Just a few weeks after its most recent round of layoffs, Unity is once again reducing its workforce. This time, around 1,800 employees will lose their job in the coming weeks as the company is trying to improve its financial performance after a difficult year.
Unity is the maker of a video game engine that is widely used in the video game industry. Some popular games that have been developed using Unity’s engine include Cuphead, Ori and the Blind Forest (and its sequel), Hearthstone, Cities: Skylines (and its sequel), Hollow Knight and Beat Saber. Unity’s main competitor is Epic Games, the company behind Fortnite and the Unreal Engine.
In an SEC filing, Unity says that it is conducting this new round of layoffs as it “restructures and refocuses on its core business, and to position itself for long-term and profitable growth.”
Even though this move will reduce the company’s costs, shares haven’t moved significantly as Unity stock is currently down 0.62% in pre-market trading compared to yesterday’s closing price. At $38.74 a share, the company’s stock is still down significantly compared to its all-time high of $201.12 in November 2021.
Last year, after conducting three rounds of layoffs, the company tried to improve its financials by changing the fee structure for the engine. Under the old pricing scheme, indie developers who earn less than $100,000 per year would be able to use Unity for free.
Once you cross that threshold and generate between $100,000 and $200,000 in revenue, you would have to pay $399 per user per year. Bigger video game studios would have to pay $1,900 per user per year.
With the pricing change, the company said that developers would have to pay $.15 to $.20 for every game install after 200,000 installs. And if you’re a mobile game developer or you’re working on a free-to-play game, you can cross that threshold very quickly.
Many developers expressed their concerns and Unity eventually adjusted its plans with a new complicated pricing structure that isn’t strictly based on a per-install fee. Companies with more than $1 million in revenue get to choose if they would rather pay a per-user fee or a 2.5% revenue share. More importantly, the new pricing policy doesn’t apply to existing Unity games.
And yet, that controversy had some wide-ranging consequences as many developers lost faith in the game engine company. Shortly after that, Unity CEO John Riccitiello resigned. James Whitehurst, the former president of Red Hat, is currently acting as the interim CEO.
In November, Unity said that it was hitting the “reset” button on the company. And today’s layoffs seem related to this restructuring effort.