lunarfox22

a little fox typing on a keyboard

30 | I just wanna draw comics. Unfortunately I must live in a context.



queerinmech
@queerinmech

wanna know the real backstory?

i know this is not really the topic de jour anymore but i already wrote it and i am sans time machine

graphs are cool not scary, i swear

the announcement

many people's trust is (rightfully) broken and i have observed that the reason seems to be largely about the way the pricing changes would completely destroy their livelihoods for what appeared to be naked greed full of malice

but i think the reasons are deeper and more nuanced - and also worse than that

if you look at the original announcement as well as the desperate posts from unity's community management and social teams trying to respond to the outrage the language is just weird

it seems out of touch at best and often gaslighting, heavily implying that developers were confused and misunderstanding, and that unity was actually doing something good here

thing is - i think that is kinda true! people did misunderstand

unless you were a moderately successful mobile dev in which case it probably made a lot of sense at first

that is the key

setting the stage

2018 was the last time that unity had a major controversy, it was also involving their tos

it lead to improved protections for developers and the creation of a github repo with their license to elicit community feedback and let everyone see the changes and easily compare them over time - this was real progress and let them quickly recover the goodwill lost by their changes

but wait! what were those changes really about anyway?


terminally online

in late 2018 unity unilaterally revoked a license from a developer under the auspices of a tos violation - for a clause they seemingly added to target that specific developer - the company was improbable (that is its actual name: improbable)

what was that developer's sin? on the surface the developer simply provided mmo and multiplayer functionality to other game devs, and this does not really seem to be a threat to unity's business model at all

yet this resulted in multiple online games being pulled down as a result of this tos change, with full foreknowledge by unity's leadership as detailed in this quote:

Today we must regretfully inform our community of the following developments.

  • Unity’s block of SpatialOS: The game engine provider Unity recently changed (Dec 5) and then clarified directly to us (9 Jan) their terms of service to specifically disallow services like Improbable’s to function with their engine. This was previously freely possible in their terms, as with other major engines.
  • What this means: Unity has clarified to us that this change effectively makes it a breach of terms to operate or create SpatialOS games using Unity, including in development and production games.
  • Ongoing negotiation: Worryingly, this change occurred during an open commercial negotiation with the company to find a way to do more together.
  • Revoked Unity license: In addition, Unity has revoked our ability to continue working with the engine for breaching the newly changed terms of service in an unspecified way. This will affect our ability to support games.

- via Improbable's Blog Post (Archived)

over a week later unity finally got around to replying and flat out claimed it was all a lie, but then subsequently proceeded to confirm its truth almost point by point, using weasel words and spin in an attempt to make it seem like they had not changed the tos in order to force improbable into a one-sided contract - it is one of the more slimy corporate pr responses that i have read - if you are curious i could go into the details of what was actually happening but that part is not relevant

  • epic then partnered with improbable to fund developers who wanted to migrate away from unity
  • improbable open sourced their unity code
  • improbable revisited their own tos to make it more friendly after realizing that it was also full of legal junk

in response, on january 16th 2019 unity made another blog post, again denying all wrongdoing and pointing fingers, but making major concessions

they removed language which limited where unity games could be deployed:

When you make a game with Unity, you own the content and you should have the right to put it wherever you want. Our TOS didn't reflect this principle – something that is not in line with who we are.

they added new language which re-affirmed the right to keep the tos that devs agreed to at the start of their projects:

When you obtain a version of Unity, and don’t upgrade your project, we think you should be able to stick to that version of the TOS.

they create a github repo with their tos:

Moving forward, we will host TOS changes on Github to give developers full transparency about what changes are happening, and when. The link is https://github.com/Unity-Technologies/TermsOfService.

