6 ms·

Purely conjecture, but somehow I suspect that private equity has crunched the numbers and decided it's time to milk this one dry.

xbmcuser 3y ago
They are making a billion dollars loss a year. So with no vc cash available they need to get profitable if they want to survive. You can argue this is wrong way to go about it but they do need to get profitable.
- qwytw 3y ago
  Massive over hiring and random acquisitions are there main reasons why are they here. If they hadn't increased their headcount by 5k and continued focusing on their core products the company would already be profitable (even if revenue would be lower). At this point it's too late to significantly cut costs, so yeah seems like they pushed themselves into a corner. The sad part is that it was already perfectly obvious where were they heading after they IPO'ed.
  - usrusr 3y ago
    Trying to run a publicly traded company like a VC bonfire - what could possibly go wrong.
    - plagiarist 3y ago
      Why would they even IPO if they are bleeding money as fast as they were? Was it one of those SPAC pyramid scams just to get fresh money from people?
      - gmerc 3y ago
        because early VCs wanted someone else to hold the bag
        delfinom 3y ago
        The fact that people still don't understand that this is what any IPO is about is funny and sad.
      - qwytw 3y ago
        Well because profitability was just a few years away according to their prospectus. Which to be fair wasn't that inaccurate. Had they stopped expanding like crazy for a year or so the company would've been profitable (with minimal damage to their core product, if not the other way around).
  - ambyra 3y ago
    Seems like they’re trying to fund their unprofitable acquisitions by harming their profitable core. They could have spent that money making unity better/more stable. I hope they make it out of this. The unity editor is pretty great.
    - vintermann 3y ago
      > They could have spent that money making unity better/more stable. Public shareholders don't like that. It's not good enough.
      - qwytw 3y ago
        It's not at all obvious to me investors who bought their stock after they IPO wanted any of this. The board and upper management together with their VC backers (they also gave Unity a significant loan to fund the IronSource acquisition which will be exchanged to stock in a few years) seem to be the main driving force behind this. The only way most public shareholders can express their approval is by buying or selling stock and looking at the share price over the last 1.5 years they don't seem to approve that much.
- gmerc 3y ago
  They miscalculated, which is a risk with investments. Miscalculated badly and executed worse. They bet on ads and ads is not the growth market it used to be. They bought IronSource and their main competitor, AppLovin is kicking their ass. The neglected the core product and have the gall to justify their retroactive change of terms (after sneakingly deleting assurances to the contrary from the TOS and deleting the github repro that tracked transparency after their last PR disaster) with rising costs of maintaining the runtime that’s been falling into disrepair. Investments carry risk. Investors may dream that it’s ok to get made whole by the game industry they tried to take over using VC money to build a dominating position and then changing terms and extracting rent but this is such an open and shut case of corporate mismanagement, deceit and hubris, no point in even trying to justify that. If they want to survive, they fire the CEO, claw back bonuses and shares from executives and shrink the company to a size that’s warranted. Unity can die in a fire, anyone with a choice will know better than to get into a relationship with them now. There’s enough landlords in the industry already with platforms, there’s no room for another extracting value of the hard work of creatives. Accepting their terms requires broad changes to the industry business models - back to old EAs dream of charging by the download. And it requires open eyes walking into a relationship with a company that every time their CEO makes a shitty gamble will extract the losses from developers. Burn it with fire.
  - delfinom 3y ago
    They bought IronSource because the VC funds that owned IronSource offered a billion investment, they were still bleeding money before the acquisition. And before the acquisition, AppLovin even offered to buy Unity for $17 bil. I'm skeptical it wouldn't have turned into a shitfest in that direction either given that they would have either focused on mobile exclusively or worked to turn normal PC gaming into adware. Even now, Unity's quarterly statements are wtf, wth are they spending $500 million a year on "sales and marketing" for.
- raincole 3y ago
  Unity had 7000+ employees before layoff. Valve maintains one of the biggest platforms, and their own game engine. Valve also developed CSGO, TF2, and Dota, all popular online games that need constant maintenance (and even big content updates sometimes). Valve also invested in VR and sells hardware. Valve has 1200 employees. To me it's easy to see why Unity lose money.
  - teamonkey 3y ago
    Unity are currently asking for 4% of revenue over $1M for developing the engine and toolchain that game developers will use all day every day. Valve skim 30% of the retail price of the game for the priveledge of hosting a game on their storefront. This is why Valve makes money.
