October 4th 2024.
Is Ubisoft facing major difficulties? Recent reports suggest that the company is exploring the option of going private with the help of Chinese conglomerate Tencent, as their financial situation continues to worsen. The delay of Assassin's Creed Shadows and underwhelming sales of Star Wars Outlaws have caused Ubisoft to struggle financially.
Last month, Ubisoft's stock hit its lowest point in over a decade due to poor sales of Star Wars Outlaws, along with several other titles that did not meet their sales expectations. This includes XDefiant, Skull And Bones, and Prince Of Persia: The Lost Crown. The delay of their highly-anticipated game, Assassin's Creed Shadows, to 2025 has only added to their troubles, with the company's owners now considering a buyout.
According to Bloomberg, the Guillemot family, who founded Ubisoft and own a 20.5% stake, and Tencent, who own a 9.2% stake, have been discussing ways to stabilize the company and increase its value. One possible solution is a buyout between the two parties, which would take Ubisoft private. However, these talks are still in the early stages and there is no guarantee that a deal will be reached.
Over the past year, Ubisoft's stock has dropped by 54%, causing minority investor AJ Investments to publish an open letter calling for changes within the company. In the letter, they expressed their dissatisfaction with the company's performance and urged for a buyout and a new CEO.
Neither Ubisoft nor Tencent have commented on these reports, leaving it unclear how a potential buyout would affect the company's future. Tencent has investments in various gaming companies, including Riot Games and Sumo Group, but it is uncertain if their involvement would lead to a change in direction for Ubisoft.
It's evident that Ubisoft is in need of a significant overhaul. While they have released some successful games in recent years, such as Prince Of Persia: The Lost Crown and Mario + Rabbids: Sparks Of Hope, they have not had a major hit since 2020's Assassin's Creed Valhalla, which earned over $1 billion in revenue.
But what exactly is Tencent? It is a Chinese technology conglomerate and one of the largest multimedia companies in the world, with a primary focus on the video game industry. Along with publishing games under their own division, Tencent Games, they also own major gaming companies like Riot Games, Funcom, and Sumo Group, and have stakes in other developers like Tequila Works, Ubisoft, and FromSoftware.
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