The Game Is Over for Ubisoft Stock

There’s a real “Thank you, Mario! But our princess is in another castle!” vibe to Ubisoft stock. 

The game maker has been embroiled in power struggles ever since it went public. And they never culminate with a satisfying conclusion — just an endless goose chase that leaves investors back where they started.

On the one hand, it’s kind of impressive. Consolidation is a hallmark of the video game industry. Microsoft’s $75 billion acquisition of Activision Blizzard is the prime example of that. 

Prior to that, though, Activision itself bought Vivendi Games for $19 billion. Take-Two Interactive bought Zynga for $13 billion. And Sony has acquired a slew of video game developers, including Bungie for $3.7 billion. 

Then you have Ubisoft, which has been owned and controlled by the Guillemot family since its inception in 1986. In that time, Ubisoft has acquired its share of small video game developers, but more often, it’s found itself fending off interest from competitors.

Electronic Arts took a 20% stake in Ubisoft stock in 2004. EA said it wasn’t a hostile maneuver, but Ubisoft perceived it as the prelude to a takeover. EA sold its stake in 2010. 

Then came the real boss fight. The aforementioned Vivendi succeeded in a hostile takeover of Ubisoft’s sister company, Gameloft before going after Ubisoft proper. 

Vivendi built up a 27% stake in Ubisoft, acquiring more than 30 million shares from 2015–2018. This time around, the Guillemot family succeeded in beating back that bid with help from Canada’s Ontario Teachers’ Pension Plan and Chinese tech company Tencent, which took respective stakes of 3.4% and 5%. 

Ubisoft also had to buy back about 10% of its shares from Vivendi from 2019 through 2021. That’s about when the company’s stock began to tank.

The reality now is that the only real action in Ubisoft’s stock has come from bidding wars that ultimately failed to result in a buy out. That’s left the company on its own with a slate of reasonably popular but increasingly stale titles, like Assassin’s Creed. 

Efforts to break out anything new have effectively failed. 

Pirate simulator Skull and Bones was delayed multiple times from its original 2018 target, while competitors filled the void with games like Sea of Thieves. When the game was released, it was met with a tepid reception, and Ubisoft Connect — the distribution platform the company hoped it’d launch — failed to gain any traction whatsoever.

In the wake of that folly came , which, which landed with a thud late last month. The game was expensive to make and failed to meet initial sales expectations. When video games fail to take off, they rarely gain popularity as time goes on. 

That’s a problem, because Ubisoft was counting on Outlaws and Assassin’s Creed Shadows — the 14th game in the long-running series — to carry its sales this year. Shadows releases in November, so we’ll see how that goes, but Outlaws’ failure to launch is not a good sign.

In general Ubisoft hasn’t done a great job of making money these past few years. It generated $341 million in operating income last year, but that was after losing $638 million the year prior.

It’s not really clear at this point how far its legacy games can carry the company. That’s why Ubisoft stock is at its lowest price in a decade. I think the only thing that will drive it higher at this point is another takeover attempt. And that’d probably be for the best.