Ubisoft announces a joint venture with Tencent, where the latter invests €1.16 billion for a 25% stake to foster the development of new gaming titles amid a challenging financial landscape.

Target Information

Ubisoft, a leading video game developer and publisher, is strategically spinoffing a new subsidiary in collaboration with Tencent. This joint venture involves an investment from Tencent totaling €1.16 billion (approximately $1.8 billion), allowing the Chinese gaming giant to acquire a 25 percent economic interest in the new entity. Ubisoft stands to gain at least €500 million (around $559 million) from this transaction, with the balance allocated as working capital for the newly established company.

This move comes in the wake of a challenging fiscal year for Ubisoft, during which the company experienced a significant 20 percent decline in net bookings, reporting total revenues of €1.8 billion. The situation was exacerbated by a drop in digital net bookings, which also fell by 20 percent to approximately €1.6 billion. Additionally, their back catalogue revenues were down by 13.5 percent, culminating in an IFRS operating loss of €82.6 million for the year. Despite these setbacks, Ubisoft assured investors that they are observing strong activity metrics within the Console and PC markets. The Tencent-backed subsidiary is poised to be a focal point in their restructuring plan.

Industry Overview in France

The video game industry in France has seen substantial growth over recent years, driven by a vibrant mix of innovation, creative talent, and technological advancements. France has become one of the largest gaming markets in Europe, benefiting from a strong domesti