🎮 Ubisoft establishes new division - Tencent invests $1.25 billion.

Ubisoft $UBI.PA, a traditional French video game player, is entering a new chapter. It is setting up a subsidiary that will cover its biggest and most profitable brands - Assassin's Creed, Far Cry and Tom Clancy's Rainbow Six. But it's not just an internal restructuring. Chinese giant Tencent $TCEHY is stepping in , pouring €1.16 billion into the project (or $1.25 billion,) taking a minority stake in the new company.

💼 The value of the new company is approximately 4 billion euros.
The company is valued using four times the average revenue for the years 2023-2025. This indicates not only a belief in the stability of the portfolio, but also in future growth, which should be driven mainly by expansion into multi-platform markets and free-to-play models.

🧠 Ubisoft talks about:
Increasing the quality of single-player experiences (AAA titles - video games with high budgets)

Faster development and release of multiplayer content

Building vibrant, long-lasting worlds

More investment flexibility is also important to help the company become more agile and less reliant on traditional publishing models.

📊 This transaction is significant for several reasons:
Increasing liquidity and strengthening Ubisoft's balance sheet , which has faced rising costs and shareholder pressure in recent years.

Reducing speculation of a full takeover - at least for now. Ubisoft remains independent but opens the door to Chinese capital in a way that preserves autonomy.

The launch of a new title Assassin's Creed Shadows, which takes players to Japan in the days of the samurai.

📈 Market reaction?
Ubisoft's shares rose by more than 10 % and returned to a market capitalization of over 1.9 billion euros.Tencent's investment in the subsidiary alone is equivalent to roughly two-thirds of the value of all of Ubisoft before the announcement. This is important news for investors and competitors alike.

However, today Ubisoftshares have written off more than 12 %. Unfortunately, this is indicative of the bad trend the company is heading. Regular gamers are slowly dropping out of new titles and sales of new games are declining. Shares are down more than a year from their 2018 highs . 88 %!

What do you think of this company behind the popular Assassins Creed or Far Cry franchises?