Why Tencent is the Biggest Victim of Ubisoft’s Market Struggles

Ubisoft has faced numerous setbacks recently, but the greatest blow might not land on the French game developer itself. 

Instead, Tencent, one of Ubisoft’s largest stakeholders, finds itself in a vulnerable position.

The situation stems from a broader industry issue that involves a failed game collaboration between Sony and the consulting firm Sweet Baby Inc (SBI) – whose advice sparked a major crisis. 

Let’s explore how this disaster is linked to Ubisoft’s decline, and why Tencent is feeling the heaviest impact.

The Fallout from SBI’s Influence on Sony’s GameThe problems for Ubisoft stem are in part the result of a ripple effect caused by a failed Sony game, Concord, which was heavily influenced by the controversial consulting firm SBI. 

Concord’s extreme inclusivity character design influenced by SBI. Screenshot by That’s

SBI’s guidance – which focused on extreme inclusivity and politically driven content – led to widespread criticism of Sony’s game for being overly focused on social messaging at the expense of gameplay quality. 

The failure of Concord had immediate repercussions across the gaming industry – sending a shockwave through major companies like Ubisoft, who were similarly impacted by SBI’s influence.

This controversy has contributed to delays and the underperformance of Ubisoft’s key titles, such as Star Wars Outlaws and Assassin’s Creed Shadows. 

Assassin’s Creed Shadows Qlectors featuring game characters Yasuke and Naoe on what appears to be a One-Legged Torii gate. The Qelecters upset Japanese gamers as the only known one-legged torii in Japan is located in Nagasaki caused by the blast of A-bomb. Screenshot by That’s

Ubisoft’s stock has seen significant declines—a soaring 30%, sinking to its lowest levels in over a decade .

Tencent’s Increasing Stake and Diminishing ReturnsTencent is no stranger to strategic investments, but its heavy involvement in Ubisoft has proven to be a particularly risky move.

In 2022, Tencent took a massive leap by investing over EUR300 million to acquire a 49.9% stake in the Guillemot Brothers’ holding company – which controls Ubisoft. 

This effectively gave the Chinese tech giant a larger financial interest in Ubisoft. 

However, this move didn’t translate into greater decision-making power, as Tencent only controls 9.2% of Ubisoft’s voting rights. 

This lack of control has tied Tencent’s hands in steering Ubisoft’s future amidst the crisis.

Tencent’s purchase wasn’t just a bet on Ubisoft’s existing catalog; it was a long-term gamble on the French company’s future ability to expand its influence across Europe and the global gaming market. 

Now, with the shares plummeting and the company underperforming, Tencent is left holding an asset that has lost considerable value since their buy-in.

Why Tencent is the Biggest VictimUbisoft claims that the character Yasuke in Assassin’s Creed Shadows, a black samurai, is based on a real figure in Japanese history. However, the game trailer showing the controversial character killing Japanese people has sparked wide criticism. Screenshot by That’s

Tencent’s financial hit is compounded by the fact that it has little control over the direction Ubisoft is taking. 

This leaves them unable to directly influence critical decisions at Ubisoft – such as addressing the company’s social and political controversies, restructuring management, or pushing for more timely game releases.

Ubisoft’s inability to rebound from SBI-influenced missteps, and their failure to deliver on anticipated games has eroded Tencent’s investment. 

To make matters worse, without voting power, Tencent is unable to influence Ubisoft’s strategy – leaving them in a position where they are losing money but can’t intervene to change the company’s direction.

What’s Next for Tencent and Ubisoft?There have been talks of a potential buyout; the Guillemot family and Tencent are considering teaming up to take Ubisoft private.

However, these discussions are still in early stages, and there’s no guarantee they’ll result in a deal. 

Even if Tencent and the Guillemots were to succeed, it would require Tencent to further invest in a struggling company – deepening their financial exposure.

It is clear that Tencent’s investment in Ubisoft, initially seen as a promising opportunity, has turned into a financial burden. 

Ubisoft’s market downturn and the ripple effects from the failed Sony game that was influenced by SBI have drastically devalued Tencent’s stake. 

Without a say in how Ubisoft is managed, Tencent can only watch as their investment loses ground.

For now, Tencent’s hands are tied, and the cost of staying invested in Ubisoft continues to rise. 

Will they push for a buyout, or will they be forced to ride out the storm? Only time will tell, but the odds are not in Tencent’s favor at the moment.

[Cover image via That’s]