you will note that link is now dead

but why really

according to unity they have made a loss every since their founding in 2004 and were looking to do an ipo so they were just trying to make their spreadsheets look shinier to the investor class

all this despite constantly buying up other businesses and dropping millions on major projects outside of their core competency

yeah you are going to lose 150 million dollars if you spend 200 million dollars to buy a bunch of random companies in the same year - unity literally did this several years in a row

what they wanted was to find a way to extort companies for additional revenue - even if those companies were not really unity developers and just hosted the resulting games - in order to make up for the losses caused by their own reckless spending

it gets worse

and then in august of 2020 unity announced its ipo

this is the downfall of many a corporation

unity then goes on a buying spree and acquires entire companies or major investments totaling somewhere around 10 billion dollars over the next couple of years in an absolutely unhinged frenzy - seriously go look at the list on wikipedia it is such a blatant overreach and defocus to their core business which they failed to invest in

this meant that unity was much bigger and much more unwieldy than they were in 2018 but still had the same inept leadership

rising action

this is really the key event!

in 2022 out of nowhere the company applovin (uhg) offered to buy unity but their advances were rebuffed and instead unity bought ironsource

why is that important?

both of those companies are based around app monetization and in so doing unity became applovin's competitor

from this moment everything else unfolds

they called me mr glass

in february 2023, less than a year after betting it all on mobile ads and less than 3 years after their ipo, unity's stock starts to crash

between their high in mid february their stock continued to tumble, losing almost half of its value in just a month

why?

in february ad revenues started to plateau or even drop across the board - applovin and google/youtube also lost revenue, but unity was hit hardest at the stock exchange

all of these companies dumped billions into ad tech in the prior years - betting on ad revenue continuing to grow forever after the pandemic. this was obviously unrealistic - but only unity was new to the market and in a vulnerable place

somewhere in the backrooms

unity's leadership began looking at applovin as an existential threat to their business and moves in the dark were being made to deal a devastating blow

disclaimer: up until this point everything has been very fact-based and there are a bunch of links below if you want to read up on it, from here on there is a bit of filling in the blanks, but that is exactly the purpose of this writeup after all

it would take months to work on this proposal and unity - who has been a cross-platform game engine since its inception - narrowed its view to just the mobile ad-driven market, the very same one they had willingly entered not even a year prior

this came to fruition on september 12th, 2023 when unity announced the new fee structure - but not before the company's leadership sold off nearly $40 million in stock, the most they had sold in over a year and a half

hilariously on september 13 marketwatch reports that the unity fees are a pr disaster and the stock is falling and then 2 days later posts another article from some analysts recommending that people buy unity stock because the fees are an "engine for growth" - just so completely ignorant

during the process unity silently deleted the github which previously hosted their tos and removed the explicit version protection clause from the new tos and claimed that this new fundamentally different license was effective retroactively

i am not going to go over the fees themselves as there are plenty of analysis on that, but what i am interested in why those fees specifically

language!

lets go back to when i pointed out the weird language that unity used in the announcement

myself, a desktop gamer for my whole life, and who has worked on some desktop unity projects, and played many desktop unity games - i was flabbergasted and judging by the public posts and outcries from innumerable well known game devs, they were too

from a desktop perspective what unity was demanding was physically impossible and anyone with a modicum of technical understanding could point that out

there was a lot of speculation that they were intentionally tanking the company

so how did that license change and that language make it into legal documents and public posts by a billion dollar company?

they literally forgot desktop existed

i am not exaggerating

the only way anything makes sense is if you imagine that unity is a mobile games company - which due to their acquisition of ironsource they technically are

The last time Riccitiello’s name was in the news in a prominent way was when he said mobile game developers who don’t utilize Unity’s suite of ad technology are “fucking idiots.”