    - raincole 3y ago
      Yes, tool makers just can't take the same margin as publishers/platforms do. It's nothing new. Microsoft Words can't take 80% (like a traditional publisher) of your book's retail price, nor even 30% (like Amazon). I'm not "defending" Valve (actually I find it's very worrisome that they're a game developer and a platform at the same time.) I'm pointing out the fact in no way Unity can sustain 6x of employees than Valve.
    - gmerc 3y ago
      Valve delivers massive value equivalent to entire departments in a publisher through their steamworks system. Distribution, Analytics, Multiplayer, Anticheat, Publishing Services, Anti Piracy, Storefront, Sales, Mods, Custom Content Integrations, Localisation, and most importantly discovery (things you pay for dearly outside on mobile). They never had need to convince developers that the fee is worth it and they never had to retroactively change terms of service. They have continually invested into the system and built the trust. Most of all, Valve chose the long term sustainable business model when everyone else in the industry tried to extract per download charges from gamers. So gamers chose the company that sold them their game collection, just in the cloud instead of nickel and diming. And developers chose valve because they were infinitely more trustworthy and offered better tools than any of the legacy publishers. They never increased the fees because they made bad bets either (and they had a few like VR) Yes there’s a case to be made that the 30% should be reduced now, but realistically few could compare Valve to Unity when it comes to execution and long term value balancing for developers and gamers.
RockRobotRock 3y ago
Milk dry, or try to start making money?
qwytw 3y ago
They can only get anything from it if the stock price goes up though. So far this isn't helping. Also it won't be several quarters until the additional revenue kicks in, by the time they might already be losing significant numbers of customers which the market won't like even if the financial start looking a bit better.
HFguy 3y ago
"Purely conjecture, but somehow I suspect that private equity has crunched the numbers and decided it's time to milk this one dry." They are a public company at this point. Not a fan of PE but no need to blame them for everything.
delfinom 3y ago
Unity is a public company, they IPOed years ago. Instead, look at their EPS. They have been negative since they IPO and never posted a profit.
Aurornis 3y ago
> but somehow I suspect that private equity Unity is publicly traded: https://finance.yahoo.com/quote/U https://finance.yahoo.com/quote/U Can’t blame private equity for this one. > crunched the numbers and decided it's time to milk this one dry. More realistically, they crunched the numbers and saw that they aren’t making enough money to keep the company going forever. It’s not a secret, because it’s a public company: They need to make more money to survive. More monetization was inevitable. I know it’s unpopular public opinion, but Unity as it is today cannot exist forever on the monetization model they had in the past. The numbers didn’t add up. They had to change something.
- gmerc 3y ago
  Most of their losses was in the last 1.5 years. They actually could have been profitable. They are not sustainable because of mismanagement and massively failed bets. “We got greedy but don’t worry, you’ll pay for it” doesn’t have the best ring to it.
  - matthew-wegner 3y ago
    They were profitable from 2013 until around 2016, beginning the buildup to IPO...
- gnramires 3y ago
  Sure, but thinking just because it's a publicly traded company "anything goes" is equally deeply misguided. Whoever owns your company or organization, we should always respect and try to do the best for our customers and everyone involved -- we don't get to destroy things in the name of profit. This behavior is not only destructive of their legacy, the promises they kept, but of course of their own reputation as a game company... I don't see any independent developer choosing Unity from now on (without a radical change for the company) in their right minds. I'm pretty sure this wasn't the only solution to the situation. If they're going to ruin the company anyway... might as well make it open source. Start charging a large amount for a license. Cut the company size (maybe competition for other open source software is too great, and they couldn't survive at that size!). We have the choice to do the right thing, although many times that isn't the easy thing to do. This goes even to society at large. No social or economic system can exist without ethics -- to believe so is delusional. Not communism, capitalism, social democracy, or something else(and I think we need some other ideas in the mix... but that's another story!) can function well when individuals don't have a good grasp of ethics. Governments are made of people making decisions, and companies likewise. No matter how much structure you impose on top, if people don't generally cooperate, a good outcome is impossible (garbage in, garbage out). So, like a friend says, "Be excellent to each other, or else..." :)

xbmcuser 3y ago

They are making a billion dollars loss a year. So with no vc cash available they need to get profitable if they want to survive. You can argue this is wrong way to go about it but they do need to get profitable.

