Ubisoft x Tencent Partner to Form a New Subsidiary: Here's Everything You Need to Know.

Ubisoft has officially partnered with Tencent to establish a new subsidiary focused on its major gaming franchises—Assassin’s Creed, Far Cry, and Tom Clancy’s Rainbow Six. The announcement came on March 27, 2025, with the newly formed entity valued at approximately €4 billion ($4.3 billion). Tencent has invested €1.16 billion ($1.25 billion) for a 25% minority stake in this venture.

Understanding the Deal

IP Licensing Agreement

The newly created subsidiary has acquired an exclusive, worldwide, perpetual license from Ubisoft for the intellectual property (IP) rights of Assassin’s Creed, Far Cry, and Rainbow Six. This means that while the games will continue to be developed under Ubisoft’s broader vision, the subsidiary will directly handle their management and growth.

Royalty Payments

In exchange for this license, the subsidiary pays royalties to Ubisoft (the parent company). This applies to revenue from the "back catalog and future games" developed under these IPs. The specific royalty rates remain undisclosed.

Ownership and Governance

Ubisoft maintains 100% ownership of the subsidiary before Tencent’s investment. Post-investment, Ubisoft holds a 75% majority stake, ensuring it retains control. Tencent, with its 25% minority stake, has limited decision-making power but holds protective rights over significant asset disposals. A dedicated leadership team, overseen by a board controlled by Ubisoft, will manage the subsidiary’s operations, development, and marketing strategies.

Why Did Ubisoft Take This Step?

Addressing Financial Challenges

Ubisoft has faced significant financial struggles in recent years, worsened by disappointing game launches such as Star Wars Outlaws, XDefiant, Prince of Persia: Lost Crown, and Skull & Bones, along with multiple delays and cancellations. The company’s Q3 net bookings plummeted by 51.8% year-over-year, raising concerns about its financial stability. Tencent’s investment injects much-needed capital, reducing Ubisoft’s net debt and providing financial breathing space.

Streamlining Operations for Long-Term Growth

Ubisoft CEO Yves Guillemot has emphasized a shift toward a more agile and focused business model. By creating a dedicated subsidiary, the company aims to streamline operations and improve the long-term sustainability of its top-performing franchises. This allows Ubisoft to focus on other IPs, such as Ghost Recon and The Division, while ensuring that its biggest franchises continue to thrive under a specialized management structure.

Protecting the Guillemot Family’s Control

The Guillemot family, founders of Ubisoft, has been determined to maintain control over the company despite speculation of a full buyout. Past Bloomberg reports indicated that Tencent and the Guillemots explored taking Ubisoft private, but regulatory hurdles made this difficult. By structuring the subsidiary as an independent entity fully controlled by Ubisoft, the family retains influence while benefiting from Tencent’s investment.

Strengthening Ubisoft’s Partnership with Tencent

Tencent has been a long-term partner, holding a 10% stake in Ubisoft and a 49.9% stake in Guillemot Bros, the family’s holding company. This new deal reinforces their partnership without breaching France’s 30% foreign ownership cap, which would have triggered a mandatory takeover bid.

Addressing Investor Pressure

A key factor influencing this deal was pressure from AJ Investments, a Slovakian hedge fund that has been critical of Ubisoft’s management. The fund, which owns less than 1% of Ubisoft’s shares, has pushed for CEO Yves Guillemot’s removal, citing poor financial performance and mismanagement. Reports suggest AJ Investments gathered support from shareholders representing 10% of Ubisoft’s stock, advocating for drastic changes, including selling the company to Tencent or another strategic investor.

The Tencent deal appears to be a defensive move, allowing Ubisoft to secure capital while maintaining control. By transferring its most valuable franchises into a new entity under its majority ownership, Ubisoft neutralizes immediate takeover threats while ensuring financial stability.

Influence of Assassin’s Creed Shadows’ Success

Assassin’s Creed Shadows, released on March 20, 2025, played a significant role in bolstering confidence in Ubisoft’s franchises. The game attracted over 3 million players in its first week and generated the second-highest day-one revenue in the franchise’s history, trailing only Assassin’s Creed Valhalla. This strong launch may have reinforced the perceived value of Ubisoft’s IPs, contributing to Tencent’s willingness to invest.

However, not all analysts are convinced. Some critics argue that Ubisoft has been vague about actual sales figures, focusing on player counts, which include Ubisoft+ subscribers. Steam player concurrency peaked at 64,825, lower than competitors like Dragon Age: The Veilguard, raising questions about long-term engagement. Given Ubisoft’s history of financial difficulties and underperforming titles, some see the Tencent deal as a means to offset risks rather than a sign of strength.

What's Next?

The deal is expected to close by the end of 2025, marking a pivotal moment in Ubisoft’s history.

However, there have been rumors and concerns about potential layoffs following the completion. While no official confirmation of layoffs, the speculation stems from employee reactions and industry patterns rather than concrete announcements.

Insider Gaming highlights that Ubisoft employees, particularly those not working on the “big three” franchises are worried about their job security. Similar fears echoed by gamers and experts, with some predicting a major “restructure” or “reorganization.”

Ubisoft’s recent history adds credibility to the rumors. The company laid off 185 employees in January 2025, closed studios like Ubisoft Leamington, and cut 277 jobs after shutting down XDefiant in late 2024.

Ubisoft’s press release and CEO Yves Guillemot’s statements focus on the deal’s benefits—strengthening the balance sheet, crystallizing IP value—without mentioning staff cuts. However, the lack of clarity on non-subsidiary employees’ roles has left room for speculation.

Whether this strategy ultimately strengthens Ubisoft’s position or merely delays deeper structural challenges remains to be seen. What is clear, however, is that this partnership with Tencent is a calculated move to balance financial stability, creative autonomy, and corporate control.