Unity's self-sabotage with pricing will be a long-term problem for Apple
The goodwill that game engine developer Unity burnt over the last week with its bizarre and retroactive pricing demands are going to be a problem for not just the iPhone, but Apple Vision Pro too.
There's unity alright -- against the company's new licensing fees
Given Unity's lynchpin status for Apple, it's important to understand what's at stake here. If you're not familiar with them, Unity is a featured Apple Vision Pro development partner and the maker of a game engine whose tech powers many of the top-selling games on the App Store.
Unity recently announced new licensing terms for its software, immediately meeting fierce backlash from developers and sending the company into crisis management mode. Now it looks like Unity will reset its plans.
What is Unity?
Unity Engine helps devs make 3D games and apps. It's one of the most popular game engines out there: Unity claims to be at the heart of more than 60% of the top-grossing mobile games on the iPhone.
Unity is used by AAA studios and independent game makers alike, the basis of games like Niantic's Pokemon Go and Blizzard Entertainment's popular game Hearthstone, even Ustwo's award winning isometric puzzler Monument Valley.
Unity's origins began at a business called Over the Edge Entertainment, formed around 2002 to make an open-source 3D game engine for the Mac.
Their proof of concept was a game called GooBall, a Super Monkey Ball-style maze runner featuring an blobby alien floating in a jiggly, transparent ball of goo. Mac shareware darling Ambrosia Software brought the game to market.
GooBall didn't set sales records, but showed what Unity could do
GooBall didn't exactly set sales charts on fire, but Over the Edge Entertainment already had much grander plans than just to develop Mac games.
They branded the core engine tech they'd developed as Unity and presented it at WWDC in San Francisco in 2005 (they even got a runner-up Apple Design Award the following year). Unity initially targeted Mac OS X, later adding support for web-based games and Windows.
Unity -- by then, the brand adopted by both the company and platform -- was there when Apple introduced the App Store for the iPhone, and has figured prominently on Apple platforms since. Unity works on a lot more than Apple devices, of course, promising "write once, deploy anywhere" (more than two dozen platforms, at last count).
Why are developers mad?
Up until this announcement, Unity's pricing was pretty straightforward: a free personal tier for hobbyists, students, and devs just wanting to kick the tires, with per-seat annual licensing set at $400 to $1,800 per seat depending on the size of the business. Enterprise licensing was also available.
In mid-September Unity announced a revamp of its licensing model, switching to a pay-per-download pricing scheme. The license would incur fees of up to $0.20 per installation, once developers hit specific revenue and download number thresholds.
Unity's first Runtime Fee schedule went over like a lead balloon
Unity tried to sell this as a benefit to its customers.
"We believe that an initial install-based fee allows creators to keep the ongoing financial gains from player engagement, unlike a revenue share," said Unity on its blog.
Unity later tweeted that the change would impact fewer than 10% of their customers.
"Customers who will be impacted are generally those who have found a substantial scale in downloads and revenue and have reached both our install and revenue thresholds," they wrote. "This means a low (or no) fee for creators who have not found scale success yet and a modest one-time fee for those who have."
Developers weren't having it, raising questions about numerous edge cases like charity bundles, fraudulent or pirated installs, sales through game services like Xbox Game Pass, "install-bombing" (to punish marginalized developers) and other situations that Unity either ignored or didn't think much about ahead of time.
Unity's plans to track installations using its own proprietary system also raised red flags. That, combined with Unity's vague language and repeated clarifications in the following days only made things worse.
Analyzing sunk cost
Some devs threatened to pull up stakes from Unity altogether and go to the competition, including Epic's Unreal Engine and open-source engine Godot.
This is easier said than done. Game engines are foundational technology, and replacing one can mean scrapping a game and starting over.
If you're already three or four years into a game development cycle -- as some of the most vociferous developers are -- switching now is almost an impossibility. The other problem is, switch to what?
Unreal Engine is a possibility for some developers with the teams and the skill to make it work, but it's a much more unforgiving environment and not particularly cheap, either.
There's Godot and a few other open-source game development tools, but Unity's got almost two decades of runway behind it, a huge number of developers who already know the environment, and tons of tools that work with it.
There just isn't a lot out there to replace Unity, a fact not lost on Wall Street analysts. Some analysts acknowledged the public relations debacle but still saw upside potential for the company's stock, precisely because many developers won't have a choice.
Some developers are resigned to paying whatever Unity will charge them beginning in 2024. Some are looking at the company with increased skepticism and wondering where to go from here.
The ire over the new licensing scheme reached an absurd and terrifying crest a few days after the announcement when Unity closed several offices and cancelled a planned town hall meeting with its CEO following a "credible death threat."
