Unity Files For IPO

https://www.sec.gov/Archives/edgar/data/1810806/000119312520227862/d908875ds1.htm

 

Inevitable.

 

Yup they are losing money and have done 8 funding rounds.

Now big question for us is what changes are they going to make so they stop losing money?

 

To long to read the whole IPO

 

And by the way, not having a net profit is a good thing for a company, means it will pay less taxes.

 

Investing in Unity stock right now would be very wise. I see several huge corporations investing in Unity, like Facebook, Valve, and Tencent. I believe the initial price is going to be very low (less than $30 a share), and in only a few years, the price is going to go up 300% and more.

If anything, I see Unity offering preferential treatment towards the big investors. It's also interesting how their online services are providing most of the revenue. So I see Unity continuing to invest heavily into service based subscriptions, integrating them more into the engine itself.

Hopefully this means we'll actually have good online multiplayer frameworks and netcode.

 

Unity made a net loss every year of around 140-160 million dollars.

This company either finds investment in an IPO or they are bankrupt.
They build up more than 500 mil of debt.

Another interesting point, 74% of all income Unity has comes from their top 600 customers that each are paying more than 100.000 dollars per year.

Meaning all the other stuff, like plus, pro subscriptions or asset store is the other 26%.


Note that they spend 250 mil on research and development,
and a whopping 174 million on Sales and Marketing
and 143 Million on general/administration.

So this is a sales and manager company, not a tech company any more.
Hear it from Jobs of how that will go:

Good luck guys... you are going to need it.

 

Yea I like that speech from Steve jobs, The current Unity CEO also worked for PesiCo.
Lets just hope it will be fine, Apple turned out to be quite successful after all.

 

at this stage (after reading those numbers and watching that Jobs video), i'd just hope that Microsoft would buy Unity..

also these new profit ideas do not sound too exciting,
https://twitter.com/slipster216/status/1296869165593178112

 

Microsoft ? It would not be my choice, I would prefer if Softbank or some other non tech financial institution, at least it would stay independent. But better not any takeovers.

 

What are the chances of google buying out Unity

 

Two of my worst fears, adobe or autodesk buying unity shares until they own a majority and take over.

Microsoft won't be any better, and google for sure not. Apple would also not know what to do with it.

Best if we all have a little bit of shares

 

Disclaimer: I'm repeating repeating something I said in another thread some months ago:
I'd like to see Unity bought by Microsoft. If that happened, a number of things could follow:

- It could become a first class citizen of the .NET ecosystem (.NET 5 yay!)
- It could become part of the Xbox strategy (More love for high-end features!)
- It could get pushed internally to the Xbox game studios family (Dog-fooding yay!)
- It could get an overhauled Package manager & Collaborate (They have nuGet, and own Github and NPM now)
- Havok could become a core part of the engine
- It would have the backing to focus on a strategic set of markets (games, AR) and stop chasing revenue from every possible place
- A lot of online infrastructure be consolidated under the umbrella of Azure.
- It could lead to secondary companies bought by unity to become part of the base offering or even fuse with similarly-focused companies bought by Microsoft.
- Maybe, and only maybe, there could be a change in the licensing model an or/source access

If I go even further, maybe one day the whole DOTS thing can give back to the .NET stack. Maybe some new construct in C# to better support the so-called HPC# ? Maybe Burst becomes part of Roslyn (or whatever that part of the toolchain is called)?



Now I know some people still wrinkle their faces when they hear the MICRO$OFT name, but come on, it's not a bad company at all these days. I concede there could be some possible drawbacks, such as relegating OpenGL/Vulkan/Apple ecosystem, but I doubt that would be the case. What I mentioned before is more than enough for Unity to become part of the Microsoft ecosystem and "lure" devs into the rest of their offerings. I don't think they'd risk angering people by cutting cords with "the competition".

At the end of the day i think it could be a turn for the best.

