Ubisoft's business is becoming increasingly more vulnerable to a hostile takeover, new reports indicate.
Ubisoft's content IP (Assassin's Creed, Rainbow Six, Far Cry) and internal development teams make it an extremely valuable acquisition target. The company is also facing significant internal challenges that make it an even more enticing buyout proposition. These issues could soften Ubisoft's resolve and make it more amenable to a sizable buyout offer or a hostile takeover.
Sources tell Bloomberg that private equity firms are studying Ubisoft and may prepare a buyout offer. Sources have also told Kotaku's Ethan Gach that some of Ubisoft's biggest new games are farther out than expected.
The company does indeed seem to be over-extending itself with too many derivative live games, which is something I noticed back in 2019.
Despite promises to differentiate its games and space titles out, Ubisoft continues to develop arena shooter games targeting the Warzone, Overwatch, and Fortnite audience--which is also the same audience that plays its Rainbow Six Siege mega-hit.
Ubisoft has a sizable lineup of F2P-style live shooters including:
- Project Q
- The Division Heartland
- Rainbow Six Siege Mobile
- New battle royale game codenamed Pathfinder
Ubisoft's new PVP Arena shooter seems to be derivative in its scope and content offering.
Ubisoft's upcoming premium games will also be monetized with live services, as per usual. However there's another layer of complexity with its new games.
Assassin's Creed Infinity will be a kind of games-as-a-platform (GaaP) that hosts multiple games and missions across different timelines. It'll be less of a game and more a platform that hosts (and sells) individualized content, and has been described as a never-ending Assassin's Creed.
Current Assassins' Creed games take a lot of time to develop, but adding this level of complexity compounds dev time.
Then there's the next Ghost Recon game, which is codenamed OVER. That project is also far away.
Ubisoft's more immediate projects include Avatar: Frontiers of Pandora, Mario + Rabbids Sparks of Hope, Skull and Bones (yet another live game), an annualized Just Dance release, and more Assassin's Creed Valhalla content. The roadmap is somewhat thin.
Ubisoft's Q3 revenues slipped as Far Cry 6 missed performance targets, but was upheld by strong Valhalla sales and Rainbow Six mTX.
The lapse of heavy-hitters dropped Ubisoft's sales revenues down to $588 in Q3 2021, compared to $790 million in Q3 2020. It's worth mentioning 2020 was a boon year with strong monetization and the release of Assassin's Creed Valhalla.
Valhalla also recently made $1 billion in consumer revenues.
The main point is that Ubisoft needs to release more games every year to spark strong growth. Ubisoft's games are entry points to monetization but it's premium offerings like Assassin's Creed Valhalla typically slow down over time.
The instability in Ubisoft's long-term roadmap makes it more vulnerable to a buyout or hostile takeover.
Yves Guillemot's son, Charlie Guillemot, left the family-owned Ubisoft in 2021.
Kotaku's Ethan Gach also notes that Ubisoft currently has no immediate heir for the family-owned business. Ubisoft was started in 1986 by the Guillemot family, but only one remains: Current CEO Yves Guillemot. Yves' son, Charlie Guillemot, left Ubisoft in 2021. The current Guillemot-in-command could be looking for a way out of the hugely competitive and extremely costly business of making video games.
It's also worth mentioning that morale at Ubisoft's internal development teams has been shaken by ongoing sexual harassment controversies. These problems have contributed to multiple senior-level staff leaving
Despite promises of reform and ousting offenders like Tommy Francois, Serge Hascoet, Ashraf Ismail, and Maxime Beland, Ubisoft's teams are rocked by the issues.
Alleged abusers who have left Ubisoft
- Ashraf Ismail - Resigned, Assassin's Creed creative director
- Serge Hascoet - Resigned, served on Ubisoft's editorial team responsible for gatekeeping all franchises and games
- Maxime Beland - Resigned, VP of Ubisoft
- Tommy Francois - Resigned, VP of editorial/creative services
- Stone Chin - Ubisoft PR director, faces allegations but was fired for actions unrelated to allegations
- Cecile Cornet - Resigned as Head of Ubisoft HR, but still with company
All-told, Ubisoft is a prime acquisition target for its powerful IPs but also its somewhat-weakened disposition due to controversy, talent churn, and a seemingly-unstable development pipeline.
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