John Riccitiello probably should have seen the outrage coming.
A video game industry veteran, Riccitiello is the CEO of Unity Technologies, a company that’s not a household name but is a fixture for more than two million game developers who use its software to power their games. .
For most of the company’s 19-year history, Unity’s software business was relatively simple: Each developer who used Unity’s professional tools to create software paid a flat annual license fee. The software acts as an engine. It is the underlying technology that developers use to create and run their applications.
In mid-September, Mr. Riccitiello proposed an abrupt change. Instead of an annual fee, it wanted to charge developers a fee every time someone installed a copy of their games, which meant they would pay more as their titles grew in popularity. The radical change would make a significant difference for Unity, which has never turned a profit.
But in an industry where gamers and small game development studios are reluctant to trust large corporations and are quick to take offense at perceived attempts to nickel and dime them, the proposed fee change has become a crisis.
Developers around the world who use Unity, including those behind hit games like Among Us and Slay the Spire, have threatened to leave the platform, saying the new pricing model could kill their businesses if their games become too popular.
There was talk of a class action lawsuit. Someone even issued a threat requiring Unity to inform federal law enforcement officials and evacuate its San Francisco headquarters and his office in Austin, Texas, a person familiar with the decision said.
The developers said they felt betrayed. Many spent years learning and coding in a particular programming language used by Unity called C# (pronounced “C sharp”), making it difficult for them to switch to a competitor. Unity executives were using that influence, developers complained, to engage in digital activities. rent seeking behavior.
“They completely abandoned the creative, punk community of software developers that was a big part of their continued success,” said Tomas Sala, an independent developer in Amsterdam whose game, The falconerIt was built in Unity.
The episode highlights the precarious position companies can find themselves in when trying to keep a community happy at the same time executives want to find ways to make more money.
Trip Hawkins, founder of video game giant Electronic Arts and an adviser to some game developers using Unity, said he understood the outrage. He compared it to a hardware store that sells a carpenter a hammer and nails and suddenly charges a fee for each nail the carpenter has driven into a wall.
“It focuses on what feels good versus what feels bad in people’s guts,” said Hawkins, who left EA in 1994.
Now, Riccitiello and his executive team are struggling to contain the fallout. Unity has rolled back some of the changes in a series of concessions intended to appease developers.
Among other changes, it raised the revenue threshold for games that will be charged the install fee (so it will primarily be charged to larger developers) and allowed developers to pay the fee or 2.5 percent. of your company’s monthly income, whichever occurs. lower. But the company still plans to move forward with the new fee model.
In an interview with The New York Times, Riccitiello said he was “really humbled” by the response and had spent the past two weeks talking to partners and independent developers. “It reminded me how fundamental Unity is to the developer community,” Riccitiello said.
The Unity engine is one of the few software development toolsets in the video game industry. Developers can use the tools to create 3D character models that can run, jump, and shoot enemies in games. They can also use the software to design rich landscapes and textured environments. Every time a game is launched, the software engine from Unity or another company runs underneath.
Most of these engines have charged the companies that use the software a fixed annual amount for each of their developers. Unity’s new rates turned this predictability on its head. Many developers felt that they were being punished if their game turned out to be a success and that Unity had the potential to take a much larger share of the revenue.
“The new business model just doesn’t work for the rest of us,” said Sala, the game’s developer. “A lot of people feel like we’ve just been fooled.”
Unity was founded in 2004 in Copenhagen as a project of three developers who collaborated on an Internet forum dedicated to coding. The premise was to “democratize” game coding tools so that anyone, from high school hobbyists to professionals, could create games from scratch.
“For me, the key was the community and the resources around it,” said Will Todd, a 28-year-old developer. “You can go into a forum and quickly get an answer to any question you might have.” He and his partner at London independent studio Coal Supper, James Carbutt, used Unity to create their hit game, The Good Time Garden, in 2019.
Criticized for his poor financial results, Riccitiello left his job as CEO of Electronic Arts in 2013. He joined Unity the following year, when the company was relatively small. He brought with him to reputation for making money out of games in ways that sometimes infuriated developers and players.
Mr. Riccitiello took Unity to a successful initial public offering in 2020, and Unity shares peaked at around $200 in late 2021. But they have since fallen to around $30. In its most recent quarterly financial results, Unity reported $533 million in revenue (up 80 percent from a year ago), but $193 million in net losses. Also fired about 8 percent of its employees in May.
Unity has an advertising business that allows developers using its platform to insert ads into their mobile games. It is the part of the business responsible for approximately two-thirds of the company’s revenue. But it’s under pressure from changes to Apple’s software for mobile devices that limit data that the Unity system can collect from developers who use it to serve ads within their mobile games.
Riccitiello told The Times that Unity’s software pricing changes had “absolutely nothing to do” with the challenges to its advertising business, which he described as healthy. He said the new model was “designed to be a fair and appropriate exchange of value” between Unity and its customers. In other words, Unity believes it can make a lot more money from its engine business than it does now.
Behind the scenes, many employees were furious. Numerous Unity workers told management it was a bad idea that would betray small developers using Unity tools, three current and former employees said. As a result, a handful of employees have left or are in the process of leaving the company, two people said.
Riccitiello acknowledged in the interview that the new pricing model had been poorly communicated and needed some changes. And Marc Whitten, one of the company’s top executives, wrote an apology message. blog post.
But the company is not going to reverse the price change.
It will be some time before Unity knows if there is permanent damage to its business. Mr. Sala, the developer of The Falconeer, said his next game was also built in Unity, and would still need to be supported with software updates and expansions to more game content for at least two years. But after Unity made some concessions, Sala said they were welcome changes. He added that if he decided to switch to another engine, learning that software could take months, if not years, to reach the level of comfort he had with Unity.
Carbutt, the developer at studio Coal Supper, said sticking with Unity seemed “an operational risk.”
“They broke the trust of the developers because of all this,” he said. “Irreparable damage has already been caused.”
