The makers of Assassin’s Creed cling to family control at Ubisoft amidst crises
For more than three decades, the five Guillemot brothers – whose company brought the world such blockbuster video game series as Assassin’s Creed, Rayman and Rabbids – have received a call from their homes in London, New York, Paris and Brittany on the second Monday of each month.
The chats, which stretched into the wee hours of Paris, helped the brothers forge a shared vision for Ubisoft SA, the company they founded in a sleepy town in north-west France in the 1980s, growing it to become one of the largest standalone studios in the $200 billion global video game industry. Now that vision is being tested by a series of crises.
From a high-profile sexism and harassment case in the corporate suite, a pact with China’s digital giant Tencent that has angered minority investors, delays in the release of new games, canceled titles that will result in the company’s biggest loss in history and its first-ever labor strike, Ubisoft appears to be to have lost the plan.
“The group’s messages are no longer reliable and the disappointments are coming too quickly, which seems to testify that there is a real structural problem within the group,” said Alban de Preaubert, partner and fund manager at Sycomore Asset Management, which owns its shares to which the company sold in January.
The series of setbacks has seen Ubisoft stock plummet more than 55 percent since August. But investors say the brothers’ deal with Tencent, which complicates any possible takeover, shows their determination to remain in control.
Ubisoft fended off a takeover attempt in 2018. Guillemots’ Tencent deal, which seems to have put a hold on any potential takeover by the Chinese company or any other company, is being viewed by investors as evidence of the corporate governance pitfalls of family businesses. controlled companies. The brothers’ efforts coincided with a record year for mergers and acquisitions in the industry last year, with a record 324 deals. Sony bought Bungie for $3.6 billion and a slew of other smaller studios, while Tencent’s Chinese rival NetEase bought Quantic Dream SA, France’s second-largest studio. Ubisoft Chief Executive Officer Yves Guillemot dismissed concerns and said in an interview that the family is not closing the door on a potential takeover.
The pact “doesn’t prevent us from talking to whoever we want and working with whoever we want,” he said. “The market is always a source of debate. It’s part of an industry that’s being re-formed… because of the $200 billion market, a lot is going to happen.”
The Guillemots’ Tencent deal appears to have sidelined any potential takeover
But in September, the brothers sold a 49.9 percent stake in their holding company Guillemot Brothers to Tencent, in a deal widely viewed as an attempt to keep predators at bay. The pact, which valued Ubisoft shares at €80 each – almost double the trading price at the time – kept Yves on as CEO and kept the brothers on the board.
Tencent’s stake in Ubisoft is capped at under 10 percent for eight years and has no operational veto rights. In addition, it cannot sell its shares in Ubisoft for five years, after which the Guillemot family has the right of first refusal.
The Guillemot family and Tencent together own about 25 percent of Ubisoft and 29.7 percent of the voting rights. A takeover of the company is not unthinkable for Planade – at the right price.
“If a buyer made an offer for the entire group at 50 euros per share, they would get the majority of the shares by a wide margin – even if the family did not contribute their shares,” which prevents M&A, said Charles-Louis Planade, an analyst for TP ICAP Midcap. “This scenario is not on the table, but should not be ruled out.”
Some industry observers say the Guillemot brothers are naïve about Tencent, the world’s largest video game company. Tencent will want a bigger say in its investment if Ubisoft continues to stumble, an industry leader has said. For now, the Chinese company seems supportive – at least publicly.
Before Ubisoft finalized the Tencent deal last year, it resisted a takeover because “there was the specter of its dismemberment,” said Christian Guillemot, who is the youngest brother at 56. “Americans start by keeping what they want and selling what they don’t want.”
In 2015, Ubisoft’s titular stable caught the attention of the brothers’ billionaire compatriot Vincent Bollore, whose Vivendi SA bought a majority stake in Activision Blizzard in 2008. Bollore launched a hostile raid on the studio and garnered a 27 percent stake. However, when it became clear that the brothers would not relinquish control, Bollore walked away. At that point, in 2018, Tencent came to the rescue and acquired an initial stake in Ubisoft from Vivendi.
Ubisoft still has a lot to offer. Outside of the Chinese gaming giants, it has the largest production capacity in the world. It owns most of its intellectual property, with series like Assassin’s Creed And Rabbids Generating revenue from merchandising. Assassin’s Creed is being adapted for a live-action original series streaming on Netflix.
Where Ubisoft has fallen recently is in execution. On January 12, it forecast an operating loss of 500 million euros for the year ended March, pointing to disappointing holiday sales of recent games. It is skull bones Sea Battle Game has been postponed – for the sixth time – to Spring 2024.
Yves Guillemot blamed the company’s woes on the company’s post-pandemic shift to working from home and recessionary pressures that cut discretionary spending.
Ubisoft will focus on “mega-brands” and scrap some smaller titles, he said. It is planned to release the latest version of this year Assassin’s Creedcalled Mirage. A video game version by James Cameron is also in the works avatarPart of an alliance with Disney that will include war of stars games in the future.
In an email to staff following the recent failures, Yves said: “The ball is in your hands to get this line-up out on time, with the quality expected, and to show everyone what you’re capable of.”
The news fell like a stone, with employees saying they were being blamed for lost sales – and urging the CEO to apologize. A €200 million cost-cutting plan over two years that left departing employees un-replaced sparked Ubisoft’s first labor unrest on Jan. 27, with some employees stopping work for a few hours.
Relations with employees had already been attacked by a high-profile scandal in the corporate suite. For years it was an open secret within Ubisoft that sexual harassment and sexism were rampant within the company. But as the #MeToo movement drew public attention to the cases, Ubisoft 2020 was forced to confront its toxic environment. The allegations rose to the highest ranks, bringing down Serge Hascoet, the company’s chief creative officer and close associate of the CEO, among others.
While Hascoet’s departure was welcomed, it didn’t stop the company from “promoting known offenders from studio to studio, team to team without repercussion,” says a staff group called A Better Ubisoft. Yves Guillemot is still fighting a lawsuit brought by several alleged victims and a union. Ubisoft says it thoroughly investigated each case and that those involved were either acquitted or appropriately disciplined.
On January 12, it forecast an operating loss of 500 million euros for the year ending March
Ubisoft’s fall from grace followed a heady few decades of growth from its unlikely beginnings in Carentoir, a tiny commune in north-west France where the Guillemots’ parents ran a business specializing in fertilizers.
The family opened a shop to sell computers and software and began importing video games from London in 1983. They quickly became video game distributors and developers. Ubisoft moved its headquarters to Paris, opened offices in Bucharest and Shanghai, achieving international fame in 1995 Raymanrunning on the first Sony PlayStation console.
Over the years, the brothers developed specialties. Michel Guillemot, the financial expert, takes over the family’s calls from London, while Gerard lives in New York and takes care of the film and series adaptations for Ubisoft. Claude, the eldest, is the head of Guillemot Corp, which sells gaming gear. Christian runs a smart glasses shop in Brittany. In Ubisoft matters, middle brother Yves has the final say. He says he spends a lot of time trying out Ubisoft games.
Over the years the brothers have ensured that the business is well run within the family. Some of their children work for Ubisoft, and last year Claude, 66, suggested donating 22 percent of gaming gear seller Guillemot Corp to the brothers’ 17 children and their five spouses so they “feel more involved.”
As for Yves, he has no intention of letting go. “I’m still young,” said the 62-year-old.
https://www.independent.ie/business/world/assassins-creed-creators-cling-to-family-control-at-ubisoft-amid-crises-42327738.html The makers of Assassin’s Creed cling to family control at Ubisoft amidst crises