It was almost exactly a year ago to the day that Unity updated its pricing program for its game engine in a way that seemed perfectly designed to piss everyone off. Whereas Unity was once a subscription-based game engine, rather than one which collected royalties, suddenly Unity went in the opposite direction, with per-install fees that amounted to royalties. And, worse, the company decided that this wasn’t merely a go-forward plan, but one that would be retroactive, meaning that gamemakers who built their games on Unity under one pricing structure would suddenly be forced into the new one. For gamemakers that chose very small dollar amounts at which to sell their games, the new pricing structure could literally mean that every purchase of a game could result in net-negative dollars for the creator.
The fallout was widespread, with angry developers and those in the developer ecosystem rebelling and going elsewhere for their game engines. Unity’s CEO resigned a few weeks later. The competition began marketing their own engines by using the woes of Unity. Several months after the pricing change, things got bad enough that Unity laid off a quarter of its workforce.
Unity, maker of a popular cross-platform engine and toolkit, will not pursue a broadly unpopular Runtime Fee that would have charged developers based on game installs rather than per-seat licenses. The move comes exactly one year after the fee’s initial announcement.
In a blog post attributed to President and CEO Matt Bromberg, the CEO writes that the company cannot continue “democratizing game development” without “a partnership built on trust.” Bromberg states that customers understand the necessity of price increases, but not in “a novel and controversial new form.” So game developers will not be charged per installation, but they will be sorted into Personal, Pro, and Enterprise tiers by level of revenue or funding.
On the one hand, it’s good the company has recognized the mistake this was and has rolled it back. But one does have to wonder aloud about just how many developers will return now that the trust has been broken. The rollout of the new plan was done fairly suddenly without nearly the level of communication to customers that is needed when you have changes as drastic as these were. Sure, now the company appears to be focusing more on its customers’ desires rather than merely scraping for every last penny… but if the company can misbehave once, it can do so again.
And in this kind of business, there aren’t a lot of chances to rebuild trust once its gone. Which is probably why Unity is certainly making even more efforts towards luring developers back in.
Instead of ramping from there, the Runtime Fee is now gone, and Unity has made other changes to its pricing structure:
Unity Personal remains free, and its revenue/funding ceiling increases from $100,000 to $200,000
Unity Pro, for customers over the Personal limit, sees an 8 percent price increase to $2,200 per seat
Unity Enterprise, with customized packages for those over $25 million in revenue or funding, sees a 25 percent increase.
That new structure is obviously geared directly towards the smaller indie developers who were so angry about the runtime fees previously in place.
Again, that’s good! But it’s not clear that it’s going to be enough to win back the very customers who had their trust violated in the first place.
The bad times for Unity continue, it seems. Or, at the very least, for the ostensibly hardworking men and women that called the company home. The bad times really began late last summer when Unity decided to drastically change its pricing scheme both for future projects that used the game engine, and, somehow, retroactively as well, all without any transparency or much notice. This led to massive fallout among game developers, with a ton of them swearing off the engine entirely, while associated dev groups around the internet just simply shut down. Then Unity CEO John Riccitiello resigned, the company walked back some portion of its new pricing plan, and an interim CEO was named in James Whitehurst, formerly of Red Hat.
All of that takes you up to October of 2023. And that’s when the layoffs began. In November of 2023, Unity laid off over 250 workers, or something like 4% of its workforce. That was part of a plan to shut down a division it spent over a billion dollars acquiring several years ago. And now, two months later, the company has announced that it is laying off another 1,800 workers, or a full quarter of its remaining employees.
“This decision was not taken lightly, and we extend our deepest gratitude to those affected for their dedication and contributions,” Unity Director of PR Kelly Ekins said in a statement to The Verge. Ekins added that the layoffs will be spread across “all teams,” and a company spokesperson told Reuters that this round of layoffs will be complete by March, with additional internal changes coming thereafter.
