Per the CEO in today’s meeting:
“This is a ploy to gather more people to use Level Play [advertising network]. The mediation provider [advertising network] makes a cut off every ad, and right now a lot of people are on AppLovin Max [not Unity’s], so a big part of this is they want people to switch to Level Play, and by doing that they’ll make way more than the install pricing they’re suggesting. It’s too early to panic, but it is a big change”
If that sounds like a ramble, it’s because it was, but the tl;dr is it seems Unity is giving a secret pass to companies that switch to use Unity’s advertising solution.
Also some quick fun facts:
- Unity was never profitable
- Unity gave up competing with Unreal over a year ago
- Godot is a free and open source engine that competes with Unity professionally
- The trash App Store/Play Store games spy on you extensively, although Apple and Google have significantly limited their spying ability over the last couple years (i.e we used to open your camera in the background, can’t do that anymore)
Update:
CEO is in talks with some Unity folks. The impression is “this decision came from very high up in Unity” from an exec who “had no idea how bad of an idea it was”. We’re expecting a public revision shortly (next couple days)
Unity the game engine wasn’t profitable or Unity the company? I cannot believe that Unity the company wasn’t raking in tons of money from their asset store.
It was raking in tons of money, especially since 2020 (772 million for that year), but they somehow were spending way more than they were earning for most of their existence. Beats me how/where that money was being spent. https://investors.unity.com/financials/quarterly-results/default.aspx
It seems Unreal that unity is in the red. They create a software platform and asset store, right? That should effectively print money; it’s not like there’s a manufacturing cost and profit margin to selling more copies.
If you assume the average employee makes $100,000, which is almost certainly an undershot given that they’re a tech company with a lot of very talented engineers, then their labor costs in salary alone are around $770,000,000, without factoring in things like infrastructure costs, land, health care, etc etc. Sure, they don’t have direct manufacturing costs after engineering, but that’s a lot of revenue needed just to cover direct labor costs.
From just a little perusing, it seems like they’re investing heavily into R&D, and they also have quite a lot of debt. This isn’t necessarily a bad thing, or at least not misaligned with their goals. Especially in tech, the aim often isn’t to become directly profitable as quickly as possible, but rather to invest every last penny you can get your hands on in order to grow as much as you can, and then when you hit ceiling, pivot to stable profitability, which will be at a much higher level than if you’d been forced to instead focus on slower growth and immediate profit.
That’s not to say that this is a good thing or that it doesn’t have negative consequences, only that Unity probably doesn’t care about being in the red; they care about lots and lots of people using their engine.
How in the name of fuck does Unity have 7700 employees?!
That would be 7k developers.
How can that many developers work on a single product? AFAIK, they can’t.
Why shouldn’t it? It’s not only a game engine, Unity is also trying to place their technology in the movie industry and in the manufacturing industry. And they are also operating an ad service, which is also requiring sales people.
deleted by creator
The same person who made the decision to charge for installs or force an ad service into games is running the company. Sound decisions have never been their strong suit.
CEO salaries is my bet.
From a quick search, John Riccitiello received about 11 million in total compensation in 2022. In comparison:
We need to call buybacks what they are: a method of siphoning value from where it was created and is useful and into the hands of the already wealthy.
lmao i found the source for that quote and right at the very top of this share holder letter it contradicts the “never been profitable” lie by plainly saying “first profitable quarter”. https://s26.q4cdn.com/977690160/files/doc_financials/2022/q4/4Q-2022-Shareholder-Letter_FINAL.pdf
Good point fr, I forgot about buybacks.
How are buybacks functionally different in that regard than dividends, which have always existed?
Apple, for instance, paid out $14 billion in dividends in 2020. The only difference between paying that directly in dividends as opposed inflating the value of stock through buybacks is that dividends are directly taxed while stocks won’t be until they’re sold.
Sure, it enables a bit of tax tomfoolery (which also benefits anyone with a 401k, I might add), but the simple matter that companies return value to shareholders isn’t new, and stock buybacks don’t represent some meaningfully different form of this.
I’m going to assert a few things up front:
Since you are reading a lot into my comment I’m going to read a lot into yours. Why are things different now? The rules of the (United States) game changed, and checks against this behavior have been nullified. Value creation is a means to an end: acquire as much power as possible, and flex that to siphon value off for your shareholders.
That’s what Unity is doing. They are flexing their power to extract value from its customers. If you use Unity, what are you going to do? Unreal is a different beast with a different target audience. Godot is untested, and I don’t blame anyone that hesitates hitching themselves to a noncommercial open source project. Porting a game to a different engine may not even be realistic anyway.
So everyone will stomp their feet and complain and mostly keep on using Unity. Some day they’ll push too hard and that’ll be the end of them, but what do the shareholders care? They got paid. Onto the next one.
The 11 million is irritating given how it’s more than most will make in a lifetime being paid to someone who is incompetent. The 2.5 billion is why Unity is forced to resort to destructive behaviors to stay afloat. The incentives for companies to act this, and lack of checks against it, are why the economy is broken.
Dividends only work if the company has profited. In Unity’s case, if you bought shares in 2017 and waited for dividends, you’d only get them last year.
Buybacks are basically paying for investor “promises”, “I know you’re not profitable, but I’ll buy 1 million shares today if you promise to buy them back 2 years from now”. Works great with companies that “need” to operate in the red for several consecutive years until they’re actually profitable, like Twitter or Uber
It’s called stealing
Not to simp for the corpos, but this is usually a bad bet. I crunched some numbers in a recent discussion about Lowe’s, and if you simply eliminated the CEO’s compensation, each employee could get a raise of $0.02 per hour, or about $50 a year. Exec compensation, while obviously extremely high compared to individual rank-and-file employees, is still generally a pretty small portion of expenses, even just labor expenses, because there as so many more standard employees.
Even if your calculations are correct (did you include bonuses?), one CEO that may or may not have been cherry picked, doesn’t represent all CEOs. If you spend all your money on CEO salaries, bonuses, buildings, etc., it looks like you’re not making any money to the tax man.
Lowe’s was being discussed as a company that was particularly bad for paying its workers poor wages. I don’t think the math really changes much no matter where you go. Feel free to name whatever company you want though and I’ll gladly crunch the numbers. I did McDonald’s a while back, and while I don’t remember the exact figures, you could eliminate most of the exec team without materially affecting worker pay.
I don’t think it materially affects things, but you’re moving the goal posts here. Buildings are a legitimate business expense. Lots of employees get paid bonuses.
To throw another company at you, the CEO of Ford had a total comp of $20,996,146 in 2022. Ford has somewhere around 170,000 employees. Liquidating him (which is a bit questionable, given that a lot of CEO compensation is in company stock, and part of that stocks’ value comes from the fact that the CEO holds it) and distributing that value evenly to all employees gives every employee a grand raise of $123 a year, or about $10 a month. So, in exchange for losing the CEO, everyone gets to go to Starbucks twice a month.
Sure, there are more execs than the CEO, but there aren’t that many, and they’ll naturally be paid less as well. The fact of the matter is that exec pay really isn’t a huge portion of the company’s overall labor costs.
It seems absurd to me that even the game engine isn’t profitable.
The end of the free money is making quite a lot of incompetence very public.