I kinda feel bad for Unity. The company is in a bad place finacially. They're burning almost $1 billion a year and they have no good solutions to this. Either they try to increase pricing and piss off their customers, or they cut costs (which they've been doing with mass layoffs) and risk losing ground to other game engineers like Unreal.
For years the only thing really holding the company a float was their valuation. So long as investors were willing to give them money for growth and future profits they could continue to fund their loses. But now their growth is slowing and investors are less willing to pay up for growth generally what does Unity do?
I've felt for a while that they'd be a likely victim of this most recent tech rut and that seems to be playing out. They have no moat, slowing growth and are burning huge amounts of cash. Unless the macro changes in their favour it's hard to how they get out of this and stay on top.
I wouldn't feel bad for their executives. They are the ones who chose the 'growth at all costs' path, and this is what you get.
They could've probably been sustainable and profitable if they mainly serviced their core audience of indie developers with a smaller amount of employees and a simpler product, but it seems they really wanted to brute force themselves into the AAA market.
I suppose. There's quite a few companies in Unity's position right now for a reason though.
For better or worse the "growth at all costs" strategy was the strategy companies like Unity had to employ for the last decade to attract investor capital so I tend to blame the low interest rate "easy money" environment more than companies like Unity being reckless.
Although that said, it does seem Unity made some stupid moves in recent years. I don't follow the company that closely, but I'm aware they made some large acquisitions funded in-part with debt during the pandemic. It's one thing taking on debt if you have a strong balance sheet, but it seems a little short-sighted for a company losing billions to use debt to fund an acquisition – especially at the elevated prices they paid during the pandemic.
> I tend to blame the low interest rate "easy money" environment more than companies like Unity being reckless.
As if the founders had no other options in life than to start companies relying on business models where you capture the market with investor money and then once you’re customers are locked in, you squeeze them as much as possible. Unreal is in the same market. They also took in investor money. They’re not in the same situation.
The people behind Unity chose to play the game. The c-suite is handsomely rewarded, and we praise their business acumen when things go right, but if things go wrong suddenly they’re victims of circumstance.
You can’t stay small if you took a lot of investor cash. This is why self-funded companies are usually the ones who avoid these awful growth/layoff cycles.
"core audience of indie developers" I thought that the engine was hugely popular beyond games? from what I recall indie games were just a small portion that used Unity.
Honestly, if they just added revenue share like Unreal does and tweaked their subscriptions a little, the backlash wouldn't have been nearly as bad. The uproar is a combination of a really badly announced system and details that don't seem to be ironed out properly leaving devs ripe for abuse. Plus you have one of the most tight knit communities of artists who all reacted almost as one to this announcement and have experience with abuse from gamers in terms of piracy, review bombs, refund waves and so on. I guarantee most developers would have grumbled but given in to a revenue share
I'm also completely baffled how poorly thought out this whole thing has been. Unity has been used by the likes of Nintendo, Microsoft and other massive game development studios. Do they seriously think a fee applied on retroactive sales and revenue numbers would be accepted without issue from them?
> Honestly, if they just added revenue share like Unreal does and tweaked their subscriptions a little, the backlash wouldn't have been nearly as bad.
They ran the numbers. If it was going to work they would have gone that route, but I think the problem is that the clear majority of Unity-users (indie devs) make no money anyway.
Revenue sharing with someone making $0 in revenue is pointless.
Okay, but when we're told to share our work for free "for the exposure", we're supposed to buy that and just give it away? They wanted people to use their product for free for the exposure. Changing their mind is one thing, making it retroactive is another.
> Do they seriously think a fee applied on retroactive sales and revenue numbers would be accepted without issue from them?
Unity have not proposed a fee on retroactive sales. They have proposed a from-this-point-forward fee that applies to new sales/installs of any game made with Unity, including new sales/installs of back catalog games.
Sales and installs don't happen at the same time. If I buy a game once on Steam, I might install it on any number of unique devices. Per the Unity FAQ, every one of those installation events results in an additional bill for the game's developer.
In other words: This is absolutely a retroactive rug-pull on new installs of old sales.
Update: Because of the way they're rolling this out, the only way to avoid the retroactive license change is to immediately stop using Unity's development tools. If I were running a game studio, that's what I would do.
> They're burning almost $1 billion a year and they have no good solutions to this
Maybe they should have something to show for this $1B/year and take a cut of this $250B+ industry to cover the costs? They appear to have about %30 market share, so they need to capture less than %2 of the value created with their tool to break even and if they can't do that or they are providing tech for the less than average profitable part of the industry they should shift focus or reduce costs.
