We’re thrilled to announce the return of GamesBeat Next, hosted in San Francisco this October, where we will explore the theme of “Playing the Edge.” Apply to speak here and learn more about sponsorship opportunities here. At the event, we will also announce 25 top game startups as the 2024 Game Changers. Apply or nominate today!
A year after Unity raised prices for enterprise and professional versions of its game engine, Unity added a new charge for smaller developers who meet thresholds for revenue and installs.
Starting on January 1, 2024, Unity will charge a Unity Runtime Fee for any game that surpasses a revenue and lifetime install in the preceding 12 months. Normally, Unity Personal usage is free, and subscribers for Unity Pro pay $399 per seat.
But under the changes announced today, Unity Personal and Unity Pro users will pay fees if they hit $200,000 in revenue in a year and 200,000 lifetime installs. For anywhere from one to a million installs, those users will pay 20 cents per install.
“It’s a price increase. It’s a business model change,” acknowledged Marc Whitten, Unity Create president, in an interview with GamesBeat. “From our perspective, we’re working on ensuring that there’s an accurate exchange of value between Unity and its customers. But with that said, this price increase doesn’t impact the significant majority of our customers.”
As you might expect, this did not go over well with developers, judging by social media responses. Brandon Sheffield, an indie game developer at Necrosoft and contributor to Game Developer, wrote an article about the fees and other problems with Unity entitled, “The Death of Unity.” As that story and many other posts on social media reflect, skepticism is running high about Unity’s intentions and whether the impact is as small as the company says it will be when it comes to affecting small game developers.
“My game company Necrosoft has used Unity for every commercial project it has ever made,” Sheffield wrote. “But now I can say, unequivocally, if you’re starting a new game project, do not use Unity. If you started a project 4 months ago, it’s worth switching to something else. Unity is quite simply not a company to be trusted.”
In a message on social media, TinyBuild CEO Alex Nichiporchik said, “There’s not a single dev out there that would look at the announcement and think it was a good idea. We often factor in engine fees when making decisions on projects, and at face value the math goes towards Unreal Engine if we factor in free installs of demos, free to try versions on iOS, and playtests on Steam. I find it hard to believe this will actually go through.”
And Susan Cummings, CEO of Tiny Rebel Games, said in a post, “It’s a terrible move. I’ve been a partner of Unity for as long as I can remember and was completely blindsided by this announcement. It’s going to be yet another hardship for game developers – especially indies, especially those in free to play who are already struggling with severe UA challenges and costs. Imagine having to pay on a user that doesn’t monetize?”
She added, “I get that times are tight but a revenue share like Epic’s would surely be the way to address. Especially considering that we already pay handsomely per seat for our licenses. I don’t understand why this move was made so abruptly and surely consultation with game developers would have been the prudent move, first? I think they have no choice but to revert on this — developers are going to flee en masse to Epic and other middleware for future games.”
Christopher Kassulke, CEO of Handy Games, said in a social media post, “I felt a great disturbance in The Force. As if millions of voices suddenly cried out in terror.” And Vincenza Alagna, CEO at Core Loop, asked how an install could be verified, and what prevents bots from messing up the counting?
Unity says the criticism is overly harsh and it believes its thresholds for paying are fair. For Unity Pro and Unity Enterprise accounts, the thresholds are $1 million in revenue a year and a million lifetime installs.
Unity Pro users pay 15 cents per install for one to 100,000 installs. Then they pay less per install with growing volume. For 100,001 to 500,000 installs, they pay 7.5 cents. For 500,001 to one million installs, they pay three cents per install. For over a million installs, they pay 2 cents per install. Unity Enterprise users pay on a similar sliding scale where the amount paid per install decreases with volume.
Download and revenue numbers are easier to track these days, as there are both company reports available and third-party sources can verify the numbers, Whitten said.
The counting revolves around the Unity Runtime, which is the software that is downloaded billions of times per month. If you build a game in the editor and package it together for release, it comes with the Unity Runtime, which the game uses to drive the game loop and all the other logic for rendering the game on someone’s device.
Whitten said that fees are also lower for developers in emerging markets, with Unity Personal accounts paying 2 cents per install when they go above the thresholds, with similar discounts for enterprise users.
