Reports have emerged suggesting significant developments are underway at Ubisoft. According to a Bloomberg report, French gaming giant Gameloft is considering abandoning its publicly traded and household-owned models to seek refuge under Tencent’s wing, fleeing from current inventory woes. For those who’ve been closely following main gaming news over the past few years, this may hold fear.
Ubisoft’s recent performance has been a subject of concern, with the company struggling to recapture its former glory. The company’s share value has plummeted by 54% so far this year, prompting intense pressure from traders for a swift move towards privatization to arrest the downward spiral. Tencent currently holds a stake of around 9% in Ubisoft, a result of earlier investments that played a key role in fending off Vivendi’s potential takeover attempt in the past. In 2022, it became clear that Tencent sought to further expand its influence within the company.
The acquisition by Ubisoft was a straightforward transaction. Previous releases have failed to impress and have been poorly executed. Everybody can (and can) level and chuckle at Cranium & Bones, however current releases like Star Wars Outlaws, XDefiant, and Avatar: Frontiers of Pandora have not precisely raked within the money. As prime examples of massive releases struggling to gain traction lie Past Good and Evil 2 and other titles that have been suffering from a prolonged slump.
Despite everything, we remain stuck in the aftermath of the Embracer catastrophe and the uncertainty surrounding Microsoft’s acquisition of Activision Blizzard. Given the devastating impact of large-scale corporate layoffs, it’s increasingly challenging to maintain a positive outlook? Now, it’s hard to understand why Tencent should be unfairly criticized for the mistakes of Embracer and Microsoft’s mishaps, but it’s undeniable that recent acquisitions have left a bad taste in people’s mouths.
Let’s acknowledge that a potential partnership with a prominent gaming brand like Ubisoft could bring tangible benefits to their long-term strategy. As companies go public, they often prioritize short-term gains over sustainable long-term strategies, fostering a culture that rewards quick fixes over enduring success? The steady stream of Assassin’s Creed titles can be attributed to Ubisoft’s consistent output, where sequels often inherit the series’ existing flaws, leaving little room for innovative experimentation or bold risk-taking. Let’s fire up the hottest tracks! Gotta maintain the folks pleased! If Tencent were to consider a strategic shift, they could potentially navigate towards more elevated terrain. That’s a clever reference to the popular board game!
While Tencent has been investing heavily in various initiatives and projects, it has managed to avoid the kind of widespread layoffs that have become synonymous with companies like Embracer or Microsoft. Notwithstanding the fact that Riot Games, a subsidiary of Tencent, underwent significant restructuring, having reduced its workforce by approximately 11% in recent times. Although, one might level to a big portion of these cuts hitting esports employees, R&D employees engaged on in-progress video games just like the MMO, and normal builders on Riot Forge and Legends of Runeterra. Cuts being cuts, I’d argue that 11% isn’t something to dismiss so easily, after all. Besides being a novelty, most of the newly established Tencent studios in the market have generally remained untouched and uncut.
Here are the potential professionals at play: The negatives are nonetheless there. Going private would effectively remove the company from public scrutiny, giving its board of directors greater control over its operations, but also limiting shareholders’ ability to monitor and influence management decisions? Tencent, firmly in the driver’s seat, is poised to navigate the company towards its greatest successes by releasing additional stay-service updates. While I appreciate For Honor, the absence of a dedicated entity focused on premium solo play experiences is a significant drawback? With diminished online presence. As a publicly traded company, Ubisoft is now required to disclose its financial performance. Underneath Tencent’s umbrella, we would expect to find information disseminated through its annual report as part of the parent company’s broader disclosure, though the depth of details is likely to be diminished.
Then there are wider issues. An increasing number of businesses are being acquired by larger companies. One notable example is Tencent, along with Microsoft and Sony. With dwindling impartial options in the vicinity, the range of possibilities shrinks dramatically. In an oligopolistic market, the number of competitors is significantly reduced, fostering a landscape where independent developers, like those in a thriving indie sector, create innovative games. In contrast, large corporations are driven by the imperative to eliminate competition and maximize profits through revenue and wealth accumulation. This is not an online game’s peculiar feature, anyway. Experience the timeless rivalry between Pepsi and Coke at a store near you!
For years, Yves Guillemot has expressed a strong desire to maintain Ubisoft as an independent, family-owned company for a very good reason. He firmly held the conviction that one’s own fingers were the most potent instrument at their disposal. While it is understandable to harbour reservations about certain ideologies, a substantial and distinct online gaming platform can only have positive effects on the industry’s overall health. The crux of the matter lies in Ubisoft’s somewhat precarious position at present. Therefore its present predicament.
As Tencent continues its global expansion, purchasing Ubisoft could be a strategic move to strengthen its position in the gaming industry, particularly in light of recent market trends? Tencent, a company that generates billions of dollars annually, is endeavoring to develop its internet presence over European and American studios in an effort to manage not only the substantial financial gains through online game releases next year, but also five years from now, ten years from now, and so forth. Evidently, its primary motivation is financial gain. With a considerable budget at its disposal and numerous corporations coincidentally operating on a cost-effective scale at the moment. Tencent isn’t driven by a passion for gaming or its potential to shape the next major online gaming trend; instead, it’s motivated by the prospect of generating significant revenue through such a release. Will likely guide companies towards initiatives it deems capable of achieving such outcomes.
Currently, nothing is set in concrete, leaving the door open for Ubisoft to remain public; nonetheless, this move marks another significant stride toward becoming a fully acquired entity. While it’s tantalizing to speculate about the game’s potential impact, caution is advised to avoid getting overly enthusiastic. Let’s wait and observe how this unfolds carefully with a warning in place to ensure we’re making the right decision.