AFAIK it's only natural for businesses to go out of business if they can't capture more value than they consume.
None of this is attributable to engines, it's the size of the products built using the engines and it appears that the ad revenues are not included and that appears to be another $80B.
The game engine market is the market of supplying the game developers with the tech to build their games. That's where the game engine makers that spend 1B per year and hold %30 of the engine market need to charge about %2 of the products made using their engines to break even.
Not Weta FX but Digital’s Tools, Pipeline, and Engineering.
"Weta Digital’s Academy Award-Winning VFX teams will continue as a standalone entity known as WetaFX under majority ownership by Sir Peter Jackson and helmed by CEO Prem Akkaraju."¹
Why feel bad? They're a victim of deliberate bad choices. The buck stops at the top. Nobody told Riccitiello to hit the gas pedal, nor to enrich himself by selling shares prior to a disastrous announcement, he did that all on his own.
I feel much worse for the thousands of developers he's holding a metaphorical gun to with this awful policy, who now have to stress about swapping engines.
They spent like 6 billion on acquisitions that don't help make their core product better. Literally just don't do that and you'd be in the green right now.
Yes, and now they are burning tons of money due to that debt and having to make ridiculous decisions to appease the stockholders. You just stated the exact reason this whole thing is a problem.
UT99 and all the Unreal games have been delisted from stores and they're shutting down the game's master server. You can still play solo or in LAN but online multiplayer is gone and there's no (legal) way to get new copies.
as someone who has played so much of these two games: both are incredible games, in their own way - creating/testing maps, the weapons, the movements, the game-modes, the moddability (skins, sounds, etc)...so good
Because to make the next Fortnite takes not just a lot of money, but luck. What if they made a game and it flopped (a techinically impressive game can definitely flop)? People will be like "oh see Unity engine is so bad, even the game from the first party doesn't sell".
In some ways this is backwards, you could argue Fortnite was a flop and became a success because of their license conditions (pivot to cloning licensee PUBG).
Unreal has had much more favourable license terms since ue4 in 2014, which is before Fortnite and the Store. To the best of my knowledge, unreals terms have always been "good", which is one of the reasons it's so popular.
Maybe they should stop acquiring a continuous stream of startups that have nothing to do with their primary mission? I would bet only a very small proportion of Unity employees work on or even adjacent to the Unity engine.
I’d probably bet that the majority of games on steam have less than 1000 sales, so being a popular game on Steam probably doesn’t mean much compared to being a popular game by daily active users viewing unity ads.
The methodology on the site only includes games with a minimum popularity, so the long tail of tiny indie games isn't included. By the way, since steam has a fee to be included, aren't most of those tiny indie games over at itch.io anyway?
> Unless stated otherwise, we filtered out unreleased games, free games, those that launched with less than a $4.99 price point, and those that have fewer than 50 reviews.
To be fair, the difference here is that Unity is doing more than just an engine for a specific type of game. Rather, they are building lots of different tools for lots of different games.
For example, Larian (BG3) and Wube (Factorio) each have their own engine. They are specially built specifically for the games they are making.
Also, you say "have been kept modern" but even that is questionable. "Modern?" What does that really mean? It's "modern" enough for the game. Starfield was just released, and it was released without ray tracing.
And we are just talking about games. Unity and Unreal do more than just working on the engine for games. So yes, while it's a lot, it's not fair to compare the bespoke engine use by game companies and engines like Unity and Unreal.
How many such game development companies actually are there? I see a lot of aging engines out there, and companies that jumped to unreal, but I have by no means broad knowledge
Gaming companies get a lot of crap for this - it seems unfair. The OS I'm using to write this is a relative newcomer at only 30 years old. Obviously, it has changed a lot in that time, but so have the engines. Most software doesn't get rewritten, it evolves.
Certainly not an expert but top studios like Bethesda and CDPR maintain their own engines with an order of magnitude less employees. They make games too.
They also produce games that are very similar to their other games, with similar mechanics, while Unity has to support a far more diverse set of games (basically anything 2d or 3d), and presumably has to continually offer a wider set of cutting-edge features.
Given the state of Creation Engine, I wouldn't say that Bethesda maintains their engine well. CDPR is switching to Unreal. CP2077 launch issues were mainly due to their engine not being capable of handling such large games.
Epic Games only had about 2,000 in 2020 and they also develop games, store front (although really slowly), so it's at least a 4x more than they need.
But also their previous monetization seems to try charge per professional developer which is a limited audience compared to consumers, especially if you want to maintain a AAA engine (which it seems Unreal is favoured still) given it seems fast pace techniques & improvements. Maybe by selling cloud servers for networking, which I think maybe they were too expensive compared to alternatives.
