Ubisoft has announced the formation of a new subsidiary in partnership with Tencent, representing a significant “strategic realignment”. The venture, valued at approximately €4 billion ($4.3 billion), involves Tencent’s investment of €1.16 billion for a 25% equity stake. This subsidiary will consolidate the development and management of key Ubisoft intellectual properties, specifically the Assassin’s Creed, Far Cry, and Rainbow Six franchises. Furthermore, the subsidiary will incorporate Ubisoft’s development studios located in Montréal, Quebec, Sherbrooke, Saguenay, Barcelona, and Sofia.
Strategic Rationale and Internal Communication
In an internal communication, Ubisoft CEO Yves Guillemot described the agreement as a “milestone” in the company’s history. The Ubisoft and Tencents deal is a remarkable move forward for both companies. He attributed the partnership to the established value of the aforementioned franchises, acknowledging the contributions of Ubisoft’s development teams. Guillemot also indicated that Tencent’s investment will facilitate the implementation of strategic changes within the organization, addressing feedback gathered from internal surveys. Marie-Sophie de Waubert, Senior Vice President at Ubisoft, emphasized the partnership as a demonstration of Tencent’s confidence in Ubisoft’s capacity to further develop the Assassin’s Creed, Far Cry, and Rainbow Six brands.
The Future of Cloud Gaming
News on anything other than the above is currently scarce. One of the things we are very interested in learning about is the future of cloud gaming. Currently, the above franchises are available on multiple cloud gaming services. The implications of this new partnership, especially the Ubisoft and Tencents deal, on cloud gaming accessibility remain unclear. Specifically, questions arise regarding potential changes to the existing cloud distribution of these titles. Furthermore, we are keen to understand if this new arrangement will impact the agreement between Ubisoft and Xbox concerning cloud gaming rights, a deal that played a role in addressing the UK’s Competition and Markets Authority (CMA) concerns during the Activision Blizzard King (ABK) merger. The long term effects of this deal on cloud gaming distribution will be something to watch.
Transaction Details and Future Implications
The companies anticipate the completion of the transaction by the end of the current financial year. Ubisoft will grant an exclusive, irrevocable, and perpetual license for the three designated franchises to the new subsidiary, in exchange for royalty payments. This Ubisoft and Tencents deal involves the development teams responsible for these titles being integrated into the subsidiary’s structure. Ubisoft intends to utilize the proceeds from Tencent’s investment to reduce its outstanding debt. This partnership signifies a strategic restructuring aimed at optimizing the development and commercial potential of Ubisoft’s core gaming franchises.
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