Compounding the chaos, reports have emerged that the threats may have been made by a Unity employee working in a field office (the company is based in San Francisco).
The long-term damage to developer trust may be permanent, but we'll see. What pretty much everyone can agree on is that Unity really stepped in it, and didn't make anyone happy.
"We f...ed up on many levels" -- Unity founder
On Monday, a contrite Unity admitted it had made a mistake in a tweet.
"We have heard you. We apologize for the confusion and angst the runtime fee policy we announced on Tuesday caused. We are listening, talking to our team members, community, customers, and partners, and will be making changes to the policy," said the company.
Bloomberg reports that Unity is now overhauling the Unity Runtime Fee structure with an eye towards a limit of 4% of a game's revenue for customers making more than $1 million.
A Unity spokesman quoted in the article claims that the company will instead rely on customers to self-report installation data. This would defuse one of the more explosive aspects of the new policy, Unity's own proprietary install metrics.
Some details remain to be worked out as Unity takes the novel approach of actually working with stakeholders this time, rather than springing a very unwelcome surprise on them.
"I don't think there's any version of this that would have gone down a whole lot differently than what happened," Unity CEO John Riccitiello is reported to have said during a company meeting to discuss the changes. "It is a massively transformational change to our business model."
Unity co-founder and Riccitiello's predecessor as CEO, David Helgason, took to Facebook over the weekend and stated more plainly, "We f...ed up on many levels."
Describing the runtime fee as "a new business model for Unity," Helgason admitted the company had "missed a bunch of important 'corner' cases."
The new arrangement "ended up as the opposite of what it was supposed to be," he said.
AppleInsider reached out to Unity for comment but had not heard back as we went to press with this article.
Lots of growth but still no profit
Unity brought in more than $1.4 billion in revenue in 2022, a more than 25% year over year increase, and is on track to bring in more in 2023. But despite the revenue growth, Unity isn't making a profit, and actually never has.
"Unity lit money on fire for decades to buy a market advantage that overrules the basic economic incentives that supposedly ensure free markets work best for customers. It was successful in doing that because it's very hard for a sustainable business to compete against one that is fine losing billions of dollars," wrote GameIndustry.biz's Brendan Sinclair.
So it's perhaps understandable why its leadership, under the aegis of EA's former top dog, John Riccitiello, has sought to change things up.
Unity is a lot more than just a game engine these days. It's made a number of strategic acquisitions over the years including ad tech for mobile games, game streaming, and more. The company has branched out vertically into television and film, the automotive industry, architecture and other markets, spending more than $1.6 billion to acquire Weta Digital, the visual effects studio that brought the Lord of the Rings and Avatar movie series to life.
A 2022 stock swap deal with adtech firm ironSource valued at $4.4 billion dwarfed the Weta acquisition, and cemented Unity as an end-to-end development and business platform for game makers. But ironSource was a controversial choice for Unity.
The company's first product, InstallCore, was used to bundle and install unwanted software on Windows PC, ultimately getting flagged by Microsoft's own Windows Defender software as malware.
IronSource rival AppLovin attempted to spike the deal with a $20 billion acqusition bid for Unity that Unity ultimately rejected, seeing the ironSource deal as a better value proposition.
Now Unity appears poised at AppLovin's throat.
Following the unveiling of the new licensing scheme, Unity is offering some customers a waiver if they agree to use LevelPlay, the rebranded ironSource technology, according to a report from Mobilegamer.biz.
Riccitiello himself raised eyebrows for questionably timed recent stock sales: He's sold more than 50,000 shares this year, including a 2,000 share transaction that happened just a week before the runtime fee announcement.
Unity's also gone through several rounds of layoffs, axing more than 500 workers in two rounds of layoffs in 2022 and 600 more earlier this year, or about 8% of its total headcount.
Riccitiello himself has been a lightning-rod for controversy in the past. Last year he apologized after calling game developers who don't focus early on monetization "my favorite people in the world to fight with -- they're the most beautiful and pure, brilliant people. They're also some of the biggest f...ing idiots."
Those words are coming back to bite Riccitiello in the posterior as developers push back against Unity's own monetization efforts.
Unity and Vision Pro
Unity remains a key development partner for Apple, just as they've been since their debut in 2005. That factors not only into the platforms Apple offers today but the one to come as well: Vision Pro.
In unveiling Vision Pro at WWDC 2023, Apple said that Unity would be there with app development tools. Unity followed through only a few weeks later when they launched a developer program.
