Tencent Bid for Assassin's Creed Demands a Leap of Faith

One of the highlights of Ubisoft Entertainment SA’s Assassin’s Creed game series is the “leap of faith,” when the hooded main character takes a stomach-churning dive from the rooftops and always lands safely in a conveniently placed hay bale. That appears to be what Ubisoft’s long-suffering shareholders are being promised as the Guillemot founding family and Tencent Holdings Ltd. consider options including a potential buyout, after an 80% share-price meltdown in five years. But a safe exit is far from assured.

It’s clear that something heroic is needed from the Guillemots, who began a partnership with Tencent in 2018 as a way to consolidate their grip and fend off predators like Vivendi SA. A lot has gone wrong since, with Ubisoft’s enterprise value relative to underlying earnings dropping to the lowest among peers after a recent profit warning. Several game cancellations, flops and the disappointment of Star Wars — Outlaws show the firm struggling to keep up in a market where game development is prohibitively expensive and the fight for customer attention is getting tougher — after all, gamification is everywhere from Netflix Inc. to Duolingo Inc. The decision to delay the next instalment of Assassin’s Creed to 2025 shows panic seeping into its most bankable property, which featured heavily at the Paris Olympics alongside other soft-power icons such as LVMH SE.