May I ask you if you ever heard of Rust? The game, not the programming language. Online survive game, which has thousands of active players every single day since like a decade already, full 3D and quite awesome graphics I'd say. It's written in Unity.
While I don't know the Rust code, this isn't necessarily solely a Unity problem. Unity's C# API provides a lot of footguns that game developers tend to not think about in the near term. Lots of code bases I've seen in Unity don't do a good job of caching component instances, or just never opened the profiler to see their GC is off the charts. Unity can run really well if the proper thought and care is put into it.
That's not their focus at all. They're trying to be an all-things-entertainment company, currently, they are focusing on movie animation and digital character creation.
Some of the stuff looks pretty cool that they are adding but would probably take a retooling of many workflows to use correctly. They had some very compelling items they were adding in that would make people pick it over others. But with those license terms. That will be a hard pass by many. My guess is they are hurting financially but took cues from their weta tool stack for installs. Where in that industry per install cost is decently normal and just rolled into a production budget. But on the games side that is not going to fly. As it is a one time cost vs recurring. I feel bad for the shops where they are 2 years in with this thing and just had the rug pulled on them.
Do feel bad for them but this is a problem of their own making. Many parts of their current situation were avoidable.
That doesn't justify what they've tried to do here though. This isn't just a price increase, it's a significant price increase, and a poorly thought out "revshare" model that applies retroactively people who signed deals with them and built a business model off of the deal they signed.
Losing a billion means they spent more than that, but on what? I haven’t used unity since 2016 and never in a professional capacity but I can’t imagine anything significant was improved or added in the last year.
I'd love to read more about "game engine development, in general, moves at breakneck speed," if you happen to know of a blog post or something or might be willing to share more.
Blender is also managed exceptionally well for a FOSS project, systematically polishing up rough edges and paying close attention to the needs and desires of its userbase which no doubt inspires larger donations from more donors than FOSS projects usually have.
Small nitpick: AIUI it is possible to sell binaries of a GPLv2 program, provided you keep providing source for free. (I think; IANAL, there's maybe some caveat about exactly when you have to give source and to who.) That can actually work if your users don't want to compile stuff themselves.
In theory. Show me one example (not service or support, but selling actual software). You have a better chance of winning a lottery, happens every day.
In theory, I can just walk through solid wall, using a quantum tunneling effect.
The closes thing you will find are things like blender release under GPL (i.e. pay me a money to release my commercial software under GPL, but that's not selling GPL software),
Maybe Godot is similar enough where you'd be able to consider this. Otherwise this move is more harmful in the long term of Unity and it's about future games and not current ones. Long term matters more, always.
It may also make AAA invest away from Unreal as it looks like a monopoly now.
Unreal is technically orders of magnitude ahead of Unity, and they have around 4000 employees spread across multiple continents. And I'm referring to the entirety of Epic, so that's also the Fortnite teams and everybody else. Unity, by contrast, has about 8000 employees. Many companies seem to be hiring far more employees than they realistically need - often to the point of their own detriment, and I don't entirely understand why. Even for successful companies like Google, it seems unlikely that they need anywhere remotely near 180k employees.
Everything you wrote paints a familiar picture: a company whose leadership made poor financial decisions over and over. I won't judge anyone for mourning the loss of their favorite corporate entity, but I personally find it hard to feel pity knowing that they dug their own grave.
Unity seem like a very valuable acquisition target. Any of the American or Chinese big tech companies could put Unity to good strategic use plus a few medium sized tech companies like Adobe and Sony.
My money is on Meta. Unity powers the vast majority of VR games and is (was) the favored API for Meta's dev tools, and even Apple chose it as their only officially supported 3rd party toolkit for the Vision Pro.
Meta seems to enjoy throwing money into the VR space to subsidize it at the low-cost end, I could easily see them doing a hostile takeover of Unity "for the good of the VR space"
Apple “chose” it might be a bit misleading. While I’m sure they could’ve gone with Unreal, the outstanding lawsuits alongside the very loud negative press from Epic made it a non starter. Outside of Unreal and Unity, there aren’t a lot of options.
For years the only thing really holding the company a float was their valuation. So long as investors were willing to give them money for growth and future profits they could continue to fund their loses. But now their growth is slowing and investors are less willing to pay up for growth generally what does Unity do?
I've felt for a while that they'd be a likely victim of this most recent tech rut and that seems to be playing out. They have no moat, slowing growth and are burning huge amounts of cash. Unless the macro changes in their favour it's hard to how they get out of this and stay on top.