Unity R&D VP Ralph Hauwert and Apple Technology Development Group VP Mike Rockwell discuss Vision Pro at WWDC 2023
The company introduced plug-ins and other tools to make it easy for existing Unity developers to build apps that work on Vision Pro. Unity has branded its new tools "PolySpatial" technology, promising the ability to make apps that can run "side by side" in Vision Pro's "Shared Space."
Developers don't need Unity to make apps or games for Vision Pro. But Unity is still an important ally for Apple because of its popularity and familiarity for many developers, including many who otherwise might not target Apple operating systems.
So far, there hasn't been any word from Apple on the Unity situation, and there isn't likely to be. But Cupertino is surely watching and talking with them behind the scenes.
Ironic name
Time will tell if the revamped plan the company is now working on will make its customers any happier. Similarly, we'll see if there's a mass exodus of developers away from Unity, or just a trickle.
One thing's for sure. Unity's initial run at revamping its licensing structure was, by any measure, a complete PR disaster. The company executed the news poorly, communicated it badly and, it seems, didn't even think it out particularly well.
Ironically, the only "unity" that developers feel seems to be enmity against the very company they'd grown to trust.
The trust is going to take a lot longer than a week and a few mea culpas for Unity to earn back.
Read on AppleInsider
Comments
This was a wake up call for Apple and developers, and this actually gives cover to Apple to make a game engine. I’m sure their terms will be a hell of a lot more friendly, not because Apple is friendly in business, because they are tough, but it is in Apple‘s best interest to offer software tools that help them sell hardware which is their bread and butter, services is just icing on the cake very profitable yes but it’s just the icing it isn’t the main course.
I'd actually forgotten that Unity bought Weta. That's was nutzoids.
If you don't recognize why that doesn't even remotely solve the problem with Unity, I think it's pretty clear you either didn't read the article, or didn't understand it. The appeal of GDEs like Unity, Unreal Engine, or Godot, to developers is they're not platform specific. That's the whole point. That's why they're important. Essential, even. Apple is happy to keep pounding sand with Epic in their petulant quest to always be 'right' (how'd that work out with the eBook lawsuit, Apple?). Godot is promising, particularly in 2D, but it's 3D environment is woeful. That leaves Unity, which already has deep use particularly for iOS and iPadOS assets which are key to Vision Pro's development model.
Now do you understand the problem? Apple doing the equivalent of a DirectX would be beyond useless. Apple is stupid about a great many things, but they're not that stupid.
Back in '98, the founders of MacOSRumors and AppleInsider and I used to be in the #Macintosh IRC channel and all met up at one of the MacWorld parties in San Francisco.
Never did I expect AppleInsider to grow its reputation to the point of attracting established journalists.
Sorry, you evidently don’t know much about Apple history, it has become too important to let some third-party company control your destiny if you are Apple. Sitting around and waiting for them to get their ass in gear is not gonna help Apple. I am sure they’ve talked about it internally, but it’s inevitable, at every turn in Apple’s history. They’ve had to roll up their sleeves because third-party companies came up short. Unity got a taste of the big leagues and they struck out, they like Sweeney Todd and Company showed their true face, yes they make a good gaming engine but you can’t wait for them or anyone else how long is Apple supposed to sit around and wait for these people to do something they won't.
This is another Code Warrior moment, where would Apple be today? If they hadn’t rolled up their sleeves and designed their own in house solution, on this board. There were many people beforehand that went on and on at how Apple shouldn’t design and engineer their own CPU, were you one of them? Whether it was X-Code, Safari, iPod, iPad, iPhone, iMessage, Apple Watch, Apple Maps, Metal, all of them came about one way another because the marketplace was not interested in supporting the Apple ecosystems, and they still aren’t.
Overall performance isn’t the problem of Apple hardware marketplace perception is: also note, no one even knows exactly what all the functions of the new Apple R1 processor is.
Unity struck out….
https://browser.geekbench.com/mac-benchmarks/ Single core M2 the generation M3 is even faster and even has Ray tracing support
https://browser.geekbench.com/mac-benchmarks Multi core M2 the generation M3 is even faster and even has Ray tracing support
https://browser.geekbench.com/processor-benchmarks/ Single core
https://browser.geekbench.com/processor-benchmarks/ Multi core
Geek bench conveniently doesn’t measure the overall wattage used by each CPU or GPU, in that area Apple is peerless (I have a feeling when the other manufacturers catch up, they’ll start to include those numbers too) if they do show wattage I’ll be happy to know where it is.
PS.. Apple can do Direct X in their sleep. They haven’t done it because they’ve been busy doing other things but now that’s probably become inevitable. Microsoft by spending $69 billion dollars on Activision shows that they believe in shortcuts and not rolling up their sleeves. I think Apple can do a game engine in their sleep, and they won’t spend more than $3 billion dollars doing it, which by the way is the cost of the largest acquisition Apple has ever made in their history.
