Unity Files For IPO

It is still a terrible corporation, and just like any other, they don't care about what's right or wrong, but about the profit. Thinking that microsoft would do only good things to unity because they have added bash shell to windows or because they are making good decisions with github or because they have more open source stuff these days is really naive.

It’s true they have been doing many anti consumer moves over 10 years ago and since then, many of them got dumbed down. But they are doing them mostly on the markets they don't have monopoly or in markets where open sourcing stuff would mean getting more workers for free.

Linux is the market leader in the cloud services, and this is because Linux system is lightweight, free and open sourced. Something that windows server can't fight with. The only reasons why windows server still does exist are:
- Active directory, important feature for big companies, linux still doesn't have any good solution for such stuff
- Companies that haven't been able to move their servers (including game servers) to linux.

Microsoft understands this too, and because of it they have been actively trying to monopolize the market the only possible way they can. Creating a solid environment in which users wouldn't want to leave or even would pay more for it than normally.


Now the problem for microsoft is, Unity is a big corporation too, with multiple divisions that are in direct competition with microsoft services. Buying such a company brings a lot of problems in terms of laws. Every time a company tries to buy out someone else, government checks If such a takeover will cause monopoly (in most of the planet), there are obviously workarounds to this, for example epic could never buy unity because this causes monopoly, but they could get their hands on quixel because they weren't a company that makes assets. So If Microsoft would even think about buying out Unity, they would want to get only a few products.

And this definitely doesn't count Unity engine. Their xbox division doesn't care at all about unity and creates everything in ue4 (besides wastelands 3, which has been in production even before xbox started buying out companies). The only game they have lately released made in unity is ori (Microsoft doesn’t work with the developers anymore) and cuphead (which is also on switch and ps4 so they have a bit different contract).

 

We could very easily leverage that argument against Unity. People need to realize that a company isn't a person and just because it's run by people who have a sense of right and wrong doesn't mean the company is equally concerned with right and wrong.

It's part of why I never understood the mentality of being a fanboy of AMD, NVIDIA, etc. AMD is only affordable right now because they're behind everyone else. Yet I remember back in the days they weren't too far behind having one of the most expensive processors on the market. For anyone curious it was the Athlon 1000 priced at $1,299.

https://en.wikipedia.org/wiki/List_of_AMD_Athlon_microprocessors#Athlon_(Model_2,_K75_"Pluto/Orion",_180_nm)

 

Well, yes. That's exactly what my big wall is about. I simply decided to take my time and explain how does the world work.

Plus, I have scrolled through the document and found out some interesting stuff.

First, it seems like many top managers don't work anymore at Unity, not only Joachim Ante.
"Mr. Levchin resigned from our board of directors in January 2020."
"Mr. Yang resigned from our board of directors in July 2020."

I don't know what these people were doing but I have clearly noticed lately the overall lack of progress with few preview/ experimental features and a lot of new stuff that was supposed to be released this year has been heavily postponed (or even deleted, like with the environment system). I hope they are simply trully changing direction and don't want to rush anything.

 

Thing is, we already know how the world works. You said I'm being naive in thinking Microsoft is a "good person" but I never thought so.

I think Microsoft's current objectives, policies and tactics are aligned with Unity's and my own. That's all. They have an involvement in both tech and gaming market that is kinda unique to them and that makes the idea of a buy-out interesting in my eyes

 

saw twitter thread with some quick details and charts:
https://twitter.com/marketplunger1/status/1297988376369541121

 

This is wrong. According to his Linkedin profile Jochim Ante is still CTO of Unity and in the S-1 file he is listed as "Key Employees" (page 151). The only change i see that he is no more a member of the board of directors.

Key Employees

Joachim Ante. Mr. Ante has served as our Chief Technology Officer since August 2004, when he co-founded our company. Mr. Ante initially began writing the core of the Unity platform as a teenager. He served as a member of our board of directors from June 2014 through August 2020.

 

This has that Apple feel to it where Jobs was pushed out. Not saying it is but sure feels like it. I would actually feel more at peach I’d he stayed on the board

 

We do not know the context. Joachim Ante is the mastermind behind the whole DOTs system and not easily replaceable. When he is not a member of the board of directors he can spend more time with his CTO role. And i do not know how the board really works (in term of power and decision making). It is not uncommon that some people like "real" work much more than board meetings. Sometimes less is more. But this only speculation.

