Such a misleading headline, "despite... ...reduced losses".
The Unity Corporation is a machine that literally vaporizes money.
They need to find a way to profitability. Reduced losses aren't good enough. Layoffs should not be shocking. This is not an example of a company making tons of $'s and then laying off people.
Anyone who wants to use Unity long term should be supportive of them achieving profitability, because the current position is not sustainable.
Unity is a good "poster boy" for the unprofitable, bloated, economic value destroying tech company that was created in a ZIRP environment.
Many of these companies should start going bankrupt before too long as their debt hits their maturity dates and their interest expenses balloon.
And to try to survive they will have to aggressively cut R&D and SG&A. And as everyone cuts those budgets it will impact the revenues of who they do business with (and Unity's customers will similarly be doing the same thing, with fewer developers needing licenses and fewer games being sold due to less disposable income in the consumers).
The FAANG layoffs that we had over the past year or so weren't the real tech recession, that's still to come.
Between this and their license change fiasco it seems like they're trying to speedrun their way to "company most hated by developers". That said they're apparently making a lot of money doing it, so what do I know.
According to the article, they have half a billion dollars in revenue (with currently $154 millon in losses), and that seems plenty to run a company like Unity. Lay-offs are rough, but looking at the numbers, they make sense in a cold-hearted capitalist sort-of way if the goal is to reach profitability. Certainly much more so than the runtime fee thing.
The charge per install fiasco seemed like a last ditch effort. I have no doubt that Unity has been having financial issues for a while, and they were looking for a way to bump the needle.
Based on the leaks in the Ars article, it seems like their real focus is to use Unity and Unity changes to bolster the ironSource ads side of things, and they were/are? willing to slash and burn a lot of the core Unity engine business to do so.
I thought the backlash was a bit greedy by the devs? Unity is a great tool that you don't really pay for compared to foundational software in other verticals? It was like installs over 1 million (so over 1 million in revenue), which functionally netted out to about 10k - 20k per company. That seems... OK?
The major problem was the retroactive aspect and the very short amount of notice.
Part of choosing your engine is selecting the appropriate licensing costs for your games business model. After spending 2+ years working on your product, the business model completely changes, without the ability to opt out. It also affected already released games, and wasn't even a rev share, it would cost money just for downloads.
This also occured 4 years after Unity publically stated that developers should be able to stay on the version of terms of service they already agreed to.
If a company wants to have that business model, go for it - but don't bait and switch, don't go against your word, or else you've torched all trust between you and your customers
The licensing model as originally announced had three problems:
1. The fees were to be retroactively applied even to games that were already released and may have ended development. That alone would have been a dealbreaker for trust, but...
2. Unity was incorporating a price-per-sale fee model when its original sales pitch was all about how it was never going to go to such a model.
3. The changes were interpreted in the greediest way possible. It's not price-per-sale, it's price-per-install (so if I buy it once and install it on all three of my computers, it's 3 times the price to the developer), etc. And when the inevitable backlash of "are you really this colossally stupid?" came back, the company doubled and tripled down on it.
After the immense backlash, Unity did eventually backtrack to a more reasonable and typical price-per-sale model, but not without colossal and perhaps fatal damage to their reputation.
1. It retroactively applied to existing licenses. So was a bait and switch to many
2. Installs are a terrible metric for revenue. A lot of Unity based games are F2P, where installs would then turn into negative revenue.
3. They didn’t outline any of the edge cases of users getting refunds. That would allow a user to be a negative revenue suddenly.
Their change as it was first announced was really out of touch with their own community of developers, and failed to even encompass the most basic of real world details that a developer may face.
At the end of the day, the model itself isn’t really bad, but all the implementation details, or lack of, were.
Internal Unity staff had raised all these issues with leadership and been ignored.
Was it? Where was this idea that you owe library developers a % of your full revenue (vs. licensing costs) automatically come from? That sounds exceptionally greedy, especially since it wasn't negotiated with individual developers like most of similar contracts.
Most devs I am aware of were horrified by the "Fuck you, pay me" nature of the new terms. Unity would tell you how many "installs" they claimed to have seen, and you had zero way to interrogate their data. It also made it clear that the Unity runtime was probably phoning home more than most devs realized.
So you're a small time indie who agreed to the terms to "pay your fair share", Unity says you owe them $100k, and you know that doesn't make sense, but can you prove that in court? Can you pay for that court case in the first place?
Been a Unity developer for years. Was shocked and dismayed by the runtime fee announcement debacle. Was pleased at the result with JR leaving. The new CEO seems okay so far. I'd initially though of him as a hatchet man who will let the next CEO come in with clean hands, but maybe not. He seems to be talking to developers and listening.
The company NEEDS to reduce its headcount and its monte carlo solver approach to growth and profitability. They have not made meaningful progress on the Unity Editor in several years. Most pros use the old systems and those that bet their company on the new engine systems pay a heavy price. The amount and variety of debt that has piled up is staggering. They have to start servicing it.
So, the company will look like it is bleeding but I honestly think it's about time. It needs an intervention to find a way forward.