You missed the point about game developers wanting cross-platform solutions. Sure Apple can recreate Unity for their own platforms, and some smaller game developers might bite because Apple's marketshare is big enough for them. However, the big players want their games on all the major gaming platforms. That's the appeal of 3rd party game engines like Unity. Just like Apple, game developers don't want one platform maker controlling their destiny either.
Cross platform is fine, but that is secondary in order for Apple to sell their hardware they can’t sit around and wait forever for third parties to do the job and throughout their history in the end, they have to roll up their sleeves and get busy.
Another example where Apple has had to roll up their sleeves and it’s one of the biggest things that they’ve ever done was to open up their own physical Apple stores, which was also met with derision at the time by the so-called experts, and the reason was the same, most of the existing storefronts could care less about showing Apple products in a positive light.
https://www.forbes.com/sites/sanfordstein/2021/05/19/apple-store-turns-twenty/?sh=1bd26efb31ac
Important to note the it wasn't a threat from an upset game dev. It was an internal Unity employee who made the threat.
…doing dumb shit, like buying a bunch of stuff they don’t need. Simply put, poor leadership driving fiscal irresponsibility. Yet those leaders are the ones with the stock grants, golden parachutes, future CEO jobs and board seats, etc. Rotten.
And yes, there is Android. Can't push this narrative where "the Mac's small number of gaming units when compared to PC and console doesn't matter because of mobile" on one hand and then ignore Android's massive market share in mobile on the other. No matter how many times statistics like "iPhone device owners spend 7 times as much as Android owners on average" get thrown out there, the idea of making a game engine where mobile games is a large part of its strategy without including the largest mobile platform is nuts. Evidence of this? Ask Apple. We have already established that Apple Arcade got no traction. Apple didn't even try to launch Apple Music without making the app available on Android. Even more embarrassing: Apple did try to launch Apple TV+ without Android only to capitulate and put it on Android. They even put it on Android TV when using it to sell more Apple TV 4K devices was a major motivator for their creating the service in the first place.
Long story short: Apple can create their own game engine just fine. But if it can't be used to make PC, console and - yes - Android games, no one is going to use it. Making it a wasted effort.
They could also build a game engine but I would expect them to build off an existing engine than start from scratch. They could build one from the ground up in Swift like a much bigger version of Swift Playgrounds but for cross-platform support, an existing engine has everything they need as well as familiarity with developers. A custom engine would take years to make. Unity is currently valued just under $13b:
https://finance.yahoo.com/quote/U
They lose a lot of money every year so buying them out would come with billions in ongoing losses in the near-term.
They'd probably be better partnering with one or more game studios. They have some close ties with Hideo Kojima. He chose the Decima engine from Guerilla for Death Stranding, this is the engine used in Horizon Zero Dawn.
https://en.wikipedia.org/wiki/Decima_(game_engine)
If Sony allowed it, Apple could possibly license that, build a UI around it and allow targeting multiple platforms. If they didn't allow it, CryEngine is a good engine too and has been licensed to Amazon. There's not an immediate need for it, Unity can't afford to lose their business so they are going to backtrack and Unreal is still available, despite the ongoing legal issues.
It does highlight a problem that there are only two viable production-quality engines available to game developers in one of the largest industries in the world and they are both proprietary. It's not easy to solve because fixing it requires a lot of investment with almost no return and the work involved would benefit competitors. Open source engines can have better licenses but they'll never have the resources to compete with a for-profit company with full-time devs.
I think the most sustainable solution is to have a core renderer and deployment system as an open source product. That's the hard part and small enough that it can be handled as an open source product by multiple game studios. The rest of the engine like editor and software libraries can be handled by multiple for-profit companies. There can be multiple editors and libraries (physics, particles, tools etc) that can be done by 3rd parties.
1. This world where Sony licenses something to Apple that can be used to create products on XBox and Android devices that compete with Sony and Apple devices isn't going to happen. Nor should it.
2. Apple is a hardware company. This sort of thing is hilarious. Normally the Apple fandom kicks back, revels in the benefits that being a hardware operation like Apple provides and laughs at the issues that software companies like Microsoft and Google have to put up with that Apple doesn't. Then every once in awhile a software need pops up and then it is like "oh no! Apple needs to fix this with software!" Yeah ... no. I well remember the "iTunes is malware" era when that buggy, rarely updated junk of an app would freeze and at times take down your whole PC. And Apple's experience with Safari was so bad that they just gave up and stopped supporting it on Windows. So you want the company that couldn't even manage a good media app or competitive web browser on Windows to build a cross-platform game engine? That would be used to create massive games - Call of Duty: Warzone 2 is nearly 200 GB - to run on platforms other than macOS or iOS? Pardon me, but what has Apple ever done that makes you think that Apple is even capable of such a thing?
