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This blog post points out something really interesting: > Less than half their revenue comes from game engines. Over half comes from advertising. That is to s

This blog post points out something really interesting: > Less than half their revenue comes from game engines. Over half comes from advertising. That is to say, Unity makes most of its money from people PLAYING games made with Unity. The sales to the developers are secondary. Unity had to change their model, and that meant either making the engine cheaper to acquire more games to get more ads, or it meant raising the price of the engine at the likely cost of ads, and for some reason they chose option 2, which seems like a dumb idea. The best explanation for that I can think of is that almost all of the advertising money should be coming from smaller mobile games, and so this is a move to try and make more money from the desktop games and the mobile games that don't use Unity's ad networks, which probably look like big, untapped sources of income to dumber product managers. But now imagine that they did the opposite: they raise the maximum revenue requirements and "must show splash screen" requirements and generally make Unity more available for less. Engine revenue goes down a bit, but ad revenue goes up, which probably works out even better in the long run, but also solidifies the user base, garners good will, and generally leaves everybody feeling great about Unity.

foota 3y ago
I don't think there's anyone not using unity today that would use it tomorrow because of a pricing change (well, at least, for values of today and tomorrow from last week)
- jay_kyburz 3y ago
  I wouldn't even care if they switched to Epics model and asked for 15% of revenue after the first 1M - For games making use of Unity 2024 of course.
  - nonethewiser 3y ago
    … do you have a game doing 1M in revenue?
    - jay_kyburz 3y ago
      Yes. And we are switching to Unreal. The price is not why we were using Unity in the first place. I don't like Blueprints and I don't like C++. Verse looks like it's going to be super weird. Unity is more versatile, smaller, easier to use. Faster to iterate. I've worked with both engines for many years, on the Bioshock games in Unreal and Void Bastards in Unity. But Unity has shown time and time again that they have no respect for us, so we really can't continue to do business with them.
      - ffhhttt 3y ago
        But for most games Unreal still seems to be significantly more expensive after you actually start making significant money?
        deleted 3y ago
        [deleted]
        loupol 3y ago
        Predictability of costs is important. If I use Unreal, if my game generates 2M$ revenue, I know exactly what I'll need to pay Epic. With Unity's model it's a coin toss. Are lots of people going to reinstall my games ? Am I going to get install bombed ? I have no idea.
    - 015a 3y ago
      Kingdom Hearts 3, Hellblade, Gears, FF7R, Borderlands, Sea of Thieves, Fallen Order, and countless others all use Unreal, in all likelihood made over a million dollars, and many made sequels using Unreal as well. Its also absolutely necessary to clarify that Unreal's revenue share is 5% over $1M, not 15% (and, weirdly; its 5% over $5M for games distributed on the Oculus Store, believe it or not).
  - MattRix 3y ago
    Epic’s model is 5% not 15%. 15% would be absurd.
    - jay_kyburz 3y ago
      Yes sorry, think I got confused about the store rev share, which I think is 12% now anyhow. :)
    - johnnyanmac 3y ago
      a big jump but not unheard of. remember that the biggest store platforms take 30% already; Apple, Google, Sony, Valve, Microft, and Nintendo. In a vacuum it's not unthinkable to suggest that the engine you make your game on and leverage many features for (networking, porting, collaboration, etc) is at least half as valuable as the store you're hosting the game on. Personally I think it's the store takeaways that are way too high. And in some cases overstep their boundaries in what they allow an app to do or how to sell it. But that's a big tangent.
      - deleted 3y ago
        [deleted]
edgyquant 3y ago
If their decision was made at the expense of advertisers/advertising it’s one we should all wholly support.
- squeaky-clean 3y ago
  It's not at the expense of advertisers, the advertising is staying the same. It's only at the expense of the advertiser in the sense that Unity is the advertiser and they've shot themselves in the foot.
- johnnyanmac 3y ago
  Given that they merged/aquired an adtech company accused of developing malware last year, I think Unity is having its cake here.
MattRix 3y ago
Just because Unity’s revenue from ads is greater than from the engine doesn’t mean they need to change their model. It’s ok for one part of their business to make more, especially when the engine is still making lots of money too.
- deleted 3y ago
  [deleted]
qiqitori 3y ago
Inconvenient opinion in the adware-fueled tech world, but ad income isn't a stable or safe source of income, and it's likely they're feeling that, and therefore jacking up the price for the engine. The big tech companies themselves feel it and spend a lot of money on "Other Bets". Noob consumers may click ads, but after a while they program their brain to filter them out automatically. Or occasionally filter them out using technological measures. I bet that most ad clicks are by mistake or similar (especially ads in Unity games (which AFAIK are interstitial video ads)), or the user wasn't realizing what they were clicking on was an ad (noob users, or e.g. ads at the top of Google results, which used to be much easier to distinguish from actual results). Most of my ad clicks are by mistake (due to bad page layout, or there just happened to be an ad where I happened to click), some (a handful of times per year at best) are to satisfy curiosity. And maybe a single one in my lifetime actually led to a purchase. Google ads started out text-only, now they're pretty jarring on average. Guess why. However, there's a limit to how jarring you can make ads before consumers say bye-bye. Unity ads are probably way over the limit, Google are sort of tip-toeing along the line (or let's say they're over the line for a minority, and not quite for the rest).
- codetrotter 3y ago
  > ad income isn't a stable or safe source of income True, and it’s not even just about the ads being annoying even. Regulators are catching on to the privacy problems tied to online advertising. Perhaps Unity is seeing this too, and have concluded that regulators might come for their ad revenue one day.
- doctorpangloss 3y ago
  > Noob consumers may click ads, but after a while they program their brain to filter them out automatically. Ads are not just about clicks. Half of all spending is brand advertising. Noobs don’t click random SMB ads, and yet that’s like 40% of spending on mobile. There are people who are “superclickers” and also super buyers. They’re just a really expensive audience to target, obviously. Anyway, you’re extrapolating from your sole experience with ads. It is a super big ecosystem with a lot of rationality, as ridiculous as that sounds. It is growing a lot still, digital ad spending grows like $130b a year around now, which is the highest it’s ever been. So I don’t know, you’re not saying stuff that is substantiated in truth.
ffhhttt 3y ago
> goes down a bit, but ad revenue goes up The ad market is more competitive and very crowded there is no reason to use Unity for your ads if someone else offers a better deal. Also Unity did try focusing on increasing ad revenue over the last several years, it didn’t work out that well. > leaves everybody feeling great about Unity. Making their engine entirely free would make most people feel even better. > untapped sources of income to dumber product managers. Why? Most Unity’s client’s don’t make much if anything at all a few make massive amounts. Due to the fixed licensing model the latter barely pay anything to Unity (e.g. compared to how much they pay storefronts/platform owners/ad networks). If they want to continue growing their revenue Unity has to get more from these customers, there aren’t that many other options.