The massive staffing cuts come after over 1,300 layoffs already implemented across the company in multiple waves since June 2022 (including those November Weta Digital cuts). Despite that, Unity’s statement to the SEC says these further cuts are necessary “to position [the company] for long-term and profitable growth.”
We’ll see about that growth, but it’s going to be hard to come by given the massive hit in goodwill and interest the company has taken for its core business in providing the Unity game engine. This doesn’t smell like some kind of positioning for growth at all, in fact. Instead, it sounds like classic shareholder value generation by massively trimming obligations such that stock prices rise in preparation for a sale. And, when you couple all the layoffs with reports of the state of Unity’s financial books, well, it drives the point home even further.
The company’s recent financial statements show why such a drastic change is even being considered. Despite annual revenues measured in the billions, Unity has struggled to show a profit in recent years, reporting net losses of $859 million for the 12 months ending in September 2023.
Notably, while the stock price jumped after the layoffs were announced, its price is still way, way down from just three years or so ago. Still, it’s trending back up significantly overall since Whitehurst came on board and started really driving the cost-trimming. Again, all the hallmarks of a play to make the company as attractive to buyers as possible.
And it seems as though the company is still banking on the fallout over the new pricing scheme to subside and for developers to jump back on board.
Even with the massively reduced headcount and new focus on the engine business, Unity isn’t expecting its corporate fortunes to turn around any time soon. In his November investor letter, Whitehurst said, “We expect the impact of this [runtime fee] business model change to have minimal benefit in 2024 and ramp from there as customers adopt our new releases.”
If the company really is trying to make a new go of it after all of this reputational self-immolation, all I can say is: good luck, you’re going to need it.
Unity has had a tough time of it recently. After the company decided to put in place a major pricing scheme shift for users of its game engine back in September, the company has since experienced all kinds of fallout over the changes, ousted its CEO, and has generally been vilified for not bothering to listen to its customers. Through it all, some developers previously using Unity have pledged to leave the platform in the present or future, leaving an opening for other game engines to ply their wares to these gamemakers.
Now, to be clear, a 2D game engine like GameMaker is probably not a full competitor to Unity, though 2D games are made using Unity as well. To that end, it’s notable that GameMaker is marketing its own pricing scheme to developers with some thinly veiled shade tossed at Unity. First, the pricing methodology, which stands in stark contrast to Unity’s.
If you’re making a game with GameMaker for release on consoles, you have to pay for an ongoing $80-per-month Enterprise package. If you’re trying to sell a game on other platforms (PC, mobile, browser), there’s a one-time $100 fee. If you’re just messing about or making something that’s not for sale, it’s free. And GameMaker’s asset bundles are free now, too. And some existing subscribers might now get a free commercial license. There is, notably, no mention of “run-time” or per-install fees.
That all reads as fairly reasonable from my perch. The big difference is the one at the end: the lack of per-user or per-install ongoing fees. The challenge with those in Unity’s plan was that it essentially punished publishers for having a successful game, particularly for games that had either very small dollar purchase prices or, worse, those that were provided for free with in-game purchases. Those could actually make a game being successful a money-losing proposition.
And the way GameMaker is marketing all of this vaguely calls this all out.
YoYo Games, creator of GameMaker, describes the moves as a way to “Say ‘Thank you,'” as well as a response to “other platforms making awkward moves with their pricing and terms.” Game Developer notes that this is the second pricing switch since Opera acquired the studio, after an initial move to make tinkering with the engine free, up until you publish.
For a long time, Unity was a darling in the games industry due to its previous pricing structure and the power of the engine itself. But I guess that if a hero lives long enough, they end up becoming a villain one way or the other.
It’s been a bad run of weeks lately for the company behind game engine Unity, stemming from a ham-fisted plan to drastically alter its pricing model for developers. When that plan was announced, which involved previously free tiers of the engine going away or being changed, per-install fees to developers that could essentially bankrupt a successful game company if it charged too little for games, and other concerns, the backlash from the dev community was swift and severe. Plenty of developers swore off the platform entirely, while others talked about how the trust between the company and the dev community had been shattered. Obviously when things go that poorly, heads are going to roll.