Let me go back to the iTunes example.
A. Apple didn't even write iTunes. Apple bought SoundJam, renamed it iTunes and made it worse. (Apple had to "request" for SoundJam's creators to cease making it available for those who wanted it.)
B. Media players are simple apps! (Game engines are not)
C. Apple made tons of money off iTunes for Windows! They had the resources and incentive to make it as competitive as possible! (For a game engine, this is not true.)
Yes, this stinks. But ultimately this is a software business problem and not one for Apple to solve. Should Apple contribute to the solution? Maybe. They could write Unity a check to help pay off their debts in return for co-ownership as well as a seat on their board to force them to sell off or ditch their bad acquisitions and prevent them from committing other such nonsense in the future. Or maybe they could write that check to whatever foundation that is responsible for Godot. But I really don't think that they should. This isn't Apple's area of expertise and ultimately isn't their problem. Apple's responsibility is to create a platform that will feature the top games regardless of who makes them or how they are made. With Ax/iOS they have done this. They haven't done this with macOS/Mx granted, but creating a game engine isn't going to change this.
If anyone should step in and help Unity or solve this problem it should be a software company. Start with Google. Android is just as reliant on Unity games as iOS! Hate Google all you want, they are a successful software company for whom multi-platform support has always been an emphasis. If not Google, then Microsoft. Tons of PC and XBox games are Unity, and Microsoft successfully emulated Google's multi-platform strategy after they ditched the Gates/Ballmer regime for Nadella.
Apple should keep their money and attention focused on their Vision Pro headset and try to succeed where Facebook, Valve, Samsung, Sony, Microsoft and Google failed (Google failed with Tango, Cardboard, Daydream and 2 strategies with Glass!). And creating a workstation chip that is capable of being in the same room as this soon-to-be-released monster: https://www.extremetech.com/computing/amd-zen-4-threadripper-pro-debuts-with-96-cores-to-destroy-everything ... and no, no one will care that the M2 Ultra devices will have superior power per watt to Threadripper Pro workstations that will be (more than) twice as fast while costing (less than) half as much.
Hardware (and I am someone who regards operating systems as extensions of the hardware) is Apple's thing and they should stick to it.
https://www.youtube.com/watch?v=XAfTXYa36f4
While they are capable of this (ultimately they just hire people who are capable of this), I don't think Apple is best to handle a game engine.
Microsoft would be best IMO (or the big game studios), Google cancels too many projects that don't make a return and this never would for them. For Microsoft, it helps their partners out. They own github and their employees have worked on engines before. They even own a few good engines like in Microsoft Flight Sim and Forza (Forzatech).
There's a report saying they are building Fable in the Forza engine.
https://www.ign.com/articles/fable-is-being-developed-using-the-forza-engine
They could open source the core renderer for Forzatech and setup platform distribution support and leave the rest up to 3rd parties.
Unity. Welcome to the big leagues.
https://www.geekwire.com/2023/heres-why-so-many-video-game-developers-are-suddenly-abandoning-the-unity-engine/
https://www.forbes.com/sites/paultassi/2023/09/18/unity-will-change-its-controversial-new-pricing-but-has-lost-developer-trust/
https://itch.io/t/2227391/unity-game-engine-will-become-a-virus-change-engines-now
Roll up your sleeves Apple…..
This company is Code Warrior or that Sapphire company remember them.
Apple doesn’t have to worry about being cross platform if they decide to do a game engine revenue and profit potential in comparison to the rest of the industry speaks for itself. Continue to build something that works well, and have reasonable terms for the developers who might like to try their hand at building a game within their ecosystem is all they need to do, and Apple is definitely more professional than Unity or Epic with Sweeney Todd which by their recent self-destructive actions isn’t hard to do. Those developers value stability and the ability to make a revenue and profit and Apple has that, the numbers below show that in every category.
https://www.businessofapps.com/data/app-revenues/
Apple won’t put their gaming future in the hands of Google or Microsoft, and in light of the Justice department and the EU nosing around makes that even less so, this is another roll up your sleeves Apple moment.
I welcome that. Apple should never have had a free tier in their pricing.
While the move to free-to-play has lowered quality, it's not Apple that pushed this but consumers. People simply weren't willing to pay money for mobile apps, many of which were low quality.
Free to play works as a demo so people can see if they want to pay.