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Angelus said:
I saw a tweet from Grubb yesterday saying that Ubisoft had already reached out to people in regards to acquisitions and mergers, but that they were pretty much laughed at. Nobody wants them atm |
I think the main reason that other companies are hesitant to acquire them boils down to:
- Ubisoft has the largest workforce of any gaming entity, yet were only 18th by revenue in Q2 2022, and failed to make the top 10 for overall gaming revenue in the 2010-2019 decade.
It would be incredibly difficult to make Ubisoft profitable without a significant restructuring that includes laying off a large chunk of their 20,000 employees. The fact that you will need to layoff thousands of developers in order to make them profitable is going to be an instant turnoff for any of the western companies, because they fear negative PR considerably, and don't want activists starting campaigns against them because they laid off several thousand employees shortly after acquiring a company. For that reason alone, I think the only companies/countries that might acquire them are those that are already controversial and aren't scared of the backlash they will face for laying off a huge chunk of Ubisoft's workforce, those being the 2 big Chinese companies, Tencent and Netease, and the Saudi prince who has been investing in gaming companies recently, including majority control in some cases. I think those 3 are pretty much the only ones who would be willing to face the backlash for laying off a big chunk of Ubisoft's workforce.
Problem is, say what you will about Yves Guillemot, but he is very protective of his company and his workforce, there is a reason why, even as Ubisoft lost 3/4ths of their stock value over the last few years, Yves not only resisted mass layoffs but kept expanding and hiring more employees. Improving Ubisoft's fortunes would have been as simple as shuttering some underperforming studios and refocusing the company on making fewer but larger games with more monetization opportunities in their most popular franchises, yet he resisted closing underperforming studios because I do think, at his heart, he cares about his workers. I don't think he will allow Ubisoft to purchased by anyone he thinks is going to immediately turn around and layoff thousands of Ubisoft employees. That is why he fought off the Vivendi takeover in the past.
So, where does that leave Ubisoft in the meantime? Well, they are doing one half of the thing I said above that they needed to do to turn around their fortunes. They are shuttering underperforming series to focus their efforts fully on their highest selling series like Assassin's Creed, Far Cry, and Tom Clancy. On those series, they are now aiming for fewer but larger releases with more post-launch monetization opportunities, because they saw the industry shift away from gamers buying many AAA games a year to only buying a few, so their old strategy of releasing 5 or 6 AAA's a year compared to the other big multiplat publishers releasing 2 or 3 AAA's a year at most, was no longer working, so now they are going to do the same as the other pubs and release fewer games per year while implementing GaaS aspects for long term monetization. Meanwhile Yves took an investment from Tencent in his personal company because it gives him enough voting power to holdoff any possible hostile Ubisoft takeover. Yves claims that Tencent will also help to cover Ubisoft's debts in the short term while he tries to rebuild Ubisoft on his own, which is a long term undertaking.
I really hope it works out for them, because I do like Ubisoft and would hate to see them gutted and their IP's and studios sold off to the highest bidder, or acquired by some awful company who will ruin them. I do think it is going to take more than just changing from more AAA's per year to fewer AAA's per year, and adding GaaS to everything, to turn Ubisoft around though. I'm not sure it is ever going to be possible to make them a successful company again while they have 20,000 employees, assuming an average salary of $50k per year worldwide (I'm sure their employees in some countries make more than that, while those in others make less), that is $1b a year just to pay your employee's salaries. Then you have lease bills for studios they don't own, utility bills, transportation bills, employee healthcare plans, taxes, and more that they have to pay. Ubisoft would probably need to make at least $2b in revenue per year just to break even currently, due to their large employee and studio count.
Last edited by shikamaru317 - on 12 January 2023