 

He probably didn’t want to get bogged down in the rest of the crap involved in being on the board and just wants to build the freaking engine.

 

2014:

 

Is there a point to that? It's 6 years old and represents his position at that time. 6 years is along time, much has changed in that duration.

 

I wonder what the CEO total shares are compared to the original founders.

In 2019 he got 8,450,005 in total comp including options.

Under the terms of his offer letter, we granted Mr. Riccitiello an option to purchase 8,500,000 shares of common stock with an exercise price of $1.425 per share, which option was fully vested as of December 31, 2018

He is making out unbelievable in this. If unity IPO's at around $30 per share (7 billion market cap) then he will make $250,000,000 just on his offer letter options.

 

I doubt Joachim position changed but it shows how Unity has changed. "Our response has always been that for Unity it is best to be an independent company. This has been true for the last 10 years, it is equally true today."

 

I mean you can change positions but it’s interesting to read.

 

The world has changed in the last years.

Game Engines are used not more only to develop games their capabilities are interesting for visualization (architecture und film / media and so on), AI (ML), training (workforce / students) and research. To cover all these areas you have to invest in your product and that means genereally you need additional funding. (A historical note: the great railway companies were also financed by shares - when you have a technology revolution nobody has the money finance it alone).

The "classic way" are loans but there are also Private Equity (Epic), bonds and shares. We live now in a world of low interest rates. Investors looking for yield and believe they can find them in tech shares. So - despite Covid 19 - the NASDAQ and S&P 500 running from record to record becaus the "tech trade" is now the most overcrowded area in the finance world even when the evaluations are insane (Tesla). Unity could hit with a well placed IPO the jackpot.

 

Though he said that around the time John Riccitiello joined the company meaning it was ten years of David Helgason.

 

I certainly miss the days of the popped collar.

 

https://www.gamesindustry.biz/articles/2020-08-25-what-did-we-learn-from-the-unity-ipo-filing

Interesting info here, especially this bit:

 

More corps innovating should have this policy. Though not a public company Bose will spend umpteen years on new speaker designs and circuit component configs. Stock holders would have the founder fired for spending on fiscal quarter on R&D that did not pay them dividends and was an on the books expense as a liability...even though that is the philosophy that gave them a world wide rep for quality and innovation.

 

Considering John Riccitiello (current Unity CEO) said back in 2012:

"When you are six hours into playing Battlefield and you run out of ammo in your clip, and we ask you for a dollar to reload you're really not very price sensitive at that point in time. A consumer gets engaged in property. They might spend 10, 20, 30, 50 hours on the game and then when they're deep into the game they're well invested in. We're not gouging but we're charging and at that point in time the commitment can be pretty high."

I'm sure Unity will be fine. Maybe they will start charging us $1/day just to use Unity.

"When you are six hours into developing a game and a massive popup banner appears, and we ask you for a dollar to remove it so you can continue developing your game, you're really not very price sensitive at that point in time."

- John Riccitiello (probably)

Also, weird no one is talking about:

"which included $20.9 million, $44.5 million, $14.8 million and $21.7 million, respectively, of stock-based compensation expense. "

so 88 million in stock-based compensation.

 

They already do, it's called a subscription?

 

Don't be purposely obtuse. Quote the entire thing... not just part of it whilst leaving out the obvious example of what I meant by charging people $1/day to use Unity.


I'm sure Unity will be fine. Maybe they will start charging us $1/day just to use Unity.

"When you are six hours into developing a game and a massive popup banner appears, and we ask you for a dollar to remove it so you can continue developing your game, you're really not very price sensitive at that point in time."

 

So it's exactly like the current subscriptions, just cheaper and more overtly anti-consumer.

Sounds like an improvement to me.

 

Did the CEO actually say that? If not, the quotation marks are misleading. And my response to this hypothetical situation is, if that happened, people would quit using the product. UT is in competition with Epic for 3D. They are in competition with GameMaker Studio, Defold, and Godot for 2D. There are other fish in the sea. If people stick around, to paraphrase Joaquin Phoenix, they get what they deserve.

 

You can double-down on your infantile responses and continue being overtly obtuse but my point is still valid - however childish you want to be in your attempt to dismiss anything I point out.

The fact that Unity's CEO is someone who would even float such a suggestion as charging for bullet reloads should be concerning when it comes to an IPO for Unity and what he might be willing to do to increase profit.