The fees apply to both new and existing games. Unity said it will retire the existing Unity Plus subscription, and those users will get an offer to upgrade to Unity Pro for a year at the Unity Plus price.
For free-to-play games (which have become a bigger share of the overall games market), the developers will have the option to offset the fee by adopting other services that generate revenue for Unity, such as the LevelPlay ad mediation service. Whitten said Unity wanted to give developers options.
Whitten said the majority of Unity Editor (which has limitations on publishing on platforms) users are not paying and they will not pay after this change. The ones that are impacted are generally customers that have found substantial scale in terms of downloads and revenue. And so, you know, as we put the model together, for us, it was really about a low or no fee for creators who have not found scale success and a modest, onetime fee for those that have.”
He said the one-time fee is not retroactive reaching back into the past, as it goes into effect for January 1.
“We worked to make sure that there were a bunch of thresholds, and then other ways so that customers could get the fee as low as possible and all the way to zero,” Whitten said.
That is, if you have a million downloads on mobile but no one buys any in-app purchases, you won’t trigger the threshold and incur a fee. Of course, there are some exceptions. Xbox Game Pass games aren’t going to be subject to the same kind of thresholds, Unity said. Demos and Humble Bundles don’t trigger the thresholds either.
Last year, Unity also instituted a price increase for its Unity Enterprise and Unity Pro versions of its game engine. And that generated a considerable increase in revenue. For instance, in Q2 2023, the number of customers paying more than $100,000 a year to Unity was 1,330, up from 1,075 a year earlier in Q2 2022.
Unity’s overall revenue in Q2 2023 was $533 million, up 80% from $297 million in Q2 2022, while it moved from a loss for adjusted EBITDA (earnings before interest, taxes, depreciation and amortization — a measure of profitability) of $38 million in Q2 2022 to a profit of $99 million in Q2 2023. That put Unity on a better financial footing to handle the current downturn.
Overall, Unity has 7,000 people working on the game engine and other services, and this fee for the Unity Runtime is meant to help cover those costs, Whitten said. The company cut about 600 employees back in May.
Whitten said this price increase wasn’t just a quick decision without planning.
“For something as complicated as this is, it’s a pretty big change,” Whitten said. “We’ve been working on it for some time, reviewing both the plans and getting feedback on it. For many of our customers, they have more time to prepare and understand how this impacts their plans.”
Democratizing game development?
I asked if Unity was backing off on its mission to “democratize game development” with this new fee. But Whitten said that this means Unity is doubling down on that mission. He noted that was why the thresholds exist, as Unity wants you to still keep trying to be a creator even if you haven’t found success.
“These fees don’t apply to you at all, as we want as many people to be able to pick up game creation, game development and learn and determine how to be successful on Unity as the as they can,” Whitten said. “The other thing that actually comes along with this is it actually makes our free version of Unity more flexible than it was before. So the Unity Personal edition, which is what anyone can go and download, has no seat license fees associated with it. Before this particular change, you couldn’t actually ship games that made significant revenue of more than $100,000 by using using that. And so you’d have to decide to get on Unity Pro if you thought you’re about to ship.”
Whitten noted the fee per download aggressively drops with the larger numbers of downloads for successful games, as free-to-play games often generate tons of downloads. As for the ad services, Whitten said, “We want to have a balanced value exchange and make sure that we can continue to invest in all of the things that we want to do — both the game engine and other services and everything else — so that we can make it even better for game creators making their games.”
While there were plenty of folks complaining yesterday, Whitten said the company was focused on connecting with game creators and making sure Unity was delivering the value that they need. He said the company will continue to address complaints.
“There’s always more that Unity can do,” he said. “If you looked at the discussions we’ve had throughout the year, certainly at events like GDC, or Gamescom, they’ve been very positive.”
He said the company will also have its first in-person Unite event in November, the first in-person event since 2019. And Whitten said he was excited about new services, such as the Weta Tools announced at Siggraph in August, as well as cloud DevOps, AI and storage services. Unity Enterprise has features like high-end support and source code, with different tiers of service, he said.
GamesBeat’s creed when covering the game industry is “where passion meets business.” What does this mean? We want to tell you how the news matters to you — not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it. Discover our Briefings.