qwytw 3y ago
Massive over hiring and random acquisitions are there main reasons why are they here. If they hadn't increased their headcount by 5k and continued focusing on their core products the company would already be profitable (even if revenue would be lower). At this point it's too late to significantly cut costs, so yeah seems like they pushed themselves into a corner. The sad part is that it was already perfectly obvious where were they heading after they IPO'ed.
- usrusr 3y ago
  Trying to run a publicly traded company like a VC bonfire - what could possibly go wrong.
  - plagiarist 3y ago
    Why would they even IPO if they are bleeding money as fast as they were? Was it one of those SPAC pyramid scams just to get fresh money from people?
    - gmerc 3y ago
      because early VCs wanted someone else to hold the bag
      - delfinom 3y ago
        The fact that people still don't understand that this is what any IPO is about is funny and sad.
    - qwytw 3y ago
      Well because profitability was just a few years away according to their prospectus. Which to be fair wasn't that inaccurate. Had they stopped expanding like crazy for a year or so the company would've been profitable (with minimal damage to their core product, if not the other way around).
- ambyra 3y ago
  Seems like they’re trying to fund their unprofitable acquisitions by harming their profitable core. They could have spent that money making unity better/more stable. I hope they make it out of this. The unity editor is pretty great.
  - vintermann 3y ago
    > They could have spent that money making unity better/more stable. Public shareholders don't like that. It's not good enough.
    - qwytw 3y ago
      It's not at all obvious to me investors who bought their stock after they IPO wanted any of this. The board and upper management together with their VC backers (they also gave Unity a significant loan to fund the IronSource acquisition which will be exchanged to stock in a few years) seem to be the main driving force behind this. The only way most public shareholders can express their approval is by buying or selling stock and looking at the share price over the last 1.5 years they don't seem to approve that much.
gmerc 3y ago
They miscalculated, which is a risk with investments. Miscalculated badly and executed worse. They bet on ads and ads is not the growth market it used to be. They bought IronSource and their main competitor, AppLovin is kicking their ass. The neglected the core product and have the gall to justify their retroactive change of terms (after sneakingly deleting assurances to the contrary from the TOS and deleting the github repro that tracked transparency after their last PR disaster) with rising costs of maintaining the runtime that’s been falling into disrepair. Investments carry risk. Investors may dream that it’s ok to get made whole by the game industry they tried to take over using VC money to build a dominating position and then changing terms and extracting rent but this is such an open and shut case of corporate mismanagement, deceit and hubris, no point in even trying to justify that. If they want to survive, they fire the CEO, claw back bonuses and shares from executives and shrink the company to a size that’s warranted. Unity can die in a fire, anyone with a choice will know better than to get into a relationship with them now. There’s enough landlords in the industry already with platforms, there’s no room for another extracting value of the hard work of creatives. Accepting their terms requires broad changes to the industry business models - back to old EAs dream of charging by the download. And it requires open eyes walking into a relationship with a company that every time their CEO makes a shitty gamble will extract the losses from developers. Burn it with fire.
- delfinom 3y ago
  They bought IronSource because the VC funds that owned IronSource offered a billion investment, they were still bleeding money before the acquisition. And before the acquisition, AppLovin even offered to buy Unity for $17 bil. I'm skeptical it wouldn't have turned into a shitfest in that direction either given that they would have either focused on mobile exclusively or worked to turn normal PC gaming into adware. Even now, Unity's quarterly statements are wtf, wth are they spending $500 million a year on "sales and marketing" for.
raincole 3y ago
Unity had 7000+ employees before layoff. Valve maintains one of the biggest platforms, and their own game engine. Valve also developed CSGO, TF2, and Dota, all popular online games that need constant maintenance (and even big content updates sometimes). Valve also invested in VR and sells hardware. Valve has 1200 employees. To me it's easy to see why Unity lose money.
- teamonkey 3y ago
  Unity are currently asking for 4% of revenue over $1M for developing the engine and toolchain that game developers will use all day every day. Valve skim 30% of the retail price of the game for the priveledge of hosting a game on their storefront. This is why Valve makes money.
  - raincole 3y ago
    Yes, tool makers just can't take the same margin as publishers/platforms do. It's nothing new. Microsoft Words can't take 80% (like a traditional publisher) of your book's retail price, nor even 30% (like Amazon). I'm not "defending" Valve (actually I find it's very worrisome that they're a game developer and a platform at the same time.) I'm pointing out the fact in no way Unity can sustain 6x of employees than Valve.
  - gmerc 3y ago
    Valve delivers massive value equivalent to entire departments in a publisher through their steamworks system. Distribution, Analytics, Multiplayer, Anticheat, Publishing Services, Anti Piracy, Storefront, Sales, Mods, Custom Content Integrations, Localisation, and most importantly discovery (things you pay for dearly outside on mobile). They never had need to convince developers that the fee is worth it and they never had to retroactively change terms of service. They have continually invested into the system and built the trust. Most of all, Valve chose the long term sustainable business model when everyone else in the industry tried to extract per download charges from gamers. So gamers chose the company that sold them their game collection, just in the cloud instead of nickel and diming. And developers chose valve because they were infinitely more trustworthy and offered better tools than any of the legacy publishers. They never increased the fees because they made bad bets either (and they had a few like VR) Yes there’s a case to be made that the 30% should be reduced now, but realistically few could compare Valve to Unity when it comes to execution and long term value balancing for developers and gamers.

