A European giant has suddenly encountered a violent sell-off. On January 22, following the opening of European stock markets, shares of the European gaming giant Ubisoft experienced a dramatic plunge, at one point plummeting over 35%. The catalyst was the company's announcement of a major business restructuring, involving the cancellation of six games, the delay of seven others, and a significant downgrade of its performance guidance for the 2025-2026 fiscal year.
Analysts point out that the primary reason for Ubisoft's initiation of this large-scale restructuring plan is the sustained pressure on its operating performance. Ubisoft's revenue for the 2024-2025 fiscal year decreased by 20.5% year-on-year, resulting in an annual operating loss of 15.1 million euros. The company anticipates non-IFRS operating profit for the 2025-2026 fiscal year to be approximately -1 billion euros.
The sudden crash occurred on January 22. After European markets opened, the share price of the French video game publisher Ubisoft went into a nosedive, plummeting over 35% during the session. At the time of writing, the decline stood at 32.63%, setting a course for its largest single-day drop on record.
The news driving this decline is Ubisoft's unveiling of a massive corporate restructuring plan, which has altered the fate of numerous game projects, necessitated studio adjustments, and potentially led to employee layoffs.
As a result of the restructuring, Ubisoft expects to incur a loss of 1 billion euros this fiscal year, which includes approximately 650 million euros in one-time impairments. Full-year net bookings are projected to be around 1.5 billion euros, 330 million euros lower than previous guidance.
Public information shows that Ubisoft is a French multinational video game developer, publisher, and distributor. Founded on March 28, 1986, by the five Guillemot brothers and headquartered in Montreuil, France, the company owns renowned game series such as *Assassin's Creed*, *Far Cry*, and *Rainbow Six*.
Several Ubisoft games are affected by this restructuring. Notably, the highly anticipated remake of *Prince of Persia: The Sands of Time* has been canceled, making it the only game publicly named as canceled in this adjustment.
Ubisoft also announced delays for seven games, including one that was planned for release but had not yet been officially announced. Multiple gaming media outlets had previously speculated that this game is a remake of *Assassin's Creed: Black Flag*.
These delayed games are now scheduled to be released in the following fiscal year, meaning they will reach players in 2027.
Earlier this month, Ubisoft had already closed its mobile game studios in Halifax, Canada, and Stockholm, Sweden, while restructuring studios in Abu Dhabi, RedLynx, and Massive, resulting in over 150 layoffs.
With this strategic shift, Ubisoft will prioritize the development of open-world games and games-as-a-service (GaaS), marking a significant transformation in the company's strategy. To better support this direction, a new operational model focuses on five "Creative Workshops," each dedicated to a specific creative domain. Each "Workshop" will concentrate on a unique creative area and be responsible for product development and market strategy.
Regarding work models, all teams at the company will return to a five-day-a-week in-office work system. However, the company will provide an annual remote work allowance to partially accommodate employees' remote work needs.
Why the sudden crisis? Within this large-scale restructuring plan, Ubisoft also announced it would accelerate cost-cutting measures to optimize its organizational size and improve structural efficiency.
Specifically, the company's current cost-cutting plan aims to reduce fixed costs by at least 100 million euros compared to the 2024-2025 fiscal year. This target of at least 100 million euros in fixed cost savings (including P&L structural costs + the fixed portion of cost of sales, i.e., customer service and supply chain + cash R&D expenditure, but excluding performance-based royalties and all performance bonuses) will now be achieved one year ahead of schedule, by March 2026, instead of the originally planned early 2026-2027 fiscal year.
Building on this, Ubisoft will initiate a third and final phase of the plan, aiming to cut an additional 200 million euros in fixed costs. This will bring the total fixed cost reduction since the 2022-2023 fiscal year to approximately 500 million euros. According to the new targets, by March 2028, the group's fixed costs are projected to be reduced to around 1.25 billion euros (approximately 10.173 billion yuan) on an annualized basis.
Analysis indicates that the main reason for Ubisoft's major restructuring is the continued pressure on its operational performance.
The company's 2024-2025 financial report shows that despite the solid performance of its new release *Assassin's Creed: Shadows* post-launch, Ubisoft's overall results remained weak. Revenue for the fiscal year fell 20.5% year-on-year to 1.85 billion euros, with an annual operating loss of 15.1 million euros.
Its latest outlook for the 2025-2026 fiscal year indicates that the company expects net revenue of approximately 1.5 billion euros, with gross profit reduced by about 330 million euros. Non-IFRS operating profit is forecast to be approximately -1 billion euros.
Yves Guillemot, Ubisoft's founder and CEO, acknowledged the challenges, stating that on one hand, the AAA industry is becoming highly selective and increasingly competitive amid rising development costs and greater difficulty in building brands. On the other hand, successful AAA titles possess greater financial potential than ever before. Against this backdrop, Ubisoft is announcing a major reshaping plan to seek a gradual return to sustainable growth.
Concurrently with cost-cutting, project cancellations/delays, and lowered expectations, Ubisoft is also exploring the possibility of divesting or selling assets. Chief Financial Officer Frédérick Duguet revealed during an earnings call that the company plans to explore various refinancing options over the next 12 to 18 months and will continue to consider the possibility of asset disposals, including the sale of minority stakes in other business units.
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