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Ubisoft Restructures, Spins Off Major Game Franchises in Tencent Deal
Gaming giant Ubisoft is set to spin off its most successful game franchises, including Assassin’s Creed, Far Cry, and Rainbow Six Siege, into a newly formed subsidiary. This strategic restructuring is made possible through a significant $1.25 billion investment from Chinese tech conglomerate Tencent. The substantial deal allows the Guillemot family, founders of Ubisoft, to retain control of the publisher amidst recent financial challenges and a decline in share value.
Details of the Tencent Investment and New Subsidiary
While the intricacies of the agreement are complex and the practical implications are still unfolding, the new entity, yet to be named, will operate with its own board of supervisors. Key Ubisoft studios, including Montreal, Quebec, Sherbrooke, Saguenay, Barcelona, and Sofia, will be integrated into this subsidiary.
These studios will take charge of the future development and back catalog of the flagship Assassin’s Creed, Far Cry, and Rainbow Six Siege franchises. Nevertheless, this new subsidiary will remain under the overarching structure of Ubisoft and report to its current Chief Executive Officer, Yves Guillemot.
Executive Statements on the Strategic Move
Yves Guillemot stated in a press release that “With the creation of a dedicated subsidiary to lead the development of our three premier franchises, and the addition of Tencent as a minority investor, we are solidifying the value of our assets, bolstering our financial position, and establishing optimal conditions for the sustained expansion and success of these franchises.”
He further elaborated, “With its focused and independent management team, the subsidiary will concentrate on transforming these three brands into distinctive ecosystems.”
Ubisoft Retains Control of New Entity
During an investor call following the announcement, company leadership clarified the reporting structure of the new entity, sometimes referred to as “Ubisoft 2.” Chief Financial Officer Frederick Duguet informed investors, “There will be a specific management team under the oversight of a board controlled by Ubisoft. Therefore, Ubisoft will maintain control and consolidate this entity within our overall operations.”
Background: Restructuring Amidst Industry Shifts
This significant deal arises after months of speculation regarding a potential sale of the French publisher. These rumors followed a period of weaker-than-expected sales for recent major titles like Avatar: Frontiers of Pandora and Star Wars Outlaws. Additionally, the company faced delays and cancellations of anticipated releases, such as the free-to-play shooter The Division Heartland.
Previous speculation suggested Ubisoft was considering franchise sales to companies like Microsoft. Under this new structure, other key Ubisoft properties such as The Division, Ghost Recon, The Crew, Prince of Persia, and Rayman will remain within the broader Ubisoft portfolio.
Ubisoft’s Global Operations and Employee Impact
Ubisoft operates a vast global network of studios and employees. This extensive structure facilitates a collaborative development approach, enabling the company to produce large-scale games within tighter timelines. However, this interconnectedness also means that project responsibilities are not always clearly defined across studios.
While the Montreal and Quebec studios are central to the development of the Assassin’s Creed franchise, many employees within these locations contribute to other franchises as needed.
Employee Uncertainty and Future Plans
In response to investor inquiries about the number of Ubisoft’s 17,000+ employees who would transition to the new subsidiary, the company indicated it was premature to provide specific figures. This sentiment was mirrored in an internal email from Ubisoft’s Head of Studios, Marie-Sophie de Waubert, to staff.
“This development introduces some uncertainty and questions,” she acknowledged in the email obtained by Insider Gaming. “While we may not currently have all the detailed answers, we are dedicated to communicating with you transparently and consistently.”
Key Terms of the Investment Agreement
The agreement includes two notable provisions: Tencent is restricted from selling its 25 percent equity stake for a minimum of five years. Furthermore, Ubisoft is obligated to maintain a majority of voting rights and share capital in the new subsidiary for at least two years.
In the near term, this $1.25 billion deal appears to function more as a financial instrument, providing Ubisoft’s current ownership with extended time to improve the company’s financial performance. Prior to the forthcoming release of Assassin’s Creed Shadow, questions arose about whether its success would be enough to prevent a potential breakup or sale of the company. For the present, this deal suggests that such drastic measures may be averted.
Update on Investor Call and Internal Communications
Update: [Current Date] [Current Time] ET: Information added reflecting insights from the investor call and internal employee communications.