$2.45 BILLION Debt. Ubisoft is DOOMED.

Kind: captions Language: en Ubisoft fans aren't happy. The French gaming giant has stumbled from one disappointment to the next. Skull and Bones flopped. Star Wars Outlaws failed to become the hit Ubisoft desperately needed. Even Assassin's Creed isn't the untouchable powerhouse it once seemed. So, what happened? Everyone has an answer, and they might all be wrong. Some fans blame woke writing. Industry veterans blame overworked developers and bloated management. But those explanations don't fully explain what's happening because the reality may be much darker. Is Ubisoft trying to make great games or has it become something else entirely shaped by outside interests, data harvesting, and forces most players never see? The answer could reveal a future where gaming faces its own Leman Brothers moment and where players stop being customers and become the product instead. For those holding Ubisoft stock in 2018, things were looking good. The French video game company had a huge stable of hit franchises, including Far Cry, [music] Prince of Persia, and of course, the Assassin's Creed series. With over 20 installments released in multiple spin-offs in TV and movies, it was one of the most well-known brands in video games. It was also one of the biggest factors that sent Ubisoft's stock rising to a record high of over €12 a share. But like any roller coaster, there's a climb and then a meteoric fall. By 2024, Ubisoft's stock had cratered to around €13, wiping out 87% of shareholder value on a stock that many saw as a safe bet. This is the equivalent of having a $100 bill in your pocket and then when you pull it out, it's transformed into a single movie ticket. It would be easy to assume this is a general collapse of the tech industry. It's not. While Ubisoft was crashing, almost everyone else was surging. Nintendo had been consistently climbing since 2018. and acclaimed game publisher Konami, seen as a rival to Ubisoft, saw [music] its stock roar from 2023 onward. So, it's not the industry, it's not the games, it's what's going on behind the scenes. [music] Ubisoft is a giant in the video game world. Alongside original titles, they rely heavily on existing intellectual property [music] like Star Wars and Avatar. with games involving a high level of action. The company led by chairman and CEO Eve Gilamont is also [music] independent and can cut its own deals with the console companies, but that independence hasn't been easy to maintain. The company consistently expanded and had resisted pressure to sell until 2015. That's when a company tried to take that choice away from it. Vivventi, a powerful French mass media corporation, set its sights on the gaming company as part of an expansion push. It had acquired a 10.4% 4% share in the company and Gileimot feared that it was all part of a hostile takeover plan. As Vivventi continued to acquire shares through other companies, Gileot successfully rallied board members to freeze out Vivventi's representatives. In 2018, the two struck a deal [music] that ended any risk of a hostile takeover that might have sewn the seeds of its own destruction. The Vendi was the pressing threat, but the cure might have been worse than the disease. Battered by scandals, disappointing games, and a costly fight for survival, Ubisoft turned to Chinese tech giant [music] Tencent for billions in investment. Over the last few years, that has made Tencent [music] the second largest shareholder in Ubisoft. Some would say it's the power behind the scenes. Now, Ubisoft could find itself in a hostage situation. But why would the founders hand over the keys to the castle? The war with Vivventi was over, but Ubisoft couldn't stand alone. Its largest shareholder was Gileiamont Brothers Limited, a company controlled by the family that founded Ubisoft. This is mostly done for tax purposes, and it gives the founders more flexibility when it comes to leveraging wealth, assets, and debt. 10 cent, which has been heavily investing in video game assets for years, is the world's largest video game company based on revenue, [music] and it had its sight set on Ubisoft. In 2022, Tencent invested €300 million euros into Gilamont Brothers Limited, which gave the company just under half of the investing power, 49.9%. Ubisoft has always guarded its creative independence, [music] but this deal instantly made Tencent one of the most influential players in the company's future. Meanwhile, Ubisoft gained a powerful financial backer, while Tencent expanded its reach into one of gaming's biggest publishers. That seemed like a win-win. It also might have signed Ubisoft's death warrant. €300 million sounds like a lot, but it's really only the price of one Marvel blockbuster these days. Large tech companies can throw that money around like spare change. For Ubisoft, though, it was an act of desperation. [music] They were scrambling to save board seats for the founders. Now, they found a partner who was known for wanting to maintain a hands-off approach. 