![]() Forcing Profitabilityīut alas, those euphoric early days soon came to a quick close. Unity’s high stock price served as the ultimate tool to help it acquire other companies as it could use its richly priced equity as cheap capital to get deals done. That major acquisition was followed by Speedtree, a game development tool, as well as a few others. We've yet to see the full vision for Weta unfold within Unity. That would be a game-changer.Īdditionally, the strength of Weta could likewise be incorporated into Unity’s game engine which might allow it to compete more directly with Epic’s Unreal Engine. If it were that easy well, then anyone could run their own small VFX shop and sell directly to the major studios. Imagine if creating VFX for a major film was as easy as creating a game in Unity. At the time this acquisition excited me greatly. In 2021 Unity acquired Weta Digital, the VFX tool created by Peter Jackson and his team to deliver state-of-the-art visuals for some of the most demanding projects and applications. The IPO EraĬoming to the market near the peak of the unprofitable tech bubble of 2020/2021, Unity continued to focus on revenue growth as investors rewarded them with a rich valuation regardless of profitability.ĭuring this time frame, the game engine grew more powerful and added more users but some troubling signs began to present themselves, notably, a string of rapid acquisitions. Revenue grew rapidly, but the philosophy began to shift too. Soon after things began to rapidly change at the company. It was late during this pre-IPO stage (2014) when current CEO John Riccitiello took the reigns from Unity's founder, David Helgason. ![]() The company grew with funds provided by private equity and long-term-oriented growth investors who focused on revenue growth above all. ![]() As studios focused on storytelling and gameplay the pooled resources at Unity made all parties more efficient. ![]() Unity grew based on the simple premise that a shared game engine between development studios would ultimately result in significantly cheaper game development. Originally incepted as a tool for the development of games on Mac OS, Unity’s founder, and a small team began to improve its capabilities, iterating year after year to make game development easier and easier. We need to understand how Unity got into this pickle. To understand the current environment we must first examine the past. How did we get here? And how has, what must have seemed like to investors, a standard price increase, resulted in such a severe, and likely brand-damaging, chain of events?Īnd importantly for investors, can Unity even recover from here? Some context I am provisionally optimistic about the progress. No other way to put it: a new business model for Unity was announced in a way that was hard to understand, but it also missed a bunch of important “corner” cases, and in central ways ended up as the opposite of what it was supposed to be. ![]() Over the course of the past month, we saw Unity ( NYSE: U) announce a radically different approach to billing its customers (game developers), followed by a harsh and stern backlash among game devs, then a swift walk-back coupled with an apology issued by the founder of Unity, David Helgason. Software pricing, something that is normally a mundane topic, has quickly become a flash point in the game development community. ![]()
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