Why is Ubisoft for sale and why isn’t Microsoft buying?

Ubisoft could soon be looking for a buyer, according to a report from Bloomberg and predictably enough, the buzz is going around that maybe, possibly, Microsoft could buy the French gaming conglomerate. But realistically speaking, I don’t see Ubisoft becoming a part of the Xbox family — the chances of that are slim to nil.

It’s understandable why people believe this is possible. After Microsoft announced an agreement to acquire Activision Blizzard for a nice 69 billion dollars, the prevailing sentiment is that any videogame company is up for acquisition. The ocean has become a stalking grounds now in which the bigger fish devour the smaller fish.

When Microsoft acquired Activision Blizzard, it most certainly was taking advantage of the many scandals and controversies the mega-publisher found itself in, such as the allegations of a sexist, toxic work culture, the reports that it had destroyed evidence to combat investigations, the allegations that CEO Bobby Kotick knowingly protected abusers within the company and many, many more.

With Ubisoft currently valued around at a ‘mere’ $5 billion, one could argue that the company is a steal for any company that wants it. But while there’s no denying that would bag some of the most high profile IPs in gaming, Ubisoft’s development block is questionable. For every megahit franchise they own, there’re questionable trend chasers like xDefiant or Hyperscape, to say nothing of projects in turmoil and limbo like Beyond Good and Evil 2 and Skull and Bones.

Ubisoft Microsoft
xDefiant, formerly a Tom Clancy game. One of many puzzling ideas from Ubisoft.

Simply put, Ubisoft is so ripe for the picking precisely because of a number of negative factors. Flagship franchises like Far Cry and Assassin’s Creed have diminished in impact and sales volume. Experiments with blockchain and NFTs were widely pilloried. And lastly, high profile projects in development like Beyond Good and Evil 2, Skull and Bones are mired in uncertainty. And of course, allegations of misconduct and harassment that remain mostly unanswered for.

And so while Microsoft could easily pick up Ubisoft for what amounts to chump change, it’s difficult to imagine why they would want to deal with TWO companies troubled by internal problems and labor issues and risk courting even more scrutiny from antitrust investigators. Especially when there just isn’t as much to be gained from Ubisoft as there is from Activision Blizzard.

When Microsoft acquired Activision Blizzard, it acquired a company with major problems yes, but also one with a strong development track record. ActiBlizz has well-established live services like Call of Duty Warzone, a wide swath of successful mobile titles from subsidiary King, makers of Candy Crush, and a rich portfolio of IPs with household recognition and devoted fans in Blizzard Entertainment. The acquisition of Activision Blizzard wasn’t just a matter of owning more stuff, it was about filling sectors and domains that Microsoft itself hadn’t covered.

So while the people who own Ubisoft are looking to divest themselves of the company and build a golden parachute out of such a sale, there’s a reason why its private equity firms like Blackstone Inc. and KKR & Co that have come circling around it. Now I could be wrong. Perhaps Microsoft and/or Sony’s acquisitions folks are burning the phone lines at this very minute. But in essence, a Ubisoft purchase seems like too much for Microsoft to bear.

Tom Clancy’s Ghost Recon Breakpoint. In 2021, Ubisoft added support for NFT goods and was met with an overwhelmingly negative reception.

And if you know anything about private equity firms, they don’t buy gaming companies to get in the gaming business. Rather, they’re in the business of speculation, flipping a company like Ubisoft to another buyer for bigger profit. That is, if they don’t leech that company for short-term gains and leaving them as dried, withered husks.

You might say that Ubisoft’s survival rests on being saved from the predations of private equity. But if any company is going to do that, it’s not Microsoft. It’s easy to believe that Ubisoft is just “free real estate” waiting to be picked up by an aspiring monopoly like Microsoft, but odds are that the latter will simply walk away.