Ubisoft's share price plummets following internal restructure announcement, pivot to heavier use of AI — Developer falls below $1 billion EUR market cap amidst game cancellations and layoffs

Ubisoft's future remains uncertain as the company gears for internal restructuring that will eventually save it around 500 million Euros in operational costs. The developer has suffered through financial woes for the past few years, cancelling six games today — four of which weren't even announced yet — along with enacting layoffs. The news has caused Ubisoft's market cap to fall below 1 billion Euros for the first time since 2012, with trading of shares briefly suspended on Thursday morning, AFP reports.

Out of those six titles that Ubisoft put to rest, one was the Prince of Persia: The Sands of Time remake, a highly-anticipated reimagining of a 2000s classic. The game was originally unveiled back in 2020 but has been stuck in development hell ever since, having even changed production studios twice. Sands of Time has now become the poster boy for Ubisoft's instability in an industry it once dominated.

Current industry citations say the French developer will report an operating loss of $1.2 billion (1 billion Euros) for fiscal year 2025, which is ending on March 31, 2026. The game cancellations account for $650 million, but Ubisoft plans to achieve its previous cost savings target of 100 million Euros by March, after which it wants to save 200 million Euros in the next two years, ending with around 500 million Euros saved by 2028.

The new internal structure, coming into effect from April, will divide the company into five creative houses, each carrying a different assigned genre, with the goal of recapturing that market. These teams will have their own management and budgets, with "Vantage Studios" overseeing marquee franchises like Assassin's Creed, backed by a 1.16 billion Euro investment from Tencent.

"Today’s market environment requires that the Group step-changes how it is organized and operate. The portfolio refocus will have a significant impact on the Group’s short term financial trajectory, particularly in fiscal years 2026 and 2027, but this reset will strengthen the Group and enable it to renew with sustainable growth and robust cash generation." — Yves Guillemot, Ubisoft Founder & CEO

Ubisoft also stated that as part of its new operating model, it will focus on Open World Adventures and GaaS-native experiences, specifically highlighting "accelerated investments behind player-facing Generative AI," doubling down on its investments into the technology.

All of this has resulted in a 34.37% drop in Ubisoft's share price, a new record-low, trumping the previous 31.92% decline that came in 2013. The firm was trading at 6.64 Euros before chaos broke out, enabling a 5.26 Euros open that eventually plummeted to a 4.27 Euros low. In comparison, the company once traded at above 100 Euros back in July of 2018, but its stock has been caught in a downward spiral since Q4 2020.

Somehow, Beyond Good & Evil 2 has survived through this slate cleanse, a game that's been in development for 18 years at this point. Beyond Good & Evil 2 was originally unveiled at E3 2008 and shown again at E3 2017, most recently, and Ubisoft has reportedly spent over $500 million keeping it alive, according to Insider Gaming. It's mentioned as part of "Creative House 4" in the press release, alongside Anno, Rayman, and Prince of Persia.

Studios not joining these new creative houses are Ubisoft Halifax, Nova Scotia, and Stockholm because they've been shut down. Ubisoft has also reportedly abolished remote work, calling all employees to the office, which will inevitably result in "soft layoffs" since some people won't or can't come back. The company also plans to close more studios over time as part of this strategic overhaul, but the exact number wasn't disclosed.

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