After its Q3 earnings report, Unity announced the sale of $1 billion in senior convertible notes as well.Īlthough Unity has moved in the right direction in recent quarters, which is evident from the narrowing losses, the company is still forced to spend substantial amounts on research and development projects to maintain its competitive edge. Unity is a company with a market capitalization of just over $9 billion but carries a debt burden of $2.7 billion. The need for a sudden price change came on the back of two factors: Unity has been underpricing its products, and the company found itself backed into a corner financially amid challenging macroeconomic conditions. Amid the backlash from developers and investors, Unity CEO John Riccitiello retired in early October, handing over the duties to James Whitehurst, who now acts as the interim CEO of the company. The company had built trust among developers for years through favorable pricing policies and high-quality tools, but the new pricing saga has brought the company’s trustworthiness into question. Even more importantly, Unity clarified that this new model will only apply to games that are shipped in 2024 and beyond. In a blog post dated September 22, Unity Create President Marc Whitten explained that only games with revenue of over $1 million and more than one million installs will accrue the runtime fee. Under these unforeseen circumstances, Unity quickly made several changes to its planned new pricing model. