French video game giant Ubisoft is in turmoil

French video game giant Ubisoft has been in multiple turmoil since announcing in mid-January it was cutting its financial projections for the entire 2022-23 fiscal year.

On Friday, January 27th, the Video Game Workers’ Union (STJV) and Solidaires Informatique issued a “call to strike” for all French divisions of Ubisoft to denounce managerial management practices.

In memory of the trade unionist, this is the “first” strike of this magnitude in Ubisoft’s history since the founding of the publisher that pioneered the Assassin’s Creed series in 1986, emphasizes Mark Rutschle, representative of the trade union section at Solidarity Informatics.

“At least 100 people” were on strike at Ubisoft’s Paris studio in Montreuil (Saint-Saint-Denis), and a rally was also planned in front of the Montpellier studio. “For us, this is a success. The message is clear to management,” emphasizes Mark Rutschle.

Rare protest movement.

A rather rare protest movement in the video game industry, most recently marked by a five-week strike by Activision Blizzard employees in late 2021, which resulted in the formation of the first union within an American company last May.

What set the gunpowder on fire at Ubisoft? An internal email sent by CEO Yves Guillemot talking about upcoming “structural adjustments” as Ubisoft has pledged €200 million in market savings over two years.

“For us, this means plans for downsizing. And when we talk about saving money, it means laying off people, not raising the wages of those who stay. Knowing that we are under pressure, saying: “You have to do better,” criticizes Mark Rutschle.

The “doesn’t convince” strategy

“Ubisoft doesn’t convince,” explains Charles-Louis Planade, an analyst at Midcap Partners. “There is clear distrust at the management level, given the multiple warnings about the results, as well as the ‘deal’ the Guillemot family made with Tencent.” The founders of the French video game champion (the Guillemot family) formed an alliance with the Chinese giant Tencent in early September to secure Ubisoft in the video game market in the midst of full consolidation.

Another element against this is the 100th postponement of Skull and Bones, originally scheduled for November 2022, with Ubisoft also indicating that it has halted development on three “unannounced” titles in addition to the four halts already announced in July 2022.” This is not unique in the industry, in particular due to Covid, but we get the impression that this is much more noticeable at Ubisoft than at other publishers, ”Charles-Louis Planade emphasizes again. “After that, we must not forget that the memory of the market is short. If the band releases an unusual year next year or the next year, everyone will forget,” he adds.

In their press release, the unions are demanding, inter alia, “the opening of negotiations on wages”. The harassment scandal of several former executives at the company, which has 18,000 employees worldwide, also left its mark in the summer of 2020, eroding employees’ trust in their management.

“We are confused by the scale of the difficulties that Ubisoft has faced”

“During the Vivendi takeover attempt (in 2015), teams mobilized to stop Bollor from buying Ubisoft. If this happened today, I don’t think there would be any mobilization,” says Mark Rutschle. On a financial level, the French publisher also fell heavily on the stock market after announcing in mid-January that it was cutting its financial forecasts for the entire fiscal year 2022-2023 due to the context of a “worse”. macroeconomic conditions.

Ubisoft has revised its revenue growth target downward for 2022-2023, with sales down “more than 10%” from the previous year, while initially reporting a growth goal of “more than 10%”.

As a result, the price of its shares returned to the lows of 2015-2016. “We are disoriented by the scale of the difficulties Ubisoft is facing,” Emmanuel Mato, financial analyst at Oddo BHF, responded in a note, downgrading his recommendation for the title from “excellent” to “neutral.”

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