About Unity these past few days

A lot of people have asked me about Unity and their strange new per-install charges policy that they rolled out on September 12th, 2023. I wanted to give them at least 24 hours before I posted my take on it - let the dust settle a bit so I could get a chance to read the new policy properly and all that. First, however, I think we need to take a step back and get a wider perspective. Unity Software Inc. is in some serious financial trouble. Here are their operating numbers from 2019 to 2023.

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The blue line here is how much money they take in and the red line is the amount of money they are spending each year. You may notice that they are spending significantly more money year over year than they earn. In fact, over the past 12 months alone (August 2022 to August 2023), Unity Software Inc. has lost almost $1 billion.

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In 2022, Unity spent four times as much money as they did in 2019. If they had managed to keep costs at double their spending in 2019, they still would have earned $243 million in profit. Instead, they lost $882 million in 2022.

Where does all of this cost come from? In any software company like Unity, the vast vast majority of costs comes from employee salaries. And we can directly see it in Unity’s number of employees:

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Unity Software Inc. more than tripled its headcount from 2019 to 2022, and it did all of this hiring during the pandemic while competing with many many other developers all trying to hire from the same pool. I don’t work for Unity, but I was in the market and I had lots of recruiters trying to recruit me during that time.

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In short, Unity is suffering from the same miscalculation that Embracer Group did, that EA did, that Activision-Blizzard did, that Square-Enix did, and just about everybody else in the tech industry - they misjudged the good times at the beginning of the pandemic, overspent hiring people thinking the good times would last, and are now scrambling to figure out how to survive. The difference is that Unity was getting all of their operating money from Venture Capitalists (VCs) hoping that they would eventually become profitable, but VC money has all but dried up because it’s become much more expensive to borrow money over the past two years.

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As a result, the Unity executives are likely grasping at straws in hopes of saving a sinking ship. This wild and decidedly senseless pricing plan is their (seemingly-desperate) attempt to juice their revenues. It really makes very little sense from the developer perspective, which is what makes the whole thing reek of desperation. That isn’t greed talking, it’s survival. My guess is that Unity is currently desperately looking for a buyer to save them and doing whatever they can to buy themselves some more runway. They already announced layoffs back in May, but I suspect they’ll probably have to announce some really big layoffs (e.g. 40-50%) soon. Unity Software Inc. is living on borrowed time and they know it.

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Sep. 14 2023
#the business of video games #unity 3d #business business business #where the money goes #financial things
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    A lot of people have asked me about Unity and their strange new per-install charges policy that they rolled out on...