Earlier this week, Unity CEO John Riccitiello announced his resignation as CEO and Chairman effective immediately. Precisely how voluntary that resignation actually was is anyone’s guess, but we can at least be confident that Unity was hoping that the news would be well received by developers and that trust could start to be rebuilt between both sides of the equation. And, on the first of those points at least, it certainly worked, as developers reacted positively to the news.
“Long, long overdue,” Gloomwood developer Dillon Rogers wrote, summing up joyful reactions to Riccitiello’s departure from across the game development community.
Necrosoft Games’ Brandon Sheffield (Demonschool), who was one of the most outspoken critics of Unity’s initial install-fee plans, wrote on social media that he “truly did not think [Riccitiello’s departure] would happen.” The CEO’s apparent ouster “is the main thing Unity needed to do to start rebuilding trust, so… it’s a start,” Sheffield continued.
There’s more like that from other developers, but please note that that’s about as positive as it gets from the dev community. What you’re not seeing is any developers suggesting that Riccitiello’s exit fixes all of Unity’s problems, nor that the trust between it and the developers has been repaired. In fact, many developers are saying the exact opposite, pointing out that the CEO may be gone, but many of the influential voices that caused this whole fiasco still remain.
And sometimes that is put in quite colorful terms.
Other developers see Riccitiello leaving as positive but insufficient as long as the Unity board members who also approved these business changes are still at the company. “The position was completely untenable and I hope everyone in the c-suite and on the board who were advocating for install fees have the wherewithal and grace to step down,” indie developer Leena van Deventer (Dead Static Drive) wrote. “There’s no path forward without removing everyone who had anything to do with it.”
“John Riccitiello sucks ass, but it’s also worth noting that Unity went public and now has a board of stakeholders who also seem to suck ass,” indie developer Dan Pearce (10 Second Ninja X) wrote. “Unless you see meaningful, long-term effort to nurture developers and rebuild trust, then it’s still worth keeping one eye on the door.”
Everyone “sucking ass” is not exactly an indicator that the door is open to rebuilding trust unless more changes are made. That being said, it was time for the CEO to go, so this is at least one good baby step in the direction of Unity making it as a platform. But it’s also the easiest of the steps to take.
Now the real work begins, with the platform having to demonstrate through actions, not words, that it will actually listen to its own customers.
The fallout from game engine Unity’s decision to try to cram a completely new and different pricing structure down the throats of game developers continues. Originally announced in mid-September, Unity took a bunch of its tiered structures of its offerings and suddenly instituted per-install fees, along with a bunch of other fee structures and requirements for its lower-level tiers that never had these pricing models. The backlash from developers and the public at large was so overwhelmingly one-sided and swift that the company then backtracked, making a bunch of noise about how it will listen better and learn from this fiasco. The backtracking did make a bunch of changes to address the anger from its initial announcement, including:
The newly amended pricing structure no longer applies to games already made using the engine, ending questions as to how any of this could be legal
The Personal tier of Unity will once again be free of any fees until a game reaches $200k in annual revenue and will no longer be required to show a “Made With Unity” screen on boot
Per-use fees will only kick in for the other tiers once a game reaches $1 million in revenue over a calendar year and 1 million in initial purchases/installations of a game. Those per-use fees are also capped at 2.5% of gross revenue for a game once it meets those requirements
Those per-use fees also are somewhat lower than the initial plan
You can see the table below provided by Unity for the details mentioned above:
Is this better? Yes! And some developers have even come back with positive comments on the new plan. Others, not so much.
“Unity fixed all the major issues (except trust), so it’s a possibility to use again in the future,” indie developer Radiangames wrote. “Uninstalling Godot and Unreal and getting back to work on Instruments.”
Others were less forgiving. “Unity’s updated policy can be classified as the textbook definition of, ‘We didn’t actually hear you, and we don’t care what you wanted,'” Cerulean and Drunk Robot Games engineer RedVonix wrote on social media. “We’ll never ship a Unity game of our own again…” they added.
