Unity Controversy: U-Turn After Devs Reject Pricing Change

The Unity controversy has taken the gaming industry by storm, drawing attention to Unity Technologies, a leading player in the development software space. This controversy centers around Unity’s 2023 announcement of a new pricing structure for their widely-used game engine, causing an uproar among game developers of all sizes.

In the following sections, you’ll find an analysis of the Unity controversy, featuring insights sourced from reliable reports and outlets and presented to you by Business2Community. From developments surrounding Unity’s game engine pricing structure to the company’s intent to impose revenue thresholds and runtime fees, this exploration aims to cover all facets of the situation.

The Story of the Unity Controversy

In September 2023, Unity Technologies ignited a controversy within the game industry when the company announced revisions to its pricing model. According to the updated structure, Unity began charging developers based on each download once specific revenue benchmarks and download numbers were achieved.

What is Unity?

Unity Technologies is a software development company renowned for its game engine, which serves as a tool for creators across multiple industries.

Founded in 2004 in Denmark, the Unity platform enables developers to create 2D and 3D content, offering options for rendering, physics, and audio. The versatility and accessibility of Unity’s engine have made it a popular choice for millions of developers around the world, ranging from indie developers to large-scale enterprises.

Unity holds a 26.93% share in the game development market, competing with 105 competitor tools in the same category.

In addition to gaming, the engine is used in various sectors such as film, animation, architecture, automotive, and education. As the engine supports deployment across over 20 platforms, it offers developers flexibility and reach.

Unity’s New Pricing Model Sparks Developer Backlash

On September 12, 2023, Unity announced that it would roll out its new pricing model starting January 1, 2024.

In Unity’s updated pricing structure, developers were to be charged a Unity Runtime Fee of 20 cents for each installation of their game once certain download and revenue thresholds were met. This was to replace the flat-rate subscription fee, with different tiers, that the company had been using up to this point.

Although Unity claimed that only 10% of developers would be affected, there was still uncertainty about how installs would be tracked and what would count as a “valid” install.

19 companies, mostly mobile game developers in Europe, urged Unity to reconsider its recent changes. In an open letter, the group declared:

As a course of immediate action, our collective of game development companies is forced to turn off all IronSource and Unity Ads monetization across our projects until these changes are reconsidered.

These companies, which have collectively released thousands of games with billions of downloads and came together specifically for this protest, include major players like Voodoo.io, Azur Games, and SayGames. This boycott marked an escalation in the ongoing dispute between Unity and its developers.

Beyond financial concerns, developers were outraged by the lack of transparency. Unity had previously assured users that they could stick to the terms of service that were in place when they first started using the platform.

However, Unity deleted a GitHub repository that tracked changes to the terms of service and introduced new clauses in 2023 that paved the way for the controversial runtime fees. In response to the boycott, Unity acknowledged the suspension of its ad monetization programs for some apps and retaliated by pausing user acquisition programs, making it harder for those apps to gain new users.

Despite the financial hit, developers argue that the issue goes beyond money. Nikita Guk, CEO of PR firm GIMZ, emphasized:

The new regulations from Unity will affect every project that doesn’t generate sufficient income per user.

Indie Developers Abandon Unity Following Runtime Fee Controversy

Unity’s controversial Runtime Fee policy has cost it the trust of many indie developers, with some abandoning the platform entirely.

One example is Mega Crit’s Slay the Spire II, which is now being developed in the open-source engine Godot instead of Unity, as revealed by its developer, Mega Crit.

👋 @unity pic.twitter.com/mBCfb8li3z

— Mega Crit ⚔️ Slay the Spire 2 Coming 2025! (@MegaCrit) September 13, 2023

Despite Unity rolling back some of its fee policies, the damage to its reputation was already done.

Godot, which had promoted itself as a free, open-source alternative during the debacle, gained traction among developers. With its cross-platform capabilities and a newly established development fund, Godot has positioned itself as a viable competitor to Unity in the indie gaming space.

Funding has been received from Google Play, among others.

Unity’s Revamped Pricing Model Following Developer Backlash

Less than two weeks after announcing its new pricing structure, Unity released a revamped plan that made several changes.

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. We will share an update in a couple of…

— Unity (@unity) September 17, 2023

These changes included users on the Unity Personal subscription would now be exempt from the new fee and the revenue cap for games using that plan was raised from $100,000 to $200,000. Additionally, games generating under $1 million in annual revenue were not to be affected. The requirement to use the “Made with Unity” splash screen was also removed from this tier.

For Pro and Enterprise users, Unity also clarified which games would be subject to the fee. Previously, the fee was going to apply to all games that met certain download and revenue thresholds, including those already released. Now, the fee would only apply to games made with the next version of Unity, launching in 2024, as confirmed by Unity’s president Marc Whitten. Games already released and ongoing projects will be exempt unless upgraded to the new version.

Also part of the changes in late September 2023, Unity also reinstated the option for developers to stick with the terms of service (TOS) applicable to the version of Unity they were using. This was a reversal from Unity’s previous decision to change its TOS without notifying developers, leaving them vulnerable to unexpected fees.

Starting in January 2024, Unity decided it would offer two payment options for games subject to the new runtime fee: either a 2.5% revenue share or a fee based on the number of new users each month. No game with a trailing 12-month revenue of less than $1 million would be subject to the new fees.

