Valentin Gachet , Université Grenoble Alpes (UGA)
While the lockdown initially suggested a bright future for Ubisoft, the last few years seem to bring nothing but bad news. Between franchises losing steam, declining financial performance, and internal turmoil culminating in a lawsuit for sexual and psychological harassment against three former executives, the French video game giant is going through a difficult period.
Since 2018, Ubisoft's stock price has plummeted. While its share price once reached €107, today it trades at around €10, representing an 86% drop in five years ! And the results for the 2024-2025 fiscal year , released on May 14th, did little to reassure investors, with figures and forecasts falling short of analysts' expectations.
In a cost-cutting strategy, Ubisoft has already laid off 3,000 employees since 2022.
The company, which benefits from tens of millions of euros in public subsidies , also announced last March the creation of a subsidiary that will encompass three flagship licenses but will be 25% owned by the Chinese giant Tencent . This has fueled speculation of a future acquisition and a transfer to foreign ownership. On October 9, a member of parliament sent a letter to the Prime Minister to alert him to the "important issue of strong cultural and industrial sovereignty" represented by the video game sector, without explicitly mentioning the French company.
Yet, Ubisoft is also a success story. From a small video game distribution company founded in 1986 in Brittany, the group has since established itself as one of the world's largest publishers. Known for its flagship franchises Assassin's Creed , Far Cry , Rainbow Six , and Just Dance , Ubisoft has approximately 17,000 employees and more than 40 studios worldwide.
Are we witnessing the downfall of the largest French publisher, or is it the video game sector that is in difficulty?
Ubisoft's management at the heart of the controversies
In 2020, following testimonies on social media detailing abusive behavior within the company, a journalistic investigation revealed psychological harassment and sexual assault perpetrated by some high-ranking employees. Other media outlets also gathered testimonies that highlighted serious dysfunction within the human resources department. All these revelations led to the departure or dismissal of numerous key figures at the studio, including Serge Hascoët, the creative director considered at the time to be Ubisoft's number two, who approved most of the games developed. This was also the case for Guillaume Patrux, the game director , and Michel Ancel, the creator of the successful Rayman franchise.
These events have not gone unnoticed and have damaged Ubisoft's image with a drop of more than 9% on the stock market in a single day.
But that's not all, the loss of people who largely contributed to the phenomenal success of the company's best-known and most lucrative games is affecting its results: in the 2021-2022 period , revenue is down 4.4% and is largely maintained by the back-catalogue (+11%), that is to say, the older published games.
In 2022-2023 , the back catalogue is in decline and revenue falls by another 14.6%, the result of disappointing game releases (notably Far Cry 6 ) and others that are postponed ( Skull and Bones , Avatar …).
For Ubisoft, the social crisis doesn't end there…
Several strikes
Last February, a national strike took place in France, launched by the Video Game Workers' Union (STJV), to protest the increasing number of layoffs in the industry and to demand a reduction in working hours. In October 2024, Ubisoft's unions had already called a strike to demand a pay raise and to protest a reduction in remote work days. This movement had already been preceded by another strike in February 2024, again concerning wages.
Ubisoft has therefore been experiencing serious management problems for several years, which is tarnishing its image and driving away its talent. All of this is unsettling for its investors, especially since the studio is also facing a problem that is affecting the video game industry more broadly.
The post-Covid consequences on video games
While Ubisoft found itself at the center of controversy in 2020, there's no doubt the studio still benefited from the positive impact the pandemic had on the industry. Indeed, based on the financial ratios of major video game companies, a study demonstrated that the industry was one of the few sectors to thrive economically during this period of crisis. This can be explained by a significant increase in gaming time due to lockdowns. At that time, the World Health Organization (WHO) even recommended playing online games to maintain social connections while remaining physically distant.
Other researchers have also highlighted the role of the pandemic in the positive perception and practice of video games, but while recalling that this remains once again linked to the particular and temporary context of the epidemic.
The period from 2020 to 2022 was the most prolific in terms of both growth and investment in video games. For example, between 2020 and 2021, the total number of venture capital investors actively funding studios or publishers quadrupled ! Clearly, investors were hoping for continued growth in the sector in the years to come.
However, the figures provided by the Syndicate of Entertainment Software Publishers (Sell) reveal a stagnant trend rather than real progress since 2020.
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Investor disengagement
2023 was a somewhat unusual year, marked by the release of a new generation of consoles that boosted sales, but the 2024 results show a return to levels similar to previous years. These figures demonstrate a fairly good resilience in the sector, although far from the results one might expect after the massive investments made. As a result, investors are withdrawing, leading to a drop in share prices and layoffs. Ubisoft is obviously no exception to this trend.
And unfortunately for the French publisher, in addition to the economic context of video games and its management problems, it is also being attacked for the direction taken by its latest games.
Marketing choices called into question
While Ubisoft built its reputation up until 2015 by consistently delivering increasingly ambitious and captivating games, the following years seem to mark a decline in quality. The first four Far Cry games all garnered scores above 85 out of 100 on Metacritic (a well-known review aggregator), while subsequent games have not reached this level, with Far Cry 5 scoring 81 and Far Cry 6 only 73.
The same is true for the Assassin's Creed saga, which is struggling to win over longtime fans. A case study of this franchise has shown that Ubisoft has changed its marketing strategy since Assassin's Creed Origins (2017). The formula has been adapted and universalized to appeal to the widest possible audience, even at the expense of more narrative aspects.
Games that are more expensive to produce
This shift has yielded mixed results because, while sales are rather encouraging , equaling or even surpassing the earlier games, it's important to remember that the cost of the latest installments is significantly higher, as today's big-budget productions reach $200 million . Ubisoft doesn't disclose the costs of its games, but it's estimated that Assassin's Creed Unity (2014) cost €140 million and the latest installment, around €300 million , including marketing.
But, more importantly, the scores don't reach those of previous installments, and the latest games are criticized for their similarities. These criticisms extend to all Ubisoft franchises, as this formula has been adopted for all recent projects.
This choice has sparked distrust among players and impacted the publisher's sales. Moreover, while Assassin's Creed Shadows , released on March 20th, seems to be generating enough revenue to give Ubisoft some breathing room, the studio hasn't released any figures on the number of units sold, which is rarely good news… Not to mention that on June 3rd, XDefiant , a multiplayer shooter with enormous ambitions developed by Ubisoft for May 2024, was permanently shut down due to a lack of players. This colossal failure once again highlights the disconnect between the studio and player expectations.
Ultimately, a poor adaptation to the video game industry?
On April 24th, the game Clair Obscur: Expedition 33 was released, developed by Sandfall Interactive, a newly created French studio composed of around thirty developers, mostly juniors (and a few former Ubisoft employees).
This is a turn-based role-playing game, a relatively unpopular genre that is therefore far from being for everyone… and yet it sold over two million units in less than two weeks. It also achieved an excellent score of 92. This success proves that the video game industry isn't doing so badly and that it's even possible to capture players' attention with a style of game usually shunned by both the public and publishers.
This success highlights the difficulties faced by the giant Ubisoft, which is struggling to remain as agile and innovative as smaller studios. If it wants to stay afloat, the company will therefore have to quickly adapt to the transformations in the sector while resolving its internal problems.
Valentin Gachet , PhD student in management science, specializing in finance, Université Grenoble Alpes (UGA)
This article is republished from The Conversation under a Creative Commons license. Read the original article.