- via Kotoku Article on Insider Trading

they were trying to prevent anyone using the unity engine with applovin - the competitor that they created for themselves just last year, by betting on a market trend (mobile ads) which was nearly at the end of its growth

i felt like i had to explain all this lead up to get to that one very simple point: unity is not a game engine, they are now an ad platform company that happens to own a game engine

mobile games are easy

the metrics that unity's new license terms needed to work are trivial to obtain on mobile and the outliers literally are not worth worrying about, even on steam and similar drm-stores it is pretty easy to figure out

but a huge portion of the unity world is on itch or self published or free or has some "edge case" where this is simply not possible

it only ever made sense for mobile games with ads

and unity confirmed this by contacting studios to offer them an alternative license which waived the fee if they used their ironsource-derived in-app purchasing and ad system

Studios currently using Unity’s LevelPlay mediation platform have already been offered a 100% Runtime Fee waiver, sources have told us. Unity account managers are also telling developers not using LevelPlay that if they switch over from main rival AppLovin or any other UA platform they can then unlock a Runtime Fee waiver

- via MobileGamer

unity even said this publicly in their initial announcement where they stated under the heading "Fee reduction for use of Unity services":

Qualifying customers may be eligible for credits toward the Unity Runtime Fee based on the adoption of Unity services beyond the Editor, such as Unity Gaming Services or Unity LevelPlay mediation for mobile ad-supported games. This program enables deeper partnership with Unity to succeed across the entire game lifecycle. Please reach out to your account manager to learn more.

- via Official Unity Announcement

damage control

in the wake of this colossal fuckup, unity took less than 2 weeks to rewrite their tos again

and really this new tos is garbage too

a lot of people speculated that the initial tos was intended to be terrible so that they could look benevolent when they "walked back" the worst parts

but that does not hold up and here it why: the initial license made sense (for mobile ad/microtransaction games) and the new one does not make sense for anyone - especially unity

you can see how similar the incident in 2018 and 2023 are, the words they use, the refusal to take any responsibility for their actions

the future of unity

according to their public filings they lost almost a billion dollars in 2022

every year since their ipo filing they have increased their revenue linearly but it sure looks to me like their expenditures are growing exponentially

unsatisfied with their growth and unwilling to properly manage their portfolio this was an attempt to grab a monopoly on the indie mobile gaming space

and they probably could have done it if they had not forgotten that their most visible and influence market segment was desktop

they honestly played themselves here and lost so very much as a result

the new license is worse for both unity and devs compared to the license from before the changes, it does not have the look of a well thought out machiavellian scheme, it looks like a hastily thrown together pile of legalese so their investors do not sue them

this means that this license will change again, it has to, they are burning investor money faster than they can convince people to give it to them

they cannot afford to wait 5 years for things to cool down like they did last time, so it is going to happen soon - or unity is going to be filing for bankruptcy

given how big and unwieldy they are at this point, their only hope is to be acquired by someone bigger

it probably will not be applovin as they announced last year that it had become clear that unity was not in their best interests anymore, so it would have to be microsoft or similar

microsoft has been a less awful steward of many properties over the last decade, it could be a refuge for unity and the developers that have loved the unity game engine, but it also could be the end

unity went public in 2020 and since then the board has been bought into by the terrible president formerly of ironsource, plus higher ups in the venomous investment firms of silver lake and sequoia

the ceo of unity was then ousted, and while his legacy at ea is not good and there have been some major issues at unity under his leadership for the last decade, i truly cannot see this as anything but a takeover with things becoming even more grim

check back in 5 years to tell me what i got wrong about this prediction lol


References


since i started this i have also seen a couple of others make similar statements so it is not just me seeing this

my sources, other than the articles posted since 2018, is my own experience with upper management in corporate america - ironically unity was founded originally in denmark and the former leadership have had only bad things to say about the direction that unity has taken the last few years, and now it is headquartered in san franscisco

please point out any flaws in my article or if you have any more references to add


edit 2023-10-10 updated with new information about the board and recent ousting of the ceo


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in reply to @queerinmech's post:

thanks!

it was really bothering me that their actions seemed so irrational

while we have seen plenty of mustache twirling villain behavior this year, and as shitty as their ex electronic arts ceo is, i just felt like there was more to the story so i went to figure out what

thank you for noticing! i definitely tried to structure it in video essay format

video essays are the main way that i take in information these days and i feel like that structure makes complex or boring data a lot more digestible

i mean technology connections made a video about toasters interesting, all without any flashy editing or special effects