 

would anti trust issues stop microsoft or google form buying unity

 

Microsoft would be bad for the whole multiplatform export options

apple google playstation nintendo would be the fist to be removed as export options

 

I would think not, neither of them have a major influence in the game dev/3D content markets

 

I'd agree with that if we were taking about 90's-early 00's Microsoft. It's not like that nowadays.

They're embracing open source like never before, their biggest money maker (azure) works mostly on Linux, and they're actively integrating their ecosystem into other systems (vs code for Mac, Ms launcher on Android, new Edge is built on chromium)

On the gaming side, they're focusing on PC like never before, have been releasing their games on steam, and many of their games like Minecraft and the Ori franchise are available on PlayStation and Switch

 

I’ll personally buy most of Unity and force them to focus on their best features while dropping everything else.

Starting 2021, Unity will no longer have a game engine offering and will completely focus on providing versioning services via Collaborate.

 

I'd love it if Microsoft picked up Unity. But I doubt that would happen. What's most likely is a bunch of companies will get small stakes in Unity, and UT will focus more on mobile (possibly even more enterprise mobile, like enterprise AR and the like) and ad revenue, and less on PC gaming since it seems to just be a cost for them without a great deal of profit.

 

After IPO is done, I would expect Unity to increase monetization of its free tier users due to shareholder pressure. I foresee more paid add-ons, and incentives will be added to get more people onto Unity Plus.

 

Yeah it is quite amazing to watch. Compared to the rest of the major tech giants, today's Microsoft comes off as the good guys.

 

This is mentioned from time to time but it simply isn't accurate now. Microsoft of the past is no longer the Microsoft of the present starting with the fact that the bulk of their income has nothing to do with operating systems but has instead shifted to business solutions and their cloud (of which nearly half is Linux-based).

Of the three major segments of income Windows belongs to the lowest titled "More Personal Computing" which includes their Surface line of devices and everything gaming related like the consoles. I wouldn't be surprised at all if Windows were less than one-tenth of their income now. It has seriously become that minor to them.

https://www.fool.com/investing/2019/02/19/heres-how-microsoft-makes-its-money.aspx
https://www.investopedia.com/how-microsoft-makes-money-4798809

 

Woot just got dark theme, now time for $2.99 to change the editor colors DLC, but instead of having the color changes in preferences window, it's now in a beautifully made UI.

That's what I fear from IPO, stuff like that. (Just using colors as an example) since we just got dark theme.

The reason I come out like this, because there's nothing worse than a shareholder coming in and buying up all the stocks and then have no clue on what anything is, why something may be important/or not. Shareholders are there to make a profit, nothing more nothing less.

 

They spend more on R&D than marketing, it is still a product company. The founders are around, they invest massively in new products. It's not because they are not as good as other competitors in some aspects that they are not a product company.

 

That's interesting. I believe Epic Games has less employees than Unity currently, and yet they're making much more money. Unity needs to "Sell" services to prevent further losses, while Epic can provide services, tools, and assets for free, while making large profits each year. Yeah I know Epic is currently in a legal battle with Apple/Google, but they'll likely still increase their profits and net worth this year.

It's kind of a similar situation with Halo Infinite. Supposedly the game had a 500 million development budget, yet the game looks absolutely terrible. Rumors point to a terrible developer environment with contractors replacing dedicated developers, harassment, and a terrible code base with little to no documentation. There's too many cooks in the kitchen.

Unity needs better management, plain and simple. It's one of the most popular game engines, used widely by both triple A and indie studios. Big investors have provided Unity with $$$ for years. And now the original developer of Unity is no longer sitting on the board?

 

Is Joachim Ante not on the board?

 

Not as of this month.

 

Where can I read that quote. So what is his role now?

 

It's in the S1 linked in the OP. He is CTO which is listed as a key employee, but looks like they have an entire executive suite so not sure what the difference is, if any.

 

Check the link in the OP. Search for his name and it's the third result.

 

So what does this mean for all the great preview tech like Burts and ECS ... the whole DOTS

 

Nothing. He is still chief of technology at unity.

