Tencent Now "Owns" 25% of the Assassin's Creed & Far Cry Franchises

Confirming earlier insider reports about Ubisoft's plans to navigate its financial troubles by using its most valuable game series to form an entirely new business entity, the struggling studio has now officially announced the creation of a dedicated subsidiary centered on the Assassin's Creed, Far Cry, and Tom Clancy's Rainbow Six franchises, with Chinese tech giant Tencent acting as its minority shareholder with a 25% stake.

In the first page of its official statement shared with the public, Ubisoft describes the formation of the new entity as a rapid evolution of its operational model, stating that the new subsidiary will focus on "building game ecosystems designed to become truly evergreen and multi-platform."

With a valuation of €4 billion – implying an average sales multiple of around 4x for FY23-FY25E – the company will receive a €1.16 billion ($1.25 billion) cash injection from Tencent, which will hold a 25% minority stake in the new entity. Ubisoft CEO Yves Guillemot stated that the subsidiary's creation, with Tencent as a minority shareholder, is intended to "spearhead development" for three of the company's most valuable IPs and "crystallize the value of our assets," ultimately providing, according to Guillemot, the best conditions for the game series' long-term growth.

The second page, on the other hand, is noticeably lighter on corporate jargon aimed at reassuring investors, instead offering straightforward details about the deal without the embellishments written, presumably, by the PR department.

According to this section, the new subsidiary will encompass teams working on the Tom Clancy's Rainbow Six, Assassin's Creed, and Far Cry franchises, with studios located in Montréal, Quebec, Sherbrooke, Saguenay, Barcelona, and Sofia. It will also include the back catalog, along with any ongoing or future game developments within these franchises.

Notably, the new entity will not outright own the aforementioned brand trio, and instead, Ubisoft will provide it with a "worldwide, exclusive, irrevocable, perpetual license in respect of the intellectual property and similar proprietary rights owned or licensable by Ubisoft" concerning the IPs in question in exchange for a royalty.

Regarding Tencent's role in the new venture, the company's investment would grant it minority protection veto rights, along with certain consent rights regarding the disposal of key assets of the new subsidiary. Additionally, a 5-year lock-up would apply to the shares of the new subsidiary held by Tencent, with Ubisoft retaining exclusive control and consolidation of the new subsidiary, at least for the time being.

Apparently, that could potentially change in the future, as the statement explicitly reveals that after a 2-year period, Ubisoft may no longer hold a majority of the new subsidiary's voting rights and share capital, ultimately implying that, going forward, the studio might lose all influence over the direction of three of its most important game series. This one clause outlined in the announcement makes the entire deal appear to be nothing more than a Hail Mary, designed exclusively to secure short-term investment at the expense of the franchises, rather than ensuring the game series' long-term growth, as stated by Guillemot.

The internal email shared by Chief Studios and Portfolio Officer Marie-Sophie de Waubert with Ubisoft employees, obtained by Insider Gaming, also fails to inspire much confidence, hinting at an upcoming reorganization within the studio in the weeks and months ahead, which could lead to massive layoffs and project cancellations, similar to Embracer Group's decision to eliminate 1,400 employees and shut down 42 games as part of its "restructuring."

Interestingly, the news – that one could summarize as "in two years, Ubisoft may lose all say in how Tom Clancy's Rainbow Six, Assassin's Creed, and Far Cry are handled" – comes on the heels of Assassin's Creed Shadows' supposed success, with over 3 million players having allegedly already tried the game and Shadows generating the second-highest Day 1 sales revenue in the franchise's history.

While a sizeable portion of the gaming community has repeatedly asked Ubisoft to disclose the metric that actually matters – sales numbers – rather than the vague "players reached," at least we now have one potential reason why the troubled studio has been so evasive in its announcements and ignored this request – to secure a valuation of €4 billion and not less. Could that be the actual reason? Only Ubisoft knows, and Ubisoft, as usual, isn't telling.

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