That “except trust” parenthetical is doing a lot of work, because that’s the entire damned problem. If Unity came out with this plan initially, and had actually worked constructively with its customers, the blow up about this almost certainly would have been far more muffled. But trust is one of those things that takes forever to build and only a moment to destroy.
Along those lines, we’ve learned subsequently both that some community groups that have sprung up around Unity are disbanding out of disgust for the company’s actions and that plenty of developers aren’t coming back to try this second bite at the pricing model apple that Unity wants to offer them.
As to the first, the oldest Unity dev group that exists, Boston Unity Group (BUG) has decided to call it quits, putting its reasons why in no uncertain terms.
“Over the past few years, Unity has unfortunately shifted its focus away from the games industry and away from supporting developer communities,” the group leadership wrote in a departure note. “Following the IPO, the company has seemingly put profit over all else, with several acquisitions and layoffs of core personnel. Many key systems that developers need are still left in a confusing and often incomplete state, with the messaging that advertising and revenue matter more to Unity than the functionality game developers care about.”
BUG says the install-fee terms Unity first announced earlier this month were “unthinkably hostile” to users and that even the “new concessions” in an updated pricing model offered late last week “disproportionately affect the success of indie studios in our community.” But it’s the fact that such “resounding, unequivocal condemnation from the games industry” was necessary to get those changes in the first place that has really shaken the community to its core.
“We’ve seen how easily and flippantly an executive-led business decision can risk bankrupting the studios we’ve worked so hard to build, threaten our livelihoods as professionals, and challenge the longevity of our industry,” BUG wrote. “The Unity of today isn’t the same company that it was when the group was founded, and the trust we used to have in the company has been completely eroded.”
Ouch. That’s about as complete a shellacking as you’re going to get from what, and I cannot stress this enough, is a dedicated group of Unity’s fans and customers. And while these organically created dev groups quitting on Unity certainly is bad enough, there are plenty of developers out there chiming in on these changes, essentially stating that the trust has been broken and there isn’t a chance in hell that they’re coming back on board the Unity train.
Vampire Survivors developer Poncle, for instance, gave a succinct “lol no thank you” when asked during a Reddit AMA over the weekend if their next game/sequel would again use the Unity Engine. “Even if Unity were to walk back entirely on their decisions, I don’t think it would be wise to trust them while they are under the current leadership,” Poncle added later in the AMA.
“Basically, nothing has changed to stop Unity from doing this again in the future,” InnerSloth (Among Us) developer Tony Coculuzzi wrote on social media Friday afternoon. “The ghouls are still in charge, and they’re thinking up ways to make up for this hit on projected revenue as we speak… Unity leadership still can’t be trusted to not fuck us harder in the future.”
Other developers chimed in that they did have discussions with Unity about the new pricing structure… and were summarily ignored. In those cases, those developers appeared to be solidly in the camp of “Fool me once shame on you…”.
There are certain things that are just really difficult to walk back. And breaking the trust of your own fans and customers, where loyalty is so key to the business, is one of them. The picture Unity painted for its customers is one where it simply does not care and is now pretending to, only because it landed itself in hot water.
Hoo-boy, if you pay even mild attention to the video game industry, you’re already going to be aware of the complete shitshow famed game-engine Unity has on its hands right now. By way of throat-clearing, you need to know how Unity got to where it is to understand what’s happening now. The game engine has enjoyed a successful rise in adoption and popularity in no small part because developers, regardless of size, could produce games based on subscription tiers without having to worry about or project just how successful those games would be. In fact, CEO John Riccitiello made some explicit comments as to the business model and why it was so great for smaller developers.
“There’s no royalties, no fucking around,” Unity CEO John Riccitiello memorably told GamesIndustry.biz when rolling out the free Personal tier in 2015. “We’re not nickel-and-diming people, and we’re not charging them a royalty. When we say it’s free, it’s free.”