The specifics of how this was to be calculated remained unclear. Initially, Unity planned to track downloads and revenue using proprietary software, but developers raised concerns about privacy and reliability. In response, Unity shifted to allowing developers to self-report revenue.

Marc Whitten, admitted Unity’s failure to communicate these changes effectively in a blog post that has since been deleted from the Unity website:

I want to start with simply this: I am sorry. We should have spoken with more of you and we should have incorporated more of your feedback before announcing our new Runtime Fee policy.

Marc discussed the situation in detail at the time the blog was published:

Despite these adjustments, trust between Unity and the developer community may have been irreparably damaged.

Unity’s CEO Resigns Amidst Developer Outrage

The CEO of Unity Technologies John Riccitiello resigned in October 2023 following the backlash from developers over the controversial pricing model change. This shift provoked widespread criticism from the developer community, including those behind popular titles like Among Us and Slay the Spire.

Riccitiello, a key proponent of the fee changes, had been at the helm of Unity for nearly a decade, leading the company through significant growth, including its 2020 IPO.

However, his leadership had also drawn controversy. Developers criticized his past remarks about monetizing games and his role in pushing the pricing change that many saw as detrimental to their businesses.

While Unity responded to the backlash by rolling back parts of the proposed changes, the damage to its relationship with developers had already been done. Amid escalating tensions, including threats that led to the evacuation of Unity offices, Riccitiello’s departure was seen as an effort to stabilize the company.

In May of 2024, Unity Create’s boss Marc Whitten also announced his resignation, pocketing $600,000 in severance and bonuses.

Unity Cancels Runtime Fee Following Backlash

In September 2024, Unity’s new CEO Matt Bromberg announced the cancelation of its controversial Runtime Fee for gaming customers after receiving widespread backlash from developers and partners.

After the fees created significant concern within the gaming community, Unity engaged in consultations with its customers and stakeholders, ultimately deciding to abandon the fee.

Unity chose to revert to its existing seat-based subscription model. This includes continuing with Unity Personal, which remains free for users generating under $200,000 annually.

For Unity Pro and Unity Enterprise customers, the company announced subscription price increases, effective January 1, 2025. Unity Pro will see an 8% increase, bringing the annual fee to $2,200 per seat for customers earning over $200,000, while Unity Enterprise will face a 25% hike, targeted at customers generating over $25 million annually.

Unity’s decision is aimed at realigning with its core mission of democratizing game development, focusing on delivering value and maintaining trust with its developer community.

The Consequences of the Unity Controversy

The Unity engine controversy had far-reaching impacts on multiple stakeholders within the gaming industry. For developers, particularly those operating in the free-to-play and mobile games markets, Unity’s proposed changes to its business model introduced uncertainty and concern.

Many developers, including those with successful titles, found the idea of being charged based on game installs disconcerting, fearing increased costs without clear value additions through Unity services. Unity’s initial plan sparked discussions about transparency and trust, highlighting a fracture between the game engine provider and its users.

Unity’s CEO, John Riccitiello, faced significant scrutiny during this period, resulting in his resignation amidst the uproar. Previously held in regard for leading the company through substantial growth phases, Riccitiello’s role in pushing forward the controversial pricing model led to criticisms and diminished trust. The backlash indicated a disconnect between Unity’s leadership and its core developer community, suggesting a need for future leadership to prioritize engagement and feedback from their base.

In response to the situation, Unity released multiple blog posts and updates to clarify its stance and actions while attempting to mitigate the damage. These initiatives, coupled with the appointment of interim CEO James Whitehurst in October (and later Chairperson after Bromberg was appointed CEO in May 2024), pointed to a strategic shift aimed at restoring developer confidence and resetting Unity’s image.

The company’s stock price took a hit in September 2023, before rallying and then dropping dramatically as the changes were implemented in 2024.

What’s more, in the week after the initial announcement, Unity lost 15% of its American advertisers, with another 8% leaving the following week. Three weeks after the announcement, advertiser numbers increased slightly, by 5%. The decline continued but recovered somewhat when the CEO quit soon after.

Despite Unity’s efforts to recalibrate, the controversy remains a seminal case study highlighting the delicate balance between innovation, revenue generation, and developer relations.

What Can We Learn From the Unity Controversy?

The Unity controversy serves as a reminder of the intricacies involved in navigating changes within the tech and gaming industry, particularly for businesses like Unity, a leader in the games engine market.

The controversy highlights the importance of transparent communication and stakeholder engagement when rolling out new policies. Unity’s initial strategy to implement a Runtime Fee without adequately consulting its developer base resulted in widespread backlash. The consequences of the change emphasizes the need for companies to solicit extensive input from their users and communities, especially those dependent on their platforms.

From a businessperson’s perspective, the resignation of Unity CEO John Riccitiello underscores the accountability that leaders face when key decisions provoke dissatisfaction among stakeholders. As seen in the case of video game companies and investors responding to Unity’s plans to charge developers, missteps can lead to brand damage and even personnel changes at the highest level.

The Unity controversy also underlines the importance of maintaining trust through consistent actions and communication, evidenced by Unity’s series of blog posts aimed at clarifying their stance. As Unity and other electronic arts platforms move forward, balancing innovation with the need to remain free in spirit — ensuring tools and resources are accessible without unanticipated financial burdens — becomes crucial.

Ultimately, this incident reiterates the necessity for video game companies to approach future endeavors with a sense of collaboration and mutual benefit, ensuring policies resonate positively with both the creators and the larger community.

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