10 cents business model generally centers around being a silent partner [music] and reaping the benefits. There were several conditions included in the deal that made this more than an investment. It made it into a marriage for Tencent. The deal included an 8-year lockup period [music] that kept 10-centent from selling its shares. This was to protect Ubisoft from a backdoor deal that would see its investors turn over control of the company. Ubisoft also built in protections if the company is ever sold, adding in exit clauses in case a new owner takes over. As Ubisoft actively managed its options, this arrangement seemed beneficial for both sides, stabilizing the company for the future. Behind the [music] scenes, Ubisoft was struggling and it had very few options. A company carrying debt is no surprise, but often accumulating debt is the prelude to a big sale or a collapse. A bigger company that can absorb the debt purchases it and gets all of its assets in [music] exchange for taking the upfront financial hit. But with Ubisoft determined to not [music] sell, they had to figure out how to get out from under their current debts, which as of 2026 ran $2.45 billion. Ubisoft was now in a catch22. It had to pay off its debt, but the method it would normally use to do [music] so, a quick sale, was closed off for multiple reasons. That left only one remaining suitor, 10 cent [music] itself, which was eager to purchase more shares. But if Ubisoft wanted to remain independent, it would have to figure out a new way to do business. What happened next is what many gamers say is the death spiral of the company as the gaming house known for acclaimed historically accurate epics starts turning out pure slop. Although was it doing it on purpose? Ubisoft continued to crank out games at its usual pace and several of them had a lot of hype behind them. One of the top picks was Skull and Bones which seemed like a can'tmiss pitch. It brought the historical accuracy of Assassin's Creed to a new game. Players would engage in piracy and naval warfare on the high seas. The tactical action game featured a realistic sailing mechanic that was unlike anything ever seen in video gaming before. It was innovative, but was it fun. The game had to be redesigned multiple times to refine its combat and exploration mechanics. The shipped game failed to include very little of the original sailing mechanics. Instead, it focused on treasure hunting, ship combat, and faction wars. This made it feel less like a new game and more like a reskinned Ubisoft classic that cost $200 million to produce. It debuted to poor reviews and middling sales after an extended development saw it slip from being announced in 2017 to being released in 2024. And that was just the start. It was a huge coup for Ubisoft when Star Wars Outlaws was announced in 2021. From there, it was a fairly smooth development process. The game was fully revealed in 2023 and dropped onto shelves in 2024. The game featured original characters and was a heist mission set in an open world. While it got marginally favorable reviews, it was generally seen as derivative and many users noticed frequent glitches. The middling sales likely put an end to future collaborations between Ubisoft and Lucas Films. Everyone had an opinion on what was to blame. Many players expressed their frustration with Ubisoft's recent output for subjective reasons, often accusing it of being woke. The Assassin's Creed franchise had diversified heavily since its early days, focused on Renaissance Europe, featuring lead characters of all races and genders. Star Wars Outlaws featured a female lead, while Skull and Bones let users customize their own pirate lead and featured a diverse supporting cast. Some fans felt that it was pandering to an audience who were unlikely to play video games and ignored the original fans. The reality was very different. There's a term in development, minimum viable product, which essentially means good enough. Companies will release an incomplete product with just enough to get fans interested, and then they'll let the fans tell them what was wrong. These betas are either patched and released in updated models with new features, or the feedback is incorporated into the sequel, which the studio can then sell the fans at the full price. One way or the other, the studios win. The fans who get an [music] imperfect product usually lose. This might be becoming Ubisoft's modus operandi now pushing out unfinished code just to keep the financial life support running. But where is the money coming from? It doesn't seem to make sense at first glance. After all, who would want to put out games that don't provide a satisfactory experience? That might get some money up front, but it would likely alienate most casual gamers, making it harder to sell them future games. Short-term benefit and long-term loss is very rarely a good bet when it comes to marketing. This