On this news I bought Unity (U) stock for the first time today. It was a token amount because I want to get insider comms, but I have never considered buying it at all before.
I've been finding it challenging to get a new job this year.. it's been painful with all the layoffs and increased competition. Jobs coming through now are reduced on salary too :(
Yup, and I find it incredible that seemingly very intelligent people make absolutely insane decisions like this. Is this short-term greed that makes MBAs do dumb stuff?
I don’t get why everyone is so skeptical of this. It makes sense to me based on my experience. Everywhere I’ve worked has had an obvious bottom 10% that was low or negative productivity.
I think stack ranking is bad, but accelerating un-regrettable attrition is a no brainer if you want high performing teams.
It says they made a loss of $125 million this past quarter. That would have been fine a couple of years ago, when interest was zero and cash basically free. This is not ok in 2023 (and actually most points in history).
Readit News
The Unity Corporation is a machine that literally vaporizes money.
They need to find a way to profitability. Reduced losses aren't good enough. Layoffs should not be shocking. This is not an example of a company making tons of $'s and then laying off people.
Anyone who wants to use Unity long term should be supportive of them achieving profitability, because the current position is not sustainable.
Many of these companies should start going bankrupt before too long as their debt hits their maturity dates and their interest expenses balloon.
And to try to survive they will have to aggressively cut R&D and SG&A. And as everyone cuts those budgets it will impact the revenues of who they do business with (and Unity's customers will similarly be doing the same thing, with fewer developers needing licenses and fewer games being sold due to less disposable income in the consumers).
The FAANG layoffs that we had over the past year or so weren't the real tech recession, that's still to come.
Deleted Comment
No. Unity is not making money, they are losing money. That's the problem.
"Reduced losses" means they are losing less money than they were. That's still losing money.
Unity was losing money before the licensing fiasco. It's still losing money.
The title frames it as if the layoffs were unnecessary. The title is technically true but the way it's worded is manipulative.
1 - Unity has an unprofitable Business model
2 - Unity chose their business model
3 - Changing the business model will, as we have now seen, require time.
This is the startup trouble I see in that all the promises of the previous decade are void in the fave of financial hardship.
Part of choosing your engine is selecting the appropriate licensing costs for your games business model. After spending 2+ years working on your product, the business model completely changes, without the ability to opt out. It also affected already released games, and wasn't even a rev share, it would cost money just for downloads.
This also occured 4 years after Unity publically stated that developers should be able to stay on the version of terms of service they already agreed to.
If a company wants to have that business model, go for it - but don't bait and switch, don't go against your word, or else you've torched all trust between you and your customers
1. The fees were to be retroactively applied even to games that were already released and may have ended development. That alone would have been a dealbreaker for trust, but...
2. Unity was incorporating a price-per-sale fee model when its original sales pitch was all about how it was never going to go to such a model.
3. The changes were interpreted in the greediest way possible. It's not price-per-sale, it's price-per-install (so if I buy it once and install it on all three of my computers, it's 3 times the price to the developer), etc. And when the inevitable backlash of "are you really this colossally stupid?" came back, the company doubled and tripled down on it.
After the immense backlash, Unity did eventually backtrack to a more reasonable and typical price-per-sale model, but not without colossal and perhaps fatal damage to their reputation.
1. It retroactively applied to existing licenses. So was a bait and switch to many
2. Installs are a terrible metric for revenue. A lot of Unity based games are F2P, where installs would then turn into negative revenue.
3. They didn’t outline any of the edge cases of users getting refunds. That would allow a user to be a negative revenue suddenly.
Their change as it was first announced was really out of touch with their own community of developers, and failed to even encompass the most basic of real world details that a developer may face.
At the end of the day, the model itself isn’t really bad, but all the implementation details, or lack of, were.
Internal Unity staff had raised all these issues with leadership and been ignored.
So you're a small time indie who agreed to the terms to "pay your fair share", Unity says you owe them $100k, and you know that doesn't make sense, but can you prove that in court? Can you pay for that court case in the first place?
Deleted Comment
The company NEEDS to reduce its headcount and its monte carlo solver approach to growth and profitability. They have not made meaningful progress on the Unity Editor in several years. Most pros use the old systems and those that bet their company on the new engine systems pay a heavy price. The amount and variety of debt that has piled up is staggering. They have to start servicing it.
So, the company will look like it is bleeding but I honestly think it's about time. It needs an intervention to find a way forward.
On this news I bought Unity (U) stock for the first time today. It was a token amount because I want to get insider comms, but I have never considered buying it at all before.
I would even add that companies willing to take distant remote has drastically reduced.
It is called the vitality curve.
They believe that in a given workforce, 10% are non-producers and have to be put in a PIP or laid off.
https://en.m.wikipedia.org/wiki/Vitality_curve
These layoffs usually happen at the same time during the year.
I'd start with that "very intelligent" one.
I think stack ranking is bad, but accelerating un-regrettable attrition is a no brainer if you want high performing teams.
Deleted Comment
Dead Comment