They are making a billion dollars loss a year. So with no vc cash available they need to get profitable if they want to survive. You can argue this is wrong way to go about it but they do need to get profitable.
They miscalculated, which is a risk with investments. Miscalculated badly and executed worse. They bet on ads and ads is not the growth market it used to be. They bought IronSource and their main competitor, AppLovin is kicking their ass.
The neglected the core product and have the gall to justify their retroactive change of terms (after sneakingly deleting assurances to the contrary from the TOS and deleting the github repro that tracked transparency after their last PR disaster) with rising costs of maintaining the runtime that’s been falling into disrepair.
Investments carry risk. Investors may dream that it’s ok to get made whole by the game industry they tried to take over using VC money to build a dominating position and then changing terms and extracting rent but this is such an open and shut case of corporate mismanagement, deceit and hubris, no point in even trying to justify that.
If they want to survive, they fire the CEO, claw back bonuses and shares from executives and shrink the company to a size that’s warranted.
Unity can die in a fire, anyone with a choice will know better than to get into a relationship with them now. There’s enough landlords in the industry already with platforms, there’s no room for another extracting value of the hard work of creatives.
Accepting their terms requires broad changes to the industry business models - back to old EAs dream of charging by the download. And it requires open eyes walking into a relationship with a company that every time their CEO makes a shitty gamble will extract the losses from developers.
They bought IronSource because the VC funds that owned IronSource offered a billion investment, they were still bleeding money before the acquisition.
And before the acquisition, AppLovin even offered to buy Unity for $17 bil. I'm skeptical it wouldn't have turned into a shitfest in that direction either given that they would have either focused on mobile exclusively or worked to turn normal PC gaming into adware.
Even now, Unity's quarterly statements are wtf, wth are they spending $500 million a year on "sales and marketing" for.
Valve maintains one of the biggest platforms, and their own game engine. Valve also developed CSGO, TF2, and Dota, all popular online games that need constant maintenance (and even big content updates sometimes). Valve also invested in VR and sells hardware.
Unity are currently asking for 4% of revenue over $1M for developing the engine and toolchain that game developers will use all day every day. Valve skim 30% of the retail price of the game for the priveledge of hosting a game on their storefront. This is why Valve makes money.
Valve delivers massive value equivalent to entire departments in a publisher through their steamworks system.
Distribution, Analytics, Multiplayer, Anticheat, Publishing Services, Anti Piracy, Storefront, Sales, Mods, Custom Content Integrations, Localisation, and most importantly discovery (things you pay for dearly outside on mobile).
They never had need to convince developers that the fee is worth it and they never had to retroactively change terms of service. They have continually invested into the system and built the trust.
Most of all, Valve chose the long term sustainable business model when everyone else in the industry tried to extract per download charges from gamers. So gamers chose the company that sold them their game collection, just in the cloud instead of nickel and diming.
And developers chose valve because they were infinitely more trustworthy and offered better tools than any of the legacy publishers. They never increased the fees because they made bad bets either (and they had a few like VR)
Yes there’s a case to be made that the 30% should be reduced now, but realistically few could compare Valve to Unity when it comes to execution and long term value balancing for developers and gamers.
I just find it really strange to think of Valve's 30% cut to be value, when its main advantage is being an oligopoly, but Unity's 4% cut to be rent-seeking, when it's the foundation and toolset for the software being made.
But I can't help but feel you're willing to twist the facts to defend Unity. I'll list some facts for the readers:
1. The 4% cut is a rumor at this point. It's not confirmed.
2. Unity didn't just announce a 4% cut at the first place. They announced a fee per install. It's an unprecedented business model. No other semi-popular game engine does that, ever.
I'm not defending Unity, I'm just not defending Valve/Steam (also App Store, Play), which is a much, much bigger drain on revenue.
The Unity pricing structure is complicated and badly managed. The fees were previously uncapped, and it allows for edge cases where the fees look like they could exceed revenue. It causes problems for givaways, bundles and Gamepass deals.
Still, for many situations the math works out so Unity is cheaper than Unreal, even before this 4% rumour. You wouldn't want to accidentally hit one of those edge cases though.