strategy seems likely to push Ubisoft further into debt as time goes on and make it harder for the company to maintain control of its own property. Except new gamers might not be the target anymore. One of the most important numbers in gaming is player recurring investment. [music] It's the metric that measures how much money players are willing to spend on a game after their initial purchase. In the 1990s and early 2000s, you purchased a complete game and that was it. But once game [music] systems connected to the internet, it became possible to create a whole in-game economy of microtransactions. The game wasn't so much a single product as your passport to a network of features. The days of straightforward games with a clear beginning, middle, and end are gone. Welcome to the world of games [music] as a service, where updates are constant and the fun never ends. And neither do the payments. If the studio could get a gamer addicted to the format, they'll have a customer for life. That can make up for losing dozens of other buyers. Ubisoft's become one of the biggest subscribers to this model to the frustration of many fans. [music] But as long as it keeps on paying, they'll keep on doing it. Ubisoft has had massive success with this model with its recurring player investment typically averaging 43% of total annual revenue. When you remove the big game launches that have outsized impacts on the bottom line, it can top over 50% [music] per quarter. That is a lot of money for doing little more than just selling new costumes and launching new PvP battle seasons. And when you need to put in less effort than before, you need less talent. Over the last few years, Ubisoft seen an exodus of mid-level programming talent. The team being replaced by engagement-minded algorithms that focus on creating the next hot collectible. It's a good business, but is it sustainable long-term? Not for a company in as deep a debt as Ubisoft. They need something bigger, and they may have found it at your expense. The announcement of a new Assassin's Creed game is the kind of thing that could get people excited about Ubisoft again. [music] The franchise is still Ubisoft's crown jewel, and the last installment was in 2023. So, when Assassin's Creed Jade leaked in 2022, it picked up some buzz. It would be set during the Chin Dynasty in the 3rd century BC, and it would feature a customizable lead character for the first time. But behind the scenes, there were rumors of trouble, and soon they proved to be true. This wasn't really Assassin's Creed at all. For one thing, the game was going to be released exclusively on Android and iOS. That usually comes with more limited gameplay and a greater focus on level-based gameplay as opposed to a single narrative. It's also where microtransactions live, as everyone who has ever played a match three game knows. But beyond that, the move of one of the world's greatest video game franchises to mobile raised worries of another plague of mobile gaming. Welcome to the algorithm, where you are the product. Assassin's Creed Jade isn't a Ubisoft production. It's being outsourced to Tencent. [music] With the mobile RPG being handled by Level Infinite, their mobile gaming arm designed as a free-to-play game. Little is known about the actual gameplay beyond [music] some enticing looking trailers that hint at intense battles. But veterans of mobile gaming combat know what to expect. A neverending supply of levels with new gear and features always available to purchase. Many fans are dreading their favorite game series being turned into a Hero Wars clone. if it ever comes out. That is, while the game hasn't been officially cancelled, it has been hit with massive delays since 2022, [music] and word of its development has slowed to a crawl. It's possible that Ubisoft's budget crunch led to it being cancelled. It's also possible Tencent is helping fine-tune the formula, using its expertise and player behavior and engagement to make it harder to put down. And if it works, this may be what Assassin's Creed looks like going forward and maybe all of video gaming. Ubisoft has effectively handed its most valuable franchise over to a company that could one day be a rival, but 10 cent may be after something even more valuable than your money. One of the most significant acquisitions Ubisoft has made in recent years didn't make headlines at all. In 2018, the gaming company made an offer for Dutch server [music] hosting company i3D, which hosts over 10,000 servers globally, heavily in the gaming sector. That means they have a player base of over 840 million active users with the number varying dramatically by server. The company also provides major infrastructure for both Ubisoft and competitors. By acquiring them, Ubisoft guaranteed that it could ensure server stability for its multiplayer heavy future. But that same structure might be enticing for a very different reason. I3D grew massively under Ubisoft's leadership. What it's