Bad take.

If the author understood games, he would know that the ecosystem just does not have the capacity to sustain tech like margins.

Of course that’s ultimately what Bay Area Companies, especially EA and Unity and their (ex/current CEO) dream off and want to sell their investors but they slept through the part where the tech giants took those margins from the people that initially made them big.

Having run multiple P&L for major studios - it’s just not feasible; it’s not a high margin industry like ads, even in mobile and there are many rentseekeers already leeching from developers on mobile:
- Apple
- Facebook/Tiktok. CPI is massive and entirely unavoidable in mobile precisely because Facebook and Unity have drive commodisation of Games over the last decade. There’s more supply than demand and Facebook sits right in the middle matching it (and increasingly tiktok), pitting Chinese fake game video ads against serious developers.

Most independent studios in the world are barely profitable, a stunning number of them are reliant on tax credits.

Mobile Gaming is insanely competitive, Apple’s landgrab has destroyed competitiveness of smaller ad solutions who can’t compete with Facebook’s AI powered mitigations. The lucrative China market (China is a mobile gaming exporter and devs are large spenders on ads) has been wingclipped and seen powerful competitors like Tiktok rise.

Unity is out of their mind with this move and out of their class on expectations.

They went with VCs and sold promises anyone with understanding of games knew you cannot cash. It’s a bit driven game and almost every highly profitable hit game (the top 10 that account for the majority of revenue at any time) is using their own engine.

Fun fact: Even in the best times, BioWare’s profitability was highly tied to tax credits. Alberta ramping them down forced during an investment / console cycle for ed the sale to VG Holdings (CEO:John Riccitello) who promptly switched to EA and influenced them to buy his own investment, VG holdings at a 4x ROI.

He then instituted various investor focused profitability drives such as the infamous swipe your credit card to reload your gun in battlefield pitch, the Mobile F2P defoliation of Dungeon Keeper and Ultima forever and eventually got fired and went to Unity where he made various deals, including with Facebook that died the moment he got greedy and asked them for ads RevShare which instantly ended the relationship.

Tons of other ad tech investments and the occasional molestation charges from fellow C-Level executives followed and neither seem to have not paid off (except for Riccitello Pizza in NY who may be puzzled why they suddenly were the first hits globally on the name after reputation management consultants got dispatched) or they wouldn’t have to start squeezing devs.

No, Mr. Riccitello is a very typical CEO on a mission to get very rich as fast as possible by optimizing on short term investor pitches and delusions of joining the ranks of the people he hangs out with in Silicon Valley.

Nothing new, the industry is full of these types at the top and they mingle with the people they want to become (See Bobby Kotik dating Sheryl Sandberg which fits so well with her focus on women given the corporate culture he created at Blizzard ).

The real crux though is the sudden altering of the deal with little communication, care and expectation settings. This happens because they knew it would not be a good sell, especially internally.

Their own people would have rebelled so they black-opsed it without internal consultation of the people actually understanding developers to avoid internal riots and as a result missed every single edge case.

What will happen now is mass abandonment of Unity for new projects. Interestingly, AI is reducing the costs of engine changes rather dramatically right now.

The timing suggests this was a “shareholders won’t like next quarter and must be placated” emergency ripcord, especially coupled with the stock sales by insiders that have been going into overdrive recently.

Low interest party is over - and VCs may find it hard to find a bag holder for Unity. Games is a fickle business.

Now Unity is under increased pressure to provide their VCs with a bag-holder exit (sell a growth story to institutional investors to con them into taking the sinking stock off the hands of the VCs. Where have we seen the same pattern recently ... ah, yes, reddit. Same symptoms, same disease.

https://venturebeat.com/games/the-ups-and-downs-at-ea-under-...

https://variety.com/2019/gaming/news/former-unity-exec-files...

https://www.ign.com/articles/former-ea-ceo-devs-who-dont-foc...