If he suggested the idea whilst at EA to charge for bullets.... then what might he consider charging developers when shareholders demand more and more profit.

No he did not say that. However he said something very similar about charging for bullets in battlefield. My original post attempted to make that clear using a facetious tone. AcidArrow quoted me out of context and choose to dismiss the rest of my post.

"When you are six hours into developing a game and a massive popup banner appears, and we ask you for a dollar to remove it so you can continue developing your game, you're really not very price sensitive at that point in time."

- John Riccitiello (probably)

I was drawing a comparison to how easily you could replace "bullets" and "battlefield" with "some feature" and "Unity" with what he actually said.

"When you are six hours into [playing Battlefield] developing a game on unity and you [run out of ammo in your clip] see a giant popup that you can not get rid of, and we ask you for a dollar to [reload] get rid of it you're really not very price sensitive at that point in time."

I kept the original words in brackets and replaced them with my own (in bold). This was my entire point... it's not that hard to replicate his bullet idea with something in Unity. He may not... but I'm going to be suspicious of someone who could even possible suggest charging for bullets/reloads in battlefield.

 

"Pay $1 to unpack prefab"

 

you talk as if anyone who has any idea at all has to stick to that idea 100% and will never come up with new ideas or iterate, evolve, design and improved them.


Also, gamers in this hypothetical battlefield game have no agency and will pay it just because they’re invested... no they’ll likely rage and try and take down the designers of such features on twitter and Facebook and organise a mass boycott of this an all other products made by that company to the point that company will revert its change and head down a new path.

^ anyone can make up hypothetical bull.

 

Agreed. I always thought Unity Technologies was a very successful company but the fact that they've never turned a profit since they were founded is very interesting as is the fact that the bulk of their revenue isn't even from the subscriptions.

 

My point is that they already did what you’re saying.

What is your point.

 

Really? I thought it was common knowledge that their money came from services. Turning a profit doesn't seem to be such a big deal for massive tech companies, I'm no expert on that though.

 

Yeah. I also thought it was cool they're going to give 750,000 shares to a charitable foundation.

 

its not a priority. In fact if you’re making a profit it means you’re not investing all you could be into r&d and growth.

What matters is revenue growth vs growth in ongoing expense of providing the service/product.

 

"When you are six hours into developing a game and a massive popup banner appears, and we ask you for a dollar to remove it so you can continue developing your game, you're really not very price sensitive at that point in time."

When did Unity implement a popup banner that needs to be removed (by paying $1) before you can continue? It's not "just like the subscription" as there is no prerequisite to purchase the pro license to use the engine.

My point (as I have stated multiple times) is that having the same person who once brought up the idea of selling bullets when a player is no longer "price sensitive" - is concerning should Unity have a successful IPO. What happens when the inevitable shareholders start demanding more and more profit. I don't exactly trust someone who could even consider selling bullets/reloads to players when it comes to not implementing some overtly money-hungry initiatives that could have a negative impact on anyone who uses Unity.

Maybe, had you actually tried to understand my point instead of being purposely obtuse (ThEY alReaDy Do, It'S CaLLeD A suBscRipTion), I wouldn't need to be writing this for a third time.

 

Wouldn't you have to make a profit eventually?

 

Is the banner really the problem? Not the end result? Are you really that naive?

 

The idea is that they could stop trying to grow and cut on marketing and r&d and turn a profit instantly if they wanted to.

 

I don't see why I shouldn't remember what he said even if it was 8 years ago. It doesn't matter that it never came to be or that EA never implemented it. The same as Activision's multitude of manipulative patents they haven't implemented yet.

The fact that he even suggested it is concerning due to the fact that it shows a somewhat predatory nature. The way he coldly refers to people as being "price-sensitive" is off-putting; whether he said it 8 minutes ago or 8 years ago is irrelevant.

 

First it was "they already did what you're saying" and now you're pivoting to some other tired deflection after I proved you wrong (again, I ask when did Unity implement a popup banner that needs to be removed (by paying $1) before you can continue?)

The problem is that the guy who floated the idea for selling bullets to players is also the CEO of Unity and it's concerning when it comes to a public IPO. The banner was an example of something egregious that they could do.

