Analysts on Ubisoft's cost-cutting measures and the myth of 'sustainable growth'
Ubisoft's Restructuring: A Move Towards 'Sustainable Growth' or a Last Resort?
Ubisoft, the French video game giant, has recently announced sweeping changes to its company structure, sparking debates among analysts and industry experts. The company's plan to create five separate 'creative houses' under which its various franchises will live has raised questions about the future of 'sustainable growth' in the gaming industry.
The Buzzword 'Sustainable Growth'
'Sustainable growth' is a buzzword that has been used broadly in the corporate world, often when announcing layoffs or studio closures. According to David Cole, founder and analyst at DFC Intelligence, this term reflects a real structural shift in how large publishers operate in the game industry today.
The Industry's Big Problem
Michael Futter, a video game consultant at F-Squared, believes that the industry's big problem is that public companies, especially in the gaming industry, have drastically over-prioritized shareholders among other stakeholder groups. As a result, sustainability is rarely attainable, and companies are still talking about sustaining growth instead of sustaining their business.
Ubisoft's Struggles and Overhaul
Following a series of struggles, both internal and external, Ubisoft has few other options than a dramatic overhaul, according to investor and New York University professor Joost van Dreunen. The company's shares dropped immediately after the announcement, and employees were left with plenty of questions about how the new organizational structure will lead to 'sustainable growth'.
The Creative Houses Structure
The creative houses structure is essentially pre-packaging Ubisoft for sale, according to van Dreunen. By creating autonomous divisions with clear P&Ls, they're making it easier for acquirers to cherry-pick the valuable parts, like Rainbow Six or Assassin's Creed teams, without absorbing all 17,000 employees.
The Impact on Employees
Ubisoft's employees, whose lives are heavily impacted by the executive failures, are not necessarily convinced. A recent Town Hall meeting in which Guillemot and other executives answered employee-submitted questions did not go well, specifically regarding the return-to-office mandate that some employees see as a way to shed employees. Two Ubisoft Paris developers told Game Developer earlier in February that workers are incensed by the restructuring and subsequent impact on games, studios, and employees.
The Way Forward
Ubisoft's split into these different creative houses is a way to provide 'focus and efficiencies'. However, the success rates of video games are a major concern. Expensive video games that take a lot of time to be made and cost a lot of money need to be hits, and Ubisoft is hoping that its major restructure will lead to more of those hits, and it's drastically cutting costs until it does.
