Yves Guillemot, Ubisoft: assassin’s siege
The boss of the French video game maker will this week start a fightback against Vincent Bolloré
On an October afternoon last year, as the flat autumn light was starting to fade over eastern Paris, Yves Guillemot’s phone rang. It was Vincent Bolloré, the French industrialist, billionaire and chairman of media and entertainment group Vivendi, and he had a simple message.
“He said that we should talk about potential synergies,” recalls Mr Guillemot, who heads Ubisoft, the French video game maker behind such hits as the Assassin’s Creed series, Tom Clancy’s Ghost Recon, Just Dance, Prince of Persia and, for those with longer memories, Rayman.
Describing the conversation as “brief but smooth”, Mr Guillemot hung up, assuming that the idea was to explore how the two might eventually collaborate; two hours later, he discovered — via the country’s stock market authority — that Vivendi had bought 6.6 per cent of his company.
Today, he feels under siege. Since the phone call, Vivendi’s stake in Ubisoft has crept up to almost 15 per cent.
“I told them that I had nothing to say to them,” says Mr Guillemot. “How can you talk about synergies with someone who is trying to break your door down?”
Piling on the pressure, Vivendi has also taken a 26.7 per cent stake in Gameloft, Ubisoft’s sister video game company, which is headed by one of Mr Guillemot’s four brothers — all big hitters in the global video game industry.
Vivendi, which owns the Canal Plus TV business, Universal Music Group and has just become Telecom Italia’s largest shareholder with a 20 per cent stake, has since issued a warning: if Gameloft is not open to “fruitful co-operation”, it will not exclude taking control. Mr Guillemot fears Vivendi is planning a similar strategy at Ubisoft.
In some ways, Ubisoft would seem a logical step for Vivendi, which wants to become a European entertainment powerhouse. Convergence between gaming and cinema is increasing rapidly; as Mr Guillemot acknowledges, “The video game industry is very good at creating worlds and Hollywood is very good at creating stories.”
Vivendi is also sitting on billions of euros in cash after selling off assets for the past two years. It even has experience in the industry via its majority holding, until 2013, in Activision Blizzard, the California-based video games producer. Finally, Mr Bolloré has a reputation as an astute, if ruthless, businessman who creates shareholder value.
But sipping coffee in an office decked with fantasy figures from his video games — some of them life-size — Mr Guillemot insists that such an outcome would be “a disaster”.
For one thing, he argues that Vivendi, established as a utility during the reign of Napoleon III, is inward-looking — more than half Canal Plus’s revenues come from France, for instance — while his company generates more than 90 per cent of its sales abroad.
“If we want to make a big international movie, we talk to Fox, Warner or Sony Pictures about it. They are specialists in that industry. We are not going to talk to Canal Plus.”
Moreover, he says that Mr Bolloré’s hallmark strategy of creeping control belongs to a bygone, and less transparent, era.
This approach was deployed in Mr Bolloré’s accumulation of influence at advertising agency Havas, in gaining a tight grip on Vivendi, where he is the largest shareholder with about 14.4 per cent, and even with Telecom Italia .
“It’s a very different way of doing business, and one that you don’t see in the UK, the US and even all the Asian countries,” he says. “If you want a company, you negotiate with that company and you buy it. You don’t come and take advantage of the system.”
Mr Guillemot and his brothers founded Ubisoft 30 years ago in Brittany, the northwestern coastal region of France from which the Bolloré dynasty also hails. Ubisoft grew rapidly by distributing games made by the likes of Electronic Arts. Within a few years, it had expanded to the UK, Germany and even the US. Then it began developing its own games, beginning with a title called Zombi for the Amstrad CPC.
Now with studios in almost 20 countries, Ubisoft reported €1.5bn of sales in its last fiscal year, and had almost 10,000 employees. In the four years to October 2015, before a spike caused by Vivendi’s interest, Ubisoft shares had more than quadrupled in value.
However, it cut full-year sales and profit guidance last week, a move that hit its share price. It also announced it would break from its tradition of releasing a new Assassin’s Creed each year, to refresh the franchise after a disappointing debut for the last instalment.
Mr Guillemot’s biggest concerns about Vivendi’s advances have to do with his determination to protect Ubisoft’s way of working.
“Many companies impose big external bosses who demand blind execution but we are in a creative industry, and creativity relies on letting people take risks so that they come up with something exceptional,” he says. “Having a group come in that does not understand the industry and just wants to control us will very quickly kill that creativity.”
The company is headquartered in an eight-storey modern building outside Paris that, at first glance, could be mistaken for a social housing project. Staff work in an open-plan environment, where large round wooden-topped tables for discussing ideas abound. Predictably, dress code is ultra laid-back.
Mr Guillemot, 55, says video games over the next five years will be transformed beyond recognition thanks to the increasing power of computer processors. Virtual reality machines, such as the increasingly popular and sophisticated head-mounted displays are another factor.
“Games will become much closer to what you experience in everyday life,” he says. “You will really be able to travel in different worlds, and believe that those worlds really exist. Except that in our world, you are limited by what you can do; games will enable you to live the lives of others — and all without suffering the consequences.”
He says that parents do not have to be overly concerned. “Video games are good for kids, as long as they use it as an entertainment device and don’t exaggerate,” he says.
He even argues that video games can teach children leadership skills. “If you are 12 years old, you can lead people of any age. When you are gaming, nobody knows how old you are. They just look at how you perform.”
So how does he intend to defend his company in the event that Vivendi goes for control?
A first step will come on Thursday, when he presents shareholders with a medium-term growth plan. Its biggest institutional investors are Fidelity and BlackRock, with about 10 per cent and 5 per cent respectively, while Mr Guillemot and his brothers own 9 per cent.
There will also be a message with the plan. “The companies that are performing well in the video gaming industry are those that can take quick decisions, and we don’t see companies performing that are part of big groups,” he says.
“If we don’t remain independent, we know that it will slow down our capacity to create beautiful entertainment experiences.”