 

I searched the document and did not find such a statement

 

Correct me if I'm wrong, but if any major tech companies were seriously considering buying a controlling share in Unity, wouldn't they have already done it? Either they aren't offering enough or Unity don't want to give up control. I'm going to assume the latter.

 

My assumption is that it's both. Unity likely sees themselves as being worth far more than they are and they want to stay in control even if they aren't necessarily any good at it. I'm reading through the second of the two main articles covering the topic and apparently they've never turned a profit.

https://www.theverge.com/2020/8/24/...real-competitor-epic-app-store-revenue-profit

Edit: Did anyone else notice that they say they have 1.5 million monthly active creators? I double checked old news articles and at one point they stated they had 5.5 million developers so unless they changed their way of counting developers this means they lost 4 million (more than 70%) of their active developers.

https://www.vrfocus.com/2016/05/unity-ceo-5-5-million-developers-working-with-videogame-dev-engine/

 

Accumulated deficit (in thousands)
(569,277 )

 

Maybe total all time in that old article and only monthly active in the S1.

We define monthly active creators as the number of unique devices that have started the Unity editor, the user interface for our Create Solutions, at least once during the trailing 30 days from month end. This metric includes both non-paying creators, which comprise the substantial majority of our creators, as well as paying creators, and does not currently include monthly active users of our Operate Solutions products, unless they are also using the Unity editor, as described above.

 

You forgot that Epic makes their own games. Unity... not so much (those fancy demos don't count!).
Epic also runs its own game store (where they take a 12% fee), while Unity only has the Asset Store to offer.

 

Ahh things are coming into light. The price increases, the refocusing on the core product instead of the future, makes sense for an IPO offering. I think the question is, as a user would I invest in Unity?

 

"We have a history of losses and may not achieve or sustain profitability in the future."
"As of June 30, 2020, we had an accumulated deficit of $569.3 million"

That seems a little shocking/worrying!

 

Not really. Stop the marketing spend and scale back the development and they’ll be turning a profit and can claw back that debt easily. Thing is they’ll claw it back quicker by continuing dev and investing in growth. Like any tech company.

what’s amazon made to date?

 

Actually true, to quote another source: "PitchBook estimates the company’s last private market value to be about $6.3 billion"
We are just dealing with very big numbers!

 

Yes but was that estimation before or after they released the dark theme for free?

 

I don't think so... with Xamarin and the replacement/iteration of it (MAUI) shows that they shifted their policy...

 

I wonder... how long can a company survive with such a huge deficit? It's almost 10% of their self estimated value (which I wouldn't rate at 6 billion anyways). If it's true that only 600 of their biggest customers pay the majority of Unity's income, an engine change within their customer base would be fatal. (for example during next year and the first beta versions of UE5).

 

True, but the risk of that depends very much on who their top 600 customers are. UE5 looks super attractive... to people who make a fairly specific type of game. Nanite and GI probably aren't big ticket items for studios making casual mobile games, for instance.

 

There are many brilliant and dedicated engineers at Unity. There is also alot of deadwood collecting paycheques. The two major issues that held development back months for my projects were not solved by the boilerplate cut and pastes from the bugz squad. They were solved by one of the desktop software engineers who cared enough after seeing my issues posted on the forums to reach out to me and assist in solving the problems. GlassDoor also points to issues with snarkfested HR bimbots. Five deadwood employees will consume a minimum of half a million in salaries and another 250K in benefits and in kind contributions.

 

This is a very old-fashioned view of the world. Meritocracy should be eliminated from all workplaces in favor of hiring based on representation. The most underrepresented person, is the bumbling lazy idiot. Profit centered companies simply aren't catering to this demographic.

 

And the recently announced IPO is going to kill all the good resolutions of https://blogs.unity3d.com/2020/08/13/the-road-to-2021/. I pity the fools..

Over and out!

 

Simple graph showing what unity doing with their money. It didn't disappoint me. Note that many companies, under "Administration costs" usually hide giant paychecks for the top executives.