How Do You Solve A Problem Like Ubisoft?

Assassin's Creed Shadows publisher breaks glass on a $1.25 billion bailout

Assassin’s Creed Valhalla concept art by Martin Deschambault

Ubisoft is using its most valuable franchises as collateral for a $1.25 billion bailout from Tencent. I joked on Bluesky that this is the equivalent of Obamacare for keeping the French publisher family owned, by which I meant a complex mechanism for moderately improving things without fundamentally changing the status quo.

My take on the deal is that it buys the Guillemot brothers who cofounded Ubisoft almost four decades ago a couple more years of control over a vast and uneven game making empire. If the company ships some hit blockbusters and the stock rebounds they can exit on their own terms. If Ubisoft continues to struggle, then Tencent gets first dibs on Assassin's Creed, Far Cry, and Tom Clancy's Rainbow Six Siege.

How did things get here? The short explanation is that Ubisoft rapidly doubled in size but its revenue stayed almost flat or went down. In 2017 it had a headcount of 11,907 and reported around 2 billion in revenue. In 2022 it had a headcount of 20,665 and revenue of around…$1.85 billion. By comparison, Electronic Arts has a rough headcount of 12,730. Its total revenue last fiscal year was $7.6 billion. That's $597,014 per employee. Ubisoft currently projects revenue of just $110,361 per head for the last 12 months.

Part of that difference is what happens when you don't sell popular annual sports games with money printing gambling machines inside of them. But it’s also what happens when a bunch of big games take way too long to make and don't ultimately deliver. Would-be Call of Duty-killer xDefiant did not live to see its one-year anniversary. It's hard to see Skull and Bones ever getting anywhere close to breaking even.

Assassin's Creed and Far Cry haven't been perfect either. The first used to come out every year. Now it's every two or three, with five years between Assassin's Creed Shadows and the last mainline entry. Far Cry is also set to have the longest gap between mainline entries ever, without even a mid-gen spin-off like Primal or New Dawn. Even Even DLC for The Division 2 keeps getting delayed.

Ubisoft didn't just double in size during this period, its core gameplay formulas also grew stale. It faced upheaval from the pandemic. Blockbuster budgets and workloads exploded in the shift to PS5 and Xbox Series X. And the company's longtime chief creative, Serge Hascoet, departed the company in 2020 amid allegations of sexual harassment, leaving a power vacuum which was never quite filled (his court trial over the allegations resumes in June).

Things came to a head in 2022. Ubisoft's only major release that year was Mario + Rabbids Sparks of Hope (remember Rainbow Six Extraction? I didn't think so). It was an excellent game but a Switch exclusive coming out near the end of the console's life. VGC reported the game sold around 3 million copies. My understanding is that's not even half of what Ubisoft hoped to achieve. A cost-cutting plan was revealed the next year, as well as a $537 million write-down of R&D expenses.

In some ways, Ubisoft is what many players say they want from EA: a major publisher that still experiments with smaller games and new franchises. It hasn't panned out financially. There could be a lot of reasons for that. A lack of clear vision and strong creative leadership at the top? A Byzantine co-dev structure that moves slowly and is too conservative? Premium games that are expensive to make and then go on sale for 50 percent off six months later?

The plan for a new Ubisoft within Ubisoft (Newbisoft?) consists of the rights to Assassin's Creed, Far Cry, and Rainbow Six Siege and the following studios: Montreal, Quebec, Sherbrooke, Saguenay, Barcelona, and Sofia. Some of these are obvious. Montreal and Quebec both lead Assassin's Creed. Others are less so. Saguenay spearheaded the failed battle royale Hyper Scape and last year shipped a fantasy football app. Barcelona handles the Hungry Shark mobile games (and the union there filed a labor complaint against the company over its return-to-office policy, something other studios have being striking over as well in addition to bad pay).

Notable Ubisoft studios missing from this new group include Toronto, which co-developed Far Cry 6 and is working on the next Far Cry, and Massive, which shipped Star Wars Outlaws and leads The Division. The Paris studio is leading the next Ghost Recon and Montpellier is where Beyond Good and Evil 2 remains in development for a decade now and also a new Rayman.

Note on the above chart: Scores were taken from the platform with the most reviews except when they were tied in which case I took the average. The lowest scores came the year Ubisoft tried to release two Assassin’s Creed games simultaneously. Shadows is right in the middle of the pack.

Ubisoft is currently an 18,000-person factory spread across multiple continents designed for shipping massive sequels to blockbuster games. Breaking it up would be like trying to sell off two or three pieces of major equipment on the factory floor along with the employees who work them. It would leave major gaps in the production pipeline and also what would anyone else who isn't making The Division 3 or Far Cry 7 do with those things?

This is a gross oversimplification but one I think gets at the fundamental trouble of deconstructing a modern AAA game publisher, especially one like Ubisoft which spent decades hoovering up local subsidies to set up shop all over the world so that it could annualize Assassin's Creed. One way is a devastating series of studio closures and layoffs.

That was the grim takeaway implied in last week's announcement. Ubisoft told investors it didn't know how many employees the new company within a company will consist of, and told employees that it doesn't have all the answers yet, but will work on providing more details before the deal closes at the end of the year.

Ubisoft Annecy, founded in the '90s, is one studio that sounds like it could be at risk. It's working on Pathfinder, a PVE shooter where teams race through different zones filled with AI-enemies to be the first to kill a boss at the center of the map. The multiplayer project was rebooted last year though. The team went from over 100 developers down to around just 30 as it went back to the drawing board, I'm told.

It's the latest in a long line of promising-sounding projects that the company just can't seem to figure out. Others include The Division: Heartland and Ghost Recon Frontline. The Prince of Persia remake's problems are well-known at this point, and my understanding is that the Splinter Cell remake has faced challenges as well.

Newbisoft potentially offers the Guillemots a way to jettison much of the messy baggage from the last five years of their decision making. I can't imagine currently working at the company and waiting to see who they ultimately allow into the escape capsule with them and who instead is left to burn up on re-entry.