This was a major differentiator from other game engines, such as Unreal, where subscriptions weren’t a thing at all, but royalties for games were. It was a major draw for Unity, particularly for, but not only for, smaller developers.
Well, that all changed recently. Unity unveiled its new business model and pricing plans and they are designed to milk money from developers, particularly smaller developers using the lower-tiered subscriptions for the engine, not for every copy of the game sold, like a royalty, but for every unique install.
The newly introduced Unity Runtime Fee—which will go into effect on January 1, 2024—will impose different per-install costs based on the company’s different subscription tiers. Those on the Unity Personal tier (which includes free basic Editor access) will be charged $0.20 per install after an individual game reaches $200,000 in annual revenue and 200,000 lifetime installs.
Users of Unity’s Pro and Enterprise tiers (which charge a separate annual subscription for access to a more full-featured Unity Editor) will pay slightly smaller per-install fees starting at $0.125 to $0.15 after a game reaches $1 million in annual revenue and 1 million total installs. The per-install fees for the paid subscription tiers are also subject to “volume discounts” for heavily installed games, going down as low as $0.01 per install for games that are installed 1 million times per month.
All of the sudden, once the threshholds are met, developers are essentially being punished every time a game is installed by being hit with a non-royalty royalty. Oh, and the pricing changes are retroactive, meaning that if you built and sold a game based on the old pricing model, it gets ported into this new model. It’s actually worse than a royalty, as several game developers have explained.
Beyond anger over retroactive changes, many developers also see the potential for player abuse and mischief in a world of “per-install” fees. Groups of gamers who are already liable to “review bomb” games they don’t like could theoretically start “install bombing” Unity games by repeatedly installing and deleting a game, costing the developer money with each new install. Pirated copies could also be included in the fee calculations, imposing a direct cost for illicit downloads that don’t provide any revenue for the developer.
Unity initially told Axios’ Stephen Totilo that the “per-install” fee applies even if a single user deleted and re-installed a game or installed it on two devices. A few hours later, though, Totilo reported that Unity had “regrouped” and decided to only charge developers for a user’s initial installation of a game on a single device (but an initial installation on a secondary device—such as a Steam Deck—would still count as a second install).
Sheffield points out that a success story like Vampire Survivors—which leveraged a 99-cent price to help achieve viral liftoff—would be much harder to pull off under the new Unity structure.
“Imagine releasing a game for 99 cents under the personal plan, where Steam takes 30% off the top for their platform fee, and then Unity takes 20 cents per install, and now you’re making a maximum of 46 cents on the dollar,” Sheffield wrote. “As a developer who starts a game under the personal plan, because you’re not sure how well it’ll do, you’re punished, astoundingly so, for being a breakout success.”
When it comes to all of this being retroactive to already released games, Unity may have a problem on its hands. While the company is claiming that it’s Terms of Service allow it to change the fee structure however it wants at any time, the company said the exact opposite, publicly, a few years ago.
That change in developer expectations is especially galling in light of a 2019 Unity blog post in which the company seemingly pledged that any changes to its Terms of Service would not apply retroactively to games made on older versions of the engine. “When you obtain a version of Unity and don’t upgrade your project, we think you should be able to stick to that version of the TOS,” the company wrote at the time.
Developers are pissed and it’s not difficult to understand why that would be. This is throwing every developer that built their games on Unity into chaos, wondering what fees they will be hit with, when they will be hit with them, with many of them either praying there aren’t more sales of their games or actively telling the public not to by them.
Some developers are going so far as to urge players not to install their games in light of the new fee. “Everyone buy Venba. But don’t install it,” developer Abhi wrote of his delightful cooking-based narrative game. “Come to my house and you can play it on my pc. I’ll serve Idli or Dosa for lunch.”
And angry developers and a completely broken system of trust isn’t the only trouble Unity is having as a result of all of this. It hasn’t escaped the industry’s attention that several Unity executives had the foresight to sell off a not-insignificant amount of the company’s stock just before this new pricing plan was announced.
