Fallout from New Pricing System is Only One of Unity’s Several Problems
Unity, the company behind the popular Unity video game engine, has recently announced a new pricing scheme that will charge developers on a per-install basis for games that meet specific download and revenue thresholds. The news has sparked controversy within the game developer community, negatively impacting the company’s shares.
While Unity’s shares have since trimmed losses, gaining around 4% in the pre-market trading session, the company still faces other issues — including high debt and growing losses.
How Does Unity’s New Pricing Scheme Work?
Under the new model, Unity will charge developers a Unity Runtime Fee on all games built with its video game engine, provided they have generated a minimum revenue within the last year and achieved a minimum lifetime install count. The fees are calculated based on the number of installs above the threshold, with developers being charged up to $0.20 per install.
“We chose this because each time a game is downloaded, the Unity Runtime is also installed,” Unity wrote in its blog post. “Also we believe that an initial install-based fee allows creators to keep the ongoing financial gains from player engagement, unlike a revenue share.”
While this may seem small, the implications could be significant for many game studios. Developers have voiced concern that they could be burdened with substantial fees without the revenue to cover them with the new pricing model.
They argued that Unity’s pricing model fails to consider why a game might be installed without being purchased. They believe developers should not be charged for installations that do not translate into revenue.
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Developers Oppose Unity’s New Pricing Model
Many developers and publishers have taken to social media to express their anger and call on Unity to reverse its decision. Some developers have even suggested abandoning Unity as a game engine for future titles if the changes are not rolled back.
“This decision puts studios in a position where we might not be able to justify using Unity for our future titles,” read a post on X (formerly Twitter) from developer Aggro Crab. “If these changes aren’t rolled back, we’ll be heavily considering abandoning our Unity expertise.”
The potential impact on small developer teams could be even more severe. Developers have widely used Unity to create numerous successful games, including popular titles like Genshin Impact, Among Us, Cuphead, and Beat Saber.
In response to the backlash, Unity has attempted to clarify certain aspects of its new pricing model. It stated that it would implement a system to flag malicious activity and exempt demos or game keys given away in charity bundles from counting as installations.
However, installing a game on multiple devices would still be subject to fees. Unity also clarified that subscription services like Microsoft’s would be charged instead of individual developers for games included in those services.
Despite these clarifications, many developers remain unsatisfied and feel that the damage to trust has already been done. They argue that Unity’s decision was made without proper consultation or warning, causing frustration and disappointment.
“Let me be clear.. the cost isn’t a big issue to us,” wrote Garry Newman, founder of Rust developer Facepunch Studios. “If everything worked out, the tracking was flawless and it was 10p per sale, no biggy really. If that’s what it costs, then that’s what it costs. But that’s not why we’re furious.”
“It hurts because we didn’t agree to this. We used the engine because you pay up front and then ship your product. We weren’t told this was going to happen. We weren’t warned. We weren’t consulted. We have spent 10 years making Rust on Unity’s engine. We’ve paid them every year. And now they changed the rules.”
Unity’s Stock Tumbles on the News
Unity’s stock prices also suffered following the announcement. Unity shares dropped 8% to an intraday low of $35.83 in Wednesday trading. The company’s stock lost another 3% on Thursday.
Meanwhile, it has been reported that several Unity executives sold substantial amounts of the company’s stock in the weeks leading up to the controversial decision. According to Guru Focus, Unity CEO John Riccitiello sold 2,000 Unity shares on September 6, a week before the announcement.
Unity’s market activity on the Nasdaq shows several other board members also sold significant numbers of shares leading up to the change. More specifically, Tomer Bar-Zeev, Unity’s president of growth, sold 37,500 shares on September 1 for roughly $1,406,250, and board director Shlomo Dovrat, sold 68,454 shares on August 30 for around $2,576,608.
It is worth noting that the challenges Unity is currently facing go beyond its pricing model. The company has been grappling with a mountain of debt, with $2.97 billion in total debt on the balance sheet as of June this year. Unity has also been facing exorbitant losses. In Q2 alone, the company posted a net loss of $193 million on $533 million in revenue.
Do you think Unity stock is poised to extend losses as developer dissatisfaction grows? Let us know in the comments below.