done is essentially create a digital panopticon, a massive network of almost a billion gamers playing, interacting, and making microtransactions online on a regular basis. If you wanted [music] to build a profile of the gaming industry, this is about as close as you could get. Most modern games have an online component, and their players cover nearly every demographic and genre imaginable. For Tencent, it could be the most valuable intel imaginable. Tencent is [music] one of the most successful gaming companies in the world because of its investments, but it also has been making more aggressive steps into being a provider. Its mobile gaming subsidiary has had great success in China, [music] but it's had limited impact in the United States. Assassin's Creed Jade was the first step in changing that, using a popular brand to introduce the user to Chinese gaming and media infrastructure. The next step, [music] giving them access to the entire gaming panopticon. If Tencent gains control of Ubisoft's media infrastructure, they'll [music] have an express pass to some of the biggest gaming companies in the world and their most secure data. This is essentially a backdoor into the secrets of the most popular games in the world. Tencent will be able to discover the gaming patterns of American players. When they make their next big move into the American market, this will be an invaluable tool that could change the gaming industry forever, [music] and not in a good way. Why would a western gaming company leverage its future and allow itself to be turned into little more than a vessel for foreign data harvesting? Ubisoft is still a rarity in the gaming world, a major game company that's [music] controlled by the family that founded it. It hasn't been absorbed into a larger gaming company that then turned them into little more than a boutique imprint. When the chance for a hostile takeover arrived, the Gileotss were willing to pay anything to avoid it. That's what cost them. The founding family had one priority. Avoid being pushed out of their own company. When Vivventi was ready to make a move, the company thought the deal with Tencent was worth making. However, this may have been a short-term gain in exchange for long-term pain because Ubisoft, a company already in heavy debt, had leveraged its future in exchange for maintaining its hold on the company. Now, those chickens may be coming home to roost. Ubisoft has never been like other gaming companies, and that might spell its end. Ubisoft has found itself locked in with Tencent. Neither company can easily disentangle itself from the other. And that's fine for 10-centent, which has the money to burn and has been investing heavily in companies like Ubisoft. But for Ubisoft that's given up some of its independence, and now it has less leverage. It's still heavily in debt and staring down bankruptcy unless its gaming fortunes turn around. If it was forced to sell, it would find itself with only one feasible buyer, 10 cent, who is lying in weight. The trap is set and Ubisoft's outlook is grim. What does Ubisoft's future look like? It's likely that Ubisoft's debt problems will only get worse with their release schedule slowing down. Since Star Wars Outlaws released in 2024, the majority of their releases have been internally developed games. Major titles like Just Dance are produced entirely in-house alongside releases like Monopoly and mobile games. Releases in the Assassin's Creed and Tom Clansancy series haven't produced the impact that the series used to, and it's likely that due to their financial problems, they have to sell more shares. As Tencent gains more shares and Ubisoft's stock price continues to sink, the best financial option will be to take the company private, and that would make it easier for Tencent to continue to exert control, eventually gaining a majority share or buying the company outright. All the franchises, including Assassin's Creed, would be 10-centent property and the 300 million user base with it. They would also have full access to the servers owned by i3D. they would immediately become one of the biggest players in the entire gaming market and they're ready to take full advantage. China's gaming market has been waiting for this. Tencent has been making moves in the sector for years, but they've only just been able to get shares in existing powerful companies. However, Ubisoft's determination to remain independent has done the exact opposite. [music] The company has made itself the most enticing target possible. Tencent is likely to take control, transform it from a console gaming powerhouse into a mobile only label and complete the dramatic shift of gaming power from east to west. And if it works, they're likely to be looking ahead to see who's next. Ubisoft isn't the only gaming company in deep trouble. One of the biggest names in the sector is facing its own problems. Check out the $50 million employee why Electronic Arts is dead. or watch this vide