Ubisoft, a leading video game developer, and Tencent, a global tech giant, have announced a collaboration to form a new subsidiary. This move is designed to bolster Ubisoft’s key franchises by providing them with dedicated resources and investment. The subsidiary will focus on building “evergreen, multi-platform game ecosystems,” enhancing both solo and multiplayer experiences, and introducing free-to-play elements.
Investment Details
Tencent’s investment of €1.16 billion secures them about 25% of the economic interest in the new subsidiary, which has a pre-money enterprise value of approximately €4 billion. This financial backing is expected to strengthen Ubisoft’s balance sheet and support the long-term growth of the franchises involved.
Impact on Franchises
The new subsidiary will manage Assassin’s Creed, Far Cry, and Tom Clancy’s Rainbow Six, including their back catalogs and any future titles. It will also encompass development teams from studios in Montréal, Quebec, Sherbrooke, Saguenay, Barcelona, and Sofia, giving them autonomy in development, marketing, and distribution.
This setup aims to improve game quality, expand multiplayer offerings, and integrate social features, potentially transforming how these games are experienced by players.
n a strategic move announced on March 27, 2025, Ubisoft and Tencent have formalized a partnership to establish a new subsidiary dedicated to some of Ubisoft’s most prominent gaming intellectual properties (IPs).
This collaboration, detailed in an official press release Ubisoft announces the creation of a new subsidiary, marks a significant step in Ubisoft’s transformation, aiming to enhance the development and global reach of its key franchises. Below, we explore the intricacies of this partnership, its financial implications, operational structure, and potential impact on the gaming industry.
Partnership Formation and Objectives
The new subsidiary is specifically designed to focus on Ubisoft’s flagship franchises: Assassin’s Creed, Far Cry, and Tom Clancy’s Rainbow Six. These IPs have been central to Ubisoft’s success, known for their immersive narratives and expansive gameplay. The subsidiary’s primary objective, as outlined in the press release, is to build “game ecosystems designed to become truly evergreen and multi-platform.” This involves a multifaceted approach to game development, including:
- Enhancing the quality of narrative solo experiences.
- Expanding multiplayer offerings with increased frequency of content releases.
- Introducing free-to-play touchpoints to broaden accessibility.
- Integrating more social features to foster community engagement.
This strategic direction is intended to ensure the longevity and relevance of these franchises in a competitive market, leveraging greater investment and boosted creative capacities.
Financial Details and Investment
Tencent, a global leader in technology and entertainment with a history of significant gaming investments, is injecting €1.16 billion into the new subsidiary. This investment secures Tencent approximately 25% of the economic interest, valuing the subsidiary at a pre-money enterprise value of around €4 billion, based on a multiple of approximately 4x the average sales from fiscal years 2023 to 2025E, as reported by Ubisoft spins out new gaming subsidiary, Tencent to take stake.
The transaction is subject to conditions such as a fairness opinion from Finexsi, completion of the carve-out, and regulatory clearances, with an expected completion date before the end of 2025.
The financial structure includes additional terms such as:
- A 5-year lock-up period on Tencent’s shares.
- A 2-year majority hold by Ubisoft to maintain control.
- Call and put options with pricing based on fair market value or EBIT multiple, with minimum price protection for the first 4 years.
This investment is seen as a means to strengthen Ubisoft’s balance sheet, particularly in light of recent financial challenges, including underperforming titles and declining profits, as noted in various industry reports Ubisoft forms new subsidiary with Tencent backing.
Operational Structure and Team Integration
The new subsidiary will operate with a dedicated team supervised by its own Board of Directors, granting authority over development, marketing, and distribution. It will include the development teams based in key studios such as Montréal, Quebec, Sherbrooke, Saguenay, Barcelona, and Sofia, which are responsible for the specified franchises. This structure aims to provide greater agility and autonomy, allowing for more focused and innovative game development.
The subsidiary will hold a worldwide, exclusive, irrevocable, and perpetual license for the IPs, ensuring continuity and consistency in franchise development. In return, it will pay royalties to Ubisoft, aligning their interests and fostering a collaborative relationship. This setup is detailed in reports such as Ubisoft reaches deal with Tencent to create $4.3 billion mini-Ubisoft subsidiary, which highlight the subsidiary’s role in spearheading development while remaining under Ubisoft’s umbrella.
Leadership Perspectives and Strategic Vision
Yves Guillemot, Co-Founder and CEO of Ubisoft, underscored the transformative nature of this partnership in the press release:
“Today Ubisoft is opening a new chapter in its history. As we accelerate the company’s transformation, this is a foundational step in changing Ubisoft’s operating model that will enable us to be both agile and ambitious. We are focused on building strong game ecosystems designed to become evergreen, growing high-performing brands and creating new IPs powered by cutting-edge and emerging technologies.”
Martin Lau, President of Tencent, echoed this sentiment, stating:
“We are excited to extend our longstanding partnership with Ubisoft through this strategic investment. The new subsidiary has immense potential to take these iconic franchises to new heights, and we look forward to supporting their growth and innovation.”
These statements reflect a shared vision for leveraging Tencent’s resources and expertise to elevate Ubisoft’s franchises.
Detailed Transaction Terms
For a comprehensive understanding, the following table outlines key transaction terms based on the press release:
| Term | Details |
|---|---|
| Investment Amount | €1.16 billion |
| Stake Acquired | Approximately 25% economic interest |
| Valuation | Pre-money Enterprise Value ~€4 billion, FY23-FY25E average sales multiple ~4x |
| Lock-Up Period | 5 years for Tencent shares |
| Ubisoft Hold Period | 2 years majority hold |
| Call/Put Options | Pricing based on fair market value or EBIT multiple, minimum price protection first 4 years |
| Completion Expected | Before end of 2025 |
| Conditions Precedent | Fairness opinion from Finexsi, carve-out completion, regulatory clearances |
This table provides a clear overview of the financial and operational commitments, highlighting the structured approach to ensuring mutual benefit and long-term stability.
Future Outlook and Player Impact
The subsidiary’s focus on enhancing game ecosystems suggests potential changes for players, including more frequent updates, expanded multiplayer modes, and possibly new free-to-play entry points for franchises like Rainbow Six. This could broaden accessibility and engagement, particularly for younger audiences or new players. However, it remains to be seen how these changes will balance with maintaining the narrative depth and quality that fans expect from titles like Assassin’s Creed and Far Cry.
Additionally, the involvement of Tencent, known for its success in mobile and free-to-play markets, might lead to increased focus on these areas, potentially expanding the franchises’ reach into mobile gaming. This could be an unexpected development for fans accustomed to traditional console and PC releases, offering new ways to experience these worlds.
The partnership between Ubisoft and Tencent to create a new subsidiary is a landmark development for the gaming industry, particularly for the future of Assassin’s Creed, Far Cry, and Tom Clancy’s Rainbow Six.
With a significant investment of €1.16 billion and a strategic focus on building evergreen ecosystems, this collaboration aims to enhance game quality, expand player engagement, and ensure the long-term success of these iconic franchises.
As the transaction progresses toward completion by the end of 2025, gamers and industry observers alike will watch closely to see how this new entity shapes the landscape of video game development and consumption.