I think the best argument you could make to say steam is a monopoly is to say that their plan is roughly:
1. Make a platform gamers love to use so much that they will still use it even if other stores are literally giving the games away for free
2. Build a brand that your target audience recognizes worldwide and trusts with their entire game collection.
3. "Exploit" the fact that your audience loves your product and brand so fanatically that you can charge the same amount on an open platform (PC/windows/linux) that other app stores need walled gardens (apple/android - literal lockin and literal near-monopolies/duopoly) to be able to charge.
I really struggle to find a way to frame Valve as the bad guy here. It's PC. There's literally nothing stopping you from just installing as many app stores / launcher platforms as you want. And it's not all-or-nothing - people DO use multiple launchers/stores. What gamer doesn't begrudgingly have Origin and at least one of EGS or the Blizzard/battlenet launcher installed alongside steam? And yet people still use steam, and spend the most money there by far.
> What gamer doesn't begrudgingly have Origin and at least one of EGS or the Blizzard/battlenet launcher installed alongside steam?
That's me! Not that I could have had any of those, as far as I'm aware. When it comes to Linux support, Steam isn't just the best, the others are actively bad.
Yes, tool makers just can't take the same margin as publishers/platforms do. It's nothing new. Microsoft Words can't take 80% (like a traditional publisher) of your book's retail price, nor even 30% (like Amazon).
I'm not "defending" Valve (actually I find it's very worrisome that they're a game developer and a platform at the same time.) I'm pointing out the fact in no way Unity can sustain 6x of employees than Valve.
I'm betting that Unity's customers, which includes a horde of mobile app developers, are a bit more demanding to have (and keep) than the few - if any? - outside Valve who license Source 2.
It would be great if you could be Valve. Everyone wants to be Valve. But you are not Valve. Especially not if you're publicly traded or a private equity rollup - things Valve has stubbornly resisted becoming.
Massive over hiring and random acquisitions are there main reasons why are they here. If they hadn't increased their headcount by 5k and continued focusing on their core products the company would already be profitable (even if revenue would be lower).
At this point it's too late to significantly cut costs, so yeah seems like they pushed themselves into a corner.
The sad part is that it was already perfectly obvious where were they heading after they IPO'ed.
Seems like they’re trying to fund their unprofitable acquisitions by harming their profitable core. They could have spent that money making unity better/more stable. I hope they make it out of this. The unity editor is pretty great.
It's not at all obvious to me investors who bought their stock after they IPO wanted any of this.
The board and upper management together with their VC backers (they also gave Unity a significant loan to fund the IronSource acquisition which will be exchanged to stock in a few years) seem to be the main driving force behind this.
The only way most public shareholders can express their approval is by buying or selling stock and looking at the share price over the last 1.5 years they don't seem to approve that much.
Well because profitability was just a few years away according to their prospectus.
Which to be fair wasn't that inaccurate. Had they stopped expanding like crazy for a year or so the company would've been profitable (with minimal damage to their core product, if not the other way around).
The neglected the core product and have the gall to justify their retroactive change of terms (after sneakingly deleting assurances to the contrary from the TOS and deleting the github repro that tracked transparency after their last PR disaster) with rising costs of maintaining the runtime that’s been falling into disrepair.
Investments carry risk. Investors may dream that it’s ok to get made whole by the game industry they tried to take over using VC money to build a dominating position and then changing terms and extracting rent but this is such an open and shut case of corporate mismanagement, deceit and hubris, no point in even trying to justify that.
If they want to survive, they fire the CEO, claw back bonuses and shares from executives and shrink the company to a size that’s warranted.
Unity can die in a fire, anyone with a choice will know better than to get into a relationship with them now. There’s enough landlords in the industry already with platforms, there’s no room for another extracting value of the hard work of creatives.
Accepting their terms requires broad changes to the industry business models - back to old EAs dream of charging by the download. And it requires open eyes walking into a relationship with a company that every time their CEO makes a shitty gamble will extract the losses from developers.
Burn it with fire.