Considering that you go out of your way to be obtuse and ignorant there is no point replying... maybe read what I wrote or don't bother replying if you're just going to obviously ignore valid points in favor of a hurr-durr response.

 

If it concerns you now it should have concerned you pre-IPO. The only thing this does is gives a bit more of an awarness of the timeline.

With the kinds of investments that were made an IPO was all but invevtiable (barring some major acquisition, which is probably a worse), and there has been a strong revenue focus since Riccitiello joined (remember subscriptions weren't a thing in 2014).

In any case its pretty unlikely there's going to be some kind of shareholder activism immediately following an IPO, and the growth mindset will likely continue for several years to come, particularly given the strong showing in terms of revenue growth over the last few years.

Major price upheaval is likely only to happen once Unity starts failing: I think there's quite some time before we face that scenario.

 

He has been the CEO of Unity for many many years already. They have already done egregious things. Unity is not the company they were.

 

Yeah this “not turning a profit” headline, while true, doesn’t tell the full story.

In 2019 they operated at Gross Margin of 78%, which is what is exciting potential investors.

They only don’t turn a profit because they put hundreds of millions into R&D to continue growth.

 

If I was held to account for something I said 8 years ago my response would be:

"I said that?"

 

No... Not if the prospect of growth continues to outweigh the realisation of current revenue as profit by cutting investment.

In reality if revenue continues to grow faster than you can spend it, then yeah it'll be profit. But some investors will look at that as wasted opportunity.

"Why weren't you able to forecast this massive profit and invest in another new opportunity elsewhere!"

At this point the IPO investors will all pull out and be replaced by retirement super investment management funds that require a more stable outlook even if growth potential is a bit lower.

 

Imagine spending millions on useless and not Unity related companies instead of for ex. multiplayer solution in Unity. Multiplay was bought in 2017, there's still 0 integration with Unity and it's also less accessible than PlayFab or Amazon GameLift.

What a waste, imagine if over last 5 years Unity would donate $30 mln to multiplayer open-source projects + give them access to Unity source and somehow cooperate to make engine better... Nah let's buy Vivox that can't be used in Unity out of box.

It's getting pretty funny when Unity promotes games made with Unreal https://blogs.unity3d.com/2020/08/19/why-hi-rez-isnt-worried-about-the-launch-of-rogue-company/


Well anyway, Unity is turning into investing behemoth and what's worrying is that their focus drifts away from the engine :/

 

Thank you for making your point very clear a number of times now. I think we all get what you are saying. Thank you.

 

It may not be "engine", but it's still solving problems that game developers run into. If you're making a multiplayer game then back-end stuff can be just as critical as in-engine stuff.

An idea isn't a plan or an intention. I raise plenty of ideas that I don't specifically intend to execute.

As for doing egregious things... keep in mind that Unity isn't free just because they want to be nice. It's also because it's good for their business. In most cases people have to spend a long time learning game development before they can get a job or otherwise start doing it commercially. It's beneficial to Unity to be as easily accessible to people starting out as possible, so that they do that learning with Unity instead of or as well as a competing product. If they did anything that made those people less successful they'd be driving potential customers to their competitors.

 

Oh boy, I miss Steve Jobs [/me looks at his iPhone 6S and his iMac from 2012]. Do people here remember when the Unity editor was still Mac only? Those were awesome times ...

The sad thing is that there are plenty of examples where Unity having been turned into a sales manager company instead of a tech company are quite obvious. My favorite: Make any project a VR project just by ticking a checkbox (that is not a quote but a statement that encapsulates Unity's native VR support from 2015 well enough).

In some alternative universe, Unity is still run by its founders, David, Joachim and Nicholas. I need to figure out how to get into that universe.

Or can you guys maybe use the money you made by turning the company into a product to get behind Stride (previously known as Xenko)? Looks promising to me.

 

There are times I wonder if they could just split and build a new game engine from the ground up based on everything they learned making Unity. Unreal Engine 4 is an example of what can come out of this. Tim Sweeney may not have left his company but he was the sole developer for several years and the result was a far superior engine to Unreal Engine 3.

 

Yup. It's not unusual for tiny teams or single developers to build something that's actually much more awesome than what a huge team does. Especially, if there's a corporate spirit behind the huge team, and the pure passion to create something awesome behind the tiny team or single developer.

 

Forgot to share my favorite quote about IPO:

https://twitter.com/garrynewman/status/1298316581634703360