Ubisoft CEO Yves Guillemot speaks his mind on the EA deal

With Electronic Arts the new owner of almost 20 percent of Ubisoft, you might expect that company's leader to wobble a bit in the unexpected limelight. Yves Guillemot does anything but.

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Just five days before Christmas, with many game industry staffers already on vacation, Electronic Arts dropped an explosive bit of news on the wires. In a short press release, it acknowledged having purchased an estimated $85-$100 million worth of Ubisoft shares.

The move--a surprise to the vast majority of industry observers--gave it a 19.9 percent ownership position in one of its fiercest competitors. Wedbush Morgan senior analyst Michael Pachter told GameSpot, "I think EA is interested in Ubisoft's development talent and in its Gameloft investment [in wireless games]."

But is that all? "I don't know if EA wants to take them out," Pachter said, "but given that Ubi has a pretty strong set of licenses and great development--with a more Euro-centric sales profile--it's a combination that makes sense from EA's perspective."

Pachter assessed the stock acquisition as something clearly less benign than what EA had portrayed it as. "EA is not in the business of making passive investments in public companies," Pachter concluded.

Regardless of its motives, the builders of famous franchises that include Madden and Medal of Honor now own a block of Ubisoft shares second in size only to the chunk owned by the company's founders, one of whom is its CEO and president, Yves Guillemot.

We spoke to Guillemot shortly after the transaction was announced.

GameSpot: Yves, to most observers, EA and Ubisoft are archrivals who compete for market share, mind share, shelf space, and talent. It's hard to believe the two parties can work toward common goals. Assuming all regulatory issues are cleared, your board of directors will have to acknowledge EA's wishes as they might other shareholder's. How do you expect this marriage to get on?

Yves Guillemot: Although EA and Ubisoft are both leading game publishers, I wouldn’t say we are archrivals. All players in the industry compete for market share, shelf space, and talent, but as the past few months have shown, the market is growing, and the more outstanding titles that hit the shelves, the more the market grows. So getting great games out there is a common goal that all publishers share.

GS: So how do you read the move by Electronic Arts?

YG: I have stated on the record that I view this action on the part of EA as hostile.

GS: Do you see malevolence at its core?

YG: Until we have further information, we cannot say what EA’s goals might be.

GS: How does having EA as a major shareholder affect the issue of disclosure, specifically company strategy?

YG: In terms of the company’s confidential strategy, that information is not provided to any of our shareholders. This has always been our policy, and we have consistently shown ourselves worthy of the confidence of our shareholders.

GS: Are there remaining shares of the company that are vulnerable to acquisition by Electronic Arts, and if so, is Ubisoft management considering options if EA were to become a majority shareholder?

YG: Ubisoft is a publicly traded company, with 22.8 percent of its voting rights held by the company’s founders. Of the remaining capital publicly held, 13 percent of voting rights are in the hands of financial institutions and 44.5 percent are in the hands of small shareholders. The management is studying all its options under several different scenarios.

GS: Given this twist in the company's timeline, what does the future hold for Ubisoft?

YG: For the immediate future, we are still looking forward to a record-breaking fourth quarter, with the release of several titles which you [in the press] also seem to be eagerly anticipating.

GS: What about the long-term outlook?

YG: When looking at the longer-term, our only concern is the risk that we may not be allowed to fully realize our vocation of being creators of high-quality games. Our goal is to create the best games available, and our teams are motivated and love what they do because they see that this is the key to their success. Our philosophy has been to change the terms of success in this industry, so that a successful game is one that is innovative and creative.

GS: Is that philosophy at risk?

YG: We hope that recent events will not affect Ubisoft’s capacity to be creative and that we'll continue to make outstanding games, or for that matter, that the industry as a whole will not find itself in a situation where the quality of games is no longer a factor of success.

GS: Your company's mission statement is supported by six core values, one of which is to "play fair." Do you feel that EA has played fair in this stock acquisition?

YG: Considering the industry practice of communicating informally about such decisions, we were disappointed, to say the very least, that EA chose not to inform us of their specific plans beforehand.

GS: Yves, Ubisoft was founded by you and four of your brothers back in 1986. Now, with a competitor owning the second largest block of voting shares, what do you say to those who say this could be the beginning of the end for Ubisoft?

YG: I would strongly disagree. A minority stake in the company--even if it is held by a competitor--remains just that, a minority stake. I think Ubisoft will continue to surprise those who are watching us, and time will tell what the future holds.

GS: Yves, thank you very much.

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