Analysts on Ubisoft's cost-cutting measures and the myth of 'sustainable growth'
The Big Question: Can Ubisoft's Restructuring Lead to Sustainable Growth?
Ubisoft, the French video game giant, has kicked off the year with a bold move: a major overhaul of its company structure. This announcement has left analysts and employees alike with questions about the company's future and its ability to achieve 'sustainable growth'. But what does this phrase really mean, and how is Ubisoft's restructuring attempt to achieve it?
The Buzzword: Sustainable Growth
'Sustainable growth' is a buzzword that has been thrown around by corporate execs in recent years, often when announcing layoffs or studio closures. It's a phrase that reflects a real structural shift in how large publishers operate in the gaming industry. But what does it actually mean?
According to David Cole, founder and analyst at DFC Intelligence, 'sustainable growth' can mean many things depending on the company. In the context of the gaming industry, it reflects a move towards a more modular development model, where teams are assembled on a project-to-project basis, similar to film and television production.
The Problem: Over-Prioritizing Shareholders
Michael Futter, a video game consultant at F-Squared, argues that the industry's big problem is that public companies have drastically over-prioritized shareholders among other stakeholder groups. This makes sustainability rarely attainable, as the economy is in shambles and these companies are still talking about sustaining growth instead of sustaining their business.
Ubisoft's Struggles
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 have plenty of questions about how the new organizational structure will lead to sustainable growth.
The Creative Houses Model
Ubisoft's restructuring involves dividing the company into five separate 'creative houses', each focused on specific franchises. This model is a more modular way of developing video games, allowing third parties like Tencent to invest in certain franchises while leaving other parts of the company untouched.
The Reality of the Creative Houses
The reality of the separate creative houses means that Ubisoft's franchises are easier to sell off. This is essentially pre-packaging Ubisoft for sale, making it easier for acquirers to cherry-pick the valuable parts 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 did not go well, with employees calling for the resignation of CEO Yves Guillemot and encouraging staff to strike for three days from February 10 to February 12.
The Way Forward
Ubisoft's split into these different creative houses is a way to provide focus and efficiencies. However, the company needs to address the concerns of its employees and find a way to achieve sustainable growth through its restructuring attempt.
