After a recent round of job cuts, Unity, a leading video game engine company, is once again downsizing its workforce. Around 1,800 employees are expected to lose their jobs in the coming weeks as the company aims to bounce back from a challenging year.
Unity’s game engine is widely used in the gaming industry, with popular titles such as Cuphead, Ori and the Blind Forest (and its sequel), Hearthstone, Cities: Skylines (and its sequel), Hollow Knight, and Beat Saber all being developed using the Unity engine. Epic Games, the company behind Fortnite and the Unreal Engine, is Unity’s biggest competitor.
“Restructuring and refocusing on our core business to position ourselves for long-term and profitable growth,” is how Unity describes its decision to lay off employees in a filing with the SEC.
Despite this move being a cost-cutting measure, the company’s stocks have not seen significant movement, with a 0.62% decrease in pre-market trading as compared to yesterday’s closing price. Currently trading at $38.74 per share, Unity’s stock has fallen considerably from its all-time high of $201.12 in November 2021.
Last year, Unity attempted to improve its financial performance by restructuring its fee structure for the engine. Under the previous pricing plan, indie developers earning below $100,000 annually could use Unity for free. However, once they exceeded this threshold and generated between $100,000 and $200,000 in revenue, they would be required to pay $399 per user each year. Larger game studios had to pay $1,900 per user annually.
With the new pricing model, developers now have to pay between $.15 and $.20 for every game install after 200,000 installations. This change affects mobile game developers and those working on free-to-play games the most as they can quickly reach this threshold.
However, this pricing change sparked backlash from many developers, causing Unity to revise their plans with a more complex pricing structure that isn’t solely based on per-install fees. Companies with over $1 million in revenue can choose between a per-user fee or a 2.5% revenue share. Significantly, this new pricing policy does not apply to existing Unity games.
These controversies had far-reaching consequences, with many developers losing faith in the company. This ultimately led to the resignation of Unity’s CEO John Riccitiello. James Whitehurst, the former president of Red Hat, is currently serving as interim CEO.
In November, Unity announced that they were hitting the “reset” button on the company. Today’s layoffs seem to be a result of this restructuring effort.