foota 3y ago

I don't think there's anyone not using unity today that would use it tomorrow because of a pricing change (well, at least, for values of today and tomorrow from last week)

jay_kyburz 3y ago
I wouldn't even care if they switched to Epics model and asked for 15% of revenue after the first 1M - For games making use of Unity 2024 of course.
- nonethewiser 3y ago
  … do you have a game doing 1M in revenue?
  - jay_kyburz 3y ago
    Yes. And we are switching to Unreal. The price is not why we were using Unity in the first place. I don't like Blueprints and I don't like C++. Verse looks like it's going to be super weird. Unity is more versatile, smaller, easier to use. Faster to iterate. I've worked with both engines for many years, on the Bioshock games in Unreal and Void Bastards in Unity. But Unity has shown time and time again that they have no respect for us, so we really can't continue to do business with them.
    - ffhhttt 3y ago
      But for most games Unreal still seems to be significantly more expensive after you actually start making significant money?
      - deleted 3y ago
        [deleted]
      - loupol 3y ago
        Predictability of costs is important. If I use Unreal, if my game generates 2M$ revenue, I know exactly what I'll need to pay Epic. With Unity's model it's a coin toss. Are lots of people going to reinstall my games ? Am I going to get install bombed ? I have no idea.
  - 015a 3y ago
    Kingdom Hearts 3, Hellblade, Gears, FF7R, Borderlands, Sea of Thieves, Fallen Order, and countless others all use Unreal, in all likelihood made over a million dollars, and many made sequels using Unreal as well. Its also absolutely necessary to clarify that Unreal's revenue share is 5% over $1M, not 15% (and, weirdly; its 5% over $5M for games distributed on the Oculus Store, believe it or not).
- MattRix 3y ago
  Epic’s model is 5% not 15%. 15% would be absurd.
  - jay_kyburz 3y ago
    Yes sorry, think I got confused about the store rev share, which I think is 12% now anyhow. :)
  - johnnyanmac 3y ago
    a big jump but not unheard of. remember that the biggest store platforms take 30% already; Apple, Google, Sony, Valve, Microft, and Nintendo. In a vacuum it's not unthinkable to suggest that the engine you make your game on and leverage many features for (networking, porting, collaboration, etc) is at least half as valuable as the store you're hosting the game on. Personally I think it's the store takeaways that are way too high. And in some cases overstep their boundaries in what they allow an app to do or how to sell it. But that's a big tangent.
    - deleted 3y ago
      [deleted]

