[datavirtue]

Is there any possible redemption for a publicly traded company that is on their back foot like this?

Seems like this would have been a stellar business without the hassle of going public. How did they fuck this up? All they had to do was keep customers happy and collect money.

[frfl]

From Wikipedia,

> Software developer Niantic released Pokémon Go, which was built using Unity engine, in 2016.[26] Following the success of Pokémon Go, Unity Technologies held several rounds of funding that increased the company's valuation: In July 2016, a $181 million round of funding valued the company at approximately $1.5 billion;[26] in May 2017, the company raised $400 million that valued the company at $2.8 billion;[27] and in 2018 Unity's CEO confirmed a $145 million round that valued the company at approximately $3 billion

Seems like investors wanted an exit, so public they went. I could be wrong. Maybe someone can provide better insight if I'm wrong or this isn't the complete picture.

[chongli]

I would love to know what sort of pitch they made to bring in that amount of capital. There seems to have been no business plan whatsoever besides enshittify to the max and alienate customers with ham-fisted retroactive cash grabs.

[hx8]

Video Games are one of the most potent attractions for peoples attention. In 2008 the whole industry was worth $12B. In 2010 it grew to $25B. It would have been easy to sell continued growth in 2016 because the industry actually did continue to grow to no one's surprise. $191B in 2021. Investing in the industry at the time would have been smart.

Unity sells shovels in a gold rush. In 2016 Unity was known for being easier than the competition while having fantastic multiplatform/mobile support. They were positioned to take a tax on games sold on every major platform. It's almost impressive how badly they ruined such a winning hand.

Among Us, Pokemon Go, Beat Saber, Genshin Impact, Hearthstone, Rust were all made in Unity.

[tyrfing]

They IPOed in 2020 at a valuation of 13.7B. Any investors in those rounds made fantastic profits. Dress it up, talk about revenue growth, dump it on the public markets and make it someone else's problem: the venture capital recipe.

There were, however, plenty of worse investments in those years: https://www.bloomberg.com/news/articles/2023-12-27/spac-mani...

[frfl]

$3B in 2018 seems quite modest for the amount of hype and mind-share/market-share they had from early 2010s to 2021. Since 2020, there are (were) probably a hundred companies valued at over $1B with less market fit, less product and less revenue in comparison. You have to remember pre 2022, it was all about growth. The economics and business dynamics of startups completely shifted with rates at 5% vs when they were sub-1%.

[gcampos]

Unity was never profitable and was always dependent on vc money.

For sure it's a great product, but the truth is that it was subsidized by vc capital and is not a sustainable business

[danielmarkbruce]

It's slightly better than operating cashflow neutral. It's growing at a very healthy rate. It's definitely sustainable.

The debate is around is it worth $5 billion or $50 billion. It's not as easy as one might think to figure which.

[ffgjgf1]

> slightly better than operating cashflow neutral

Only because they are issuing massive amounts of stock (IIRC ~15% per year) to pay their employees and not doing any buybacks. How sustainable is that?

> It's growing at a very healthy rate

The problem is that it’s not. YoY growth they reported yesterday was -2% and they are also guiding for negative growth next year.

[danielmarkbruce]

Sheesh, I haven't watched closely for a couple qtrs and only saw the headline. You are right.

[brutus1213]

Can you explain the "issuing stock to pay people"? 15% per year sounds quite a bit to me .. is this the norm in Silicon Valley? I presume this in the 10K?

[danielmarkbruce]

A good portion of compensation is in stock. There is nothing wrong with it per se. It shows up on the income statement as an expense - all good. But then when people quote "operating cashflow" the company has added back that expense because it wasn't in cash. So the quoted operating cashflow (which in theory should be "real") becomes more fake from an economic viewpoint.

It's not bad, you just have to be aware of it. It's in the k - right there in the income statement (the opex lines will all have some % which is equity) and cashflow statement (the operating cashflow calc explicitly has a line for it).

[coffeebeqn]

It certainly could be a smaller profitable company but that’s not how the world works apparently

[ffgjgf1]

I’m not sure going public was the main issue. The barely thought out acquisitions and massive over hiring after 2020 were. If they were more conservative they’d probably already be profitable

[jjeaff]

I was just reading about the Weta digital acquisition for something like $1.6B. A year later they decided to give up on most of that and laid off most of the technical talent. After which Peter Jackson hired them back for his new digital effects company. So he basically got a billion dollars to take a break for a year.

[ffgjgf1]

On the bright side for Unity almost all of that acquisition was financed using convertible notes from their VC investors which are almost worthless (I think > $300 share price) at 0%(!) interest. So their balance sheet isn’t that bad as a cursory look at it might imply.

[me_me_me]

Well maybe don't drive off existing and future customers by pulling rug from underneath their feet one day, then back track and promise it will not happen again.

Imagine a bank suddenly told all customers 30% of their saving will be taken, then backtrack. Only an insane/ignorant person will stay with them.

Only thing that I can think of is public ousting and crucifixion of leadership, followed by some strong legal protection of current engine's fees for X years into the future. To build the trust back.

[programmarchy]

Yes, Apple could bail them out. They might need to because, judging by recent WWDCs, they’ve already placed bets on Unity as the game engine of choice for Apple Vision Pro.

[refulgentis]

After 20 years of thinking "Apple is taking gaming seriously this time!" every 3 years, then getting __excruciatingly__ burned, I've given up. They'll build it before they buy it.

[programmarchy]

Based on how they've backed off SpriteKit and SceneKit, I really don't think they will try to build a game engine. Bringing on the big game developers requires a cross-platform engine. Like Unity, one that can target Nintendo Switch, Xbox, Playstation, etc. Any money they pour into an effort like that would cannibalize sales on their own devices.

[bmitc]

There is zero chance Apple would buy Unity. One programs and scripts in C# and an outdated version of .NET via Mono.

[programmarchy]

Dunno, maybe you're right. I agree the technology choice is very bizarre, but have you noticed the emphasis on Unity in the last two WWDCs? It's clearly the game engine currently "blessed" by Apple.

I think there's a confluence of factors driving this. Foremost, they need a way for developers to make games, especially in the AR/VR space. SpriteKit and SceneKit have floundered, and RealityKit is not a complete solution to make games, let alone cross-platform games. They can't show any favor to Unreal Engine, even though it's superior, because of their fight with Epic. I wish they would invest more in something like Godot, but Unity has more marketshare (for now).

C# is a great language, and Apple is pragmatic enough to realize the cross-platform potential is much greater than Swift's. From what I've seen, Swift has little traction as a cross-platform tool compared to Mono. Lattner's departure took some wind out of the Swift sails, too.

[flohofwoe]

I think you're taking the Vision Pro more serious than Apple tbh. I doubt that Apple is interested in whether the Vision Pro takes off as a gaming device, or games in general.

[hinkley]

Reverse merger with someone smaller but with a sane board of directors.

[paulddraper]

? They've not been profitable idk what you're talking about