AJ Investments Gains 10% Shareholder Support in Ubisoft Management Dispute

In a significant development within the gaming industry, AJ Investments, an activist investor, has announced that it has garnered support from 10% of Ubisoft's shareholders. This news comes as the company, known for its popular franchise Assassin's Creed, faces challenges in its management and strategic direction. The announcement was made in a letter shared exclusively with Reuters on September 26, 2023.

AJ Investments, which holds less than 1% of Ubisoft's shares, is advocating for the sale of the company to third parties or private equity firms at a fair price. The Slovakia-based investor has indicated that it is currently in discussions with private equity firms to further its objectives. In the letter, AJ Investments emphasized the need for a change in leadership at Ubisoft, suggesting that the company should either go private or be sold.

This push for change comes on the heels of a troubling month for Ubisoft, during which its shares have plummeted by more than 30%. This decline followed the announcement that the release of the next Assassin's Creed game would be delayed by three months, a decision that has disappointed many fans and investors alike. Over the course of the year, Ubisoft's stock has dropped approximately 50%, significantly underperforming compared to its rivals such as Electronic Arts and Take-Two Interactive Software.

The delay in the Assassin's Creed release is not an isolated incident. Ubisoft has struggled with several recent titles, including Skull and Bones and Avatar: Frontiers of Pandora, which have not met the expectations set by investors and analysts. The Guillemot family, who founded Ubisoft and own 15% of the company, along with Tencent, a major Chinese gaming firm that holds just under 10%, have not publicly commented on the situation.

Despite the challenges, Ubisoft's latest release, Star Wars Outlaws, initially had a strong launch. However, analysts have noted that sales have since slowed, raising concerns about the company's strategy of introducing new licensed intellectual properties at a time when gamers seem to prefer established titles. Karl Kontus, co-founder of Video Game Insights, pointed out that Ubisoft should focus more on its existing intellectual properties rather than taking risks on new ventures that have not yet proven successful.

AJ Investments plans to meet with Ubisoft's management to discuss its proposals, which could lead to significant changes in the company's future. As the gaming industry continues to evolve, the outcome of this management tussle could have lasting implications not only for Ubisoft but also for the broader market.

The situation at Ubisoft serves as a reminder of the volatile nature of the gaming industry. With changing consumer preferences and increasing competition, companies must adapt quickly to survive. The ongoing discussions between AJ Investments and Ubisoft's management will be crucial in determining the company's path forward, and it will be interesting to see how this unfolds in the coming weeks.