edgyquant 3y ago

If their decision was made at the expense of advertisers/advertising it’s one we should all wholly support.

squeaky-clean 3y ago
It's not at the expense of advertisers, the advertising is staying the same. It's only at the expense of the advertiser in the sense that Unity is the advertiser and they've shot themselves in the foot.
johnnyanmac 3y ago
Given that they merged/aquired an adtech company accused of developing malware last year, I think Unity is having its cake here.

MattRix 3y ago

Just because Unity’s revenue from ads is greater than from the engine doesn’t mean they need to change their model. It’s ok for one part of their business to make more, especially when the engine is still making lots of money too.

deleted 3y ago
[deleted]

qiqitori 3y ago

Inconvenient opinion in the adware-fueled tech world, but ad income isn't a stable or safe source of income, and it's likely they're feeling that, and therefore jacking up the price for the engine. The big tech companies themselves feel it and spend a lot of money on "Other Bets". Noob consumers may click ads, but after a while they program their brain to filter them out automatically. Or occasionally filter them out using technological measures. I bet that most ad clicks are by mistake or similar (especially ads in Unity games (which AFAIK are interstitial video ads)), or the user wasn't realizing what they were clicking on was an ad (noob users, or e.g. ads at the top of Google results, which used to be much easier to distinguish from actual results). Most of my ad clicks are by mistake (due to bad page layout, or there just happened to be an ad where I happened to click), some (a handful of times per year at best) are to satisfy curiosity. And maybe a single one in my lifetime actually led to a purchase. Google ads started out text-only, now they're pretty jarring on average. Guess why. However, there's a limit to how jarring you can make ads before consumers say bye-bye. Unity ads are probably way over the limit, Google are sort of tip-toeing along the line (or let's say they're over the line for a minority, and not quite for the rest).

codetrotter 3y ago
> ad income isn't a stable or safe source of income True, and it’s not even just about the ads being annoying even. Regulators are catching on to the privacy problems tied to online advertising. Perhaps Unity is seeing this too, and have concluded that regulators might come for their ad revenue one day.
doctorpangloss 3y ago
> Noob consumers may click ads, but after a while they program their brain to filter them out automatically. Ads are not just about clicks. Half of all spending is brand advertising. Noobs don’t click random SMB ads, and yet that’s like 40% of spending on mobile. There are people who are “superclickers” and also super buyers. They’re just a really expensive audience to target, obviously. Anyway, you’re extrapolating from your sole experience with ads. It is a super big ecosystem with a lot of rationality, as ridiculous as that sounds. It is growing a lot still, digital ad spending grows like $130b a year around now, which is the highest it’s ever been. So I don’t know, you’re not saying stuff that is substantiated in truth.

ffhhttt 3y ago

> goes down a bit, but ad revenue goes up The ad market is more competitive and very crowded there is no reason to use Unity for your ads if someone else offers a better deal. Also Unity did try focusing on increasing ad revenue over the last several years, it didn’t work out that well. > leaves everybody feeling great about Unity. Making their engine entirely free would make most people feel even better. > untapped sources of income to dumber product managers. Why? Most Unity’s client’s don’t make much if anything at all a few make massive amounts. Due to the fixed licensing model the latter barely pay anything to Unity (e.g. compared to how much they pay storefronts/platform owners/ad networks). If they want to continue growing their revenue Unity has to get more from these customers, there aren’t that many other options.