RockRobotRock 3y ago

Milk dry, or try to start making money?

qwytw 3y ago

They can only get anything from it if the stock price goes up though. So far this isn't helping. Also it won't be several quarters until the additional revenue kicks in, by the time they might already be losing significant numbers of customers which the market won't like even if the financial start looking a bit better.

HFguy 3y ago

"Purely conjecture, but somehow I suspect that private equity has crunched the numbers and decided it's time to milk this one dry." They are a public company at this point. Not a fan of PE but no need to blame them for everything.

delfinom 3y ago

Unity is a public company, they IPOed years ago. Instead, look at their EPS. They have been negative since they IPO and never posted a profit.

Aurornis 3y ago

> but somehow I suspect that private equity Unity is publicly traded: https://finance.yahoo.com/quote/U https://finance.yahoo.com/quote/U Can’t blame private equity for this one. > crunched the numbers and decided it's time to milk this one dry. More realistically, they crunched the numbers and saw that they aren’t making enough money to keep the company going forever. It’s not a secret, because it’s a public company: They need to make more money to survive. More monetization was inevitable. I know it’s unpopular public opinion, but Unity as it is today cannot exist forever on the monetization model they had in the past. The numbers didn’t add up. They had to change something.

gmerc 3y ago
Most of their losses was in the last 1.5 years. They actually could have been profitable. They are not sustainable because of mismanagement and massively failed bets. “We got greedy but don’t worry, you’ll pay for it” doesn’t have the best ring to it.
- matthew-wegner 3y ago
  They were profitable from 2013 until around 2016, beginning the buildup to IPO...
gnramires 3y ago
Sure, but thinking just because it's a publicly traded company "anything goes" is equally deeply misguided. Whoever owns your company or organization, we should always respect and try to do the best for our customers and everyone involved -- we don't get to destroy things in the name of profit. This behavior is not only destructive of their legacy, the promises they kept, but of course of their own reputation as a game company... I don't see any independent developer choosing Unity from now on (without a radical change for the company) in their right minds. I'm pretty sure this wasn't the only solution to the situation. If they're going to ruin the company anyway... might as well make it open source. Start charging a large amount for a license. Cut the company size (maybe competition for other open source software is too great, and they couldn't survive at that size!). We have the choice to do the right thing, although many times that isn't the easy thing to do. This goes even to society at large. No social or economic system can exist without ethics -- to believe so is delusional. Not communism, capitalism, social democracy, or something else(and I think we need some other ideas in the mix... but that's another story!) can function well when individuals don't have a good grasp of ethics. Governments are made of people making decisions, and companies likewise. No matter how much structure you impose on top, if people don't generally cooperate, a good outcome is impossible (garbage in, garbage out). So, like a friend says, "Be excellent to each other, or else..." :)