According to Guru Focus, Unity CEO John Riccitiello, one of the highest-paid bosses in gaming, sold 2,000 Unity shares on September 6, a week prior to its September 12 announcement. Guru Focus notes that this follows a trend, reporting that Riccitiello has sold a total of 50,610 shares this year, and purchased none.
Riccitiello isn’t the only executive at Unity to sell a bunch of stock the week before the company’s Runtime Fee announcement. According to Unity’s market activity on the Nasdaq, several other Unity board members sold significant numbers of shares leading up to its “plan pricing and packaging updates.” Chief among them being Tomer Bar-Zeev, Unity’s president of growth, who sold 37,500 shares on September 1 for roughly $1,406,250, and board director Shlomo Dovrat, who sold 68,454 shares on August 30 for around $2,576,608.
Is any of this illegal? I have no idea, but I sure as shit wouldn’t be surprised to read in the coming days that the SEC would begin looking into all of this trade activity to see if any of it was undertaken in coordination with the business model change. And even if it’s not illegal, it sure is an awful look for the company. The feedback on the new pricing plan has been almost universally and angrily derided by the company’s customers and just before that predictably happened a bunch of execs sold off their stock. Stock that, as it happens, had been up nearly 40% year to date, only to suffer a 7% dip this past week. How convenient.
And that is all separate from Unity having to close two of its offices this week after threats were made to employee safety by what appears to be an out-of-state worker. Did this have anything to do with the new pricing plan? Who knows, but once again, the timing is convenient.
At the very least, Unity is having itself a very bad week. And the reasons for that are obvious. Surprise announcements of new pricing models that completely upend its customer base, the strong-arming pointing to a ToS to force older games into the new model with no heads up to previous customers that it was coming, all culminating in this breaking the promises the CEO previously made while that same CEO and other executives are making bank on stock sales leading up the announcement, and it’s obvious why developers are saying that there is zero trust in Unity moving forward.
Garry Newman, creator of Garry’s Mod and the Unity-based Rust, also announced Wednesday that “Rust 2 definitely won’t be a Unity game,” because “Unity has shown its power. We can see what they can and are willing to do. You can’t un-ring that bell… The trust is gone.”
And it’s unlikely to ever be regained. Bang up job all around.
There is a very strong divergence in the games industry. On one hand we have developers and publishers who look at piracy as a cancer that needs to be cut out and on the other we have those who look at it as an opportunity. We illustrated this point recently with a mock debate between Ubisoft and Valve. Edge brings news of yet another player in the games industry who has joined with Valve in treating pirates as underserved customers rather than thieves.
John Goodale, Unity’s general manager of Asia, told Edge that Unity has seen a 258.7% growth in revenue in Asia over the last year. He puts much of this growth down to piracy of the Unity3D development platform.
How can it possibly make money from people “stealing” its products? It does so by selling additional content to the users whether legit or not.
It’s not talked about often, but we have a product called Asset Server that allows large teams to share assets more effectively, and according to the sales reports that I get we sell far more Asset Server in Asia than we do in the west.
As far as I can tell, Unity is looking at those who pirate its software in much the same way it looks at those who download the free version of the software, as customers. Goodale explains the flexibility he has been given in reaching out to the Asian market is the primary driver of this success:
Throughout my 25 years of doing business in Asia, I’ve seen very few companies be so dedicated to that region, or give me the flexibility and tools that I need to be successful. And as a result, I am just having way too much fun!
I really hope this line of thinking grows and penetrates the games industry even deeper. It is something I have argued and debated multiple times on games industry news sites and blogs. There are many people who feel the same way and many more who are dead set on treating piracy as a criminal offense. I don’t blame them for the way the feel as it is their livelihood at stake. Yet, I can’t understand their desire to hold onto an ideal that in the long run will fail — especially when there are so many examples, like this one, of a company discovering it can make more money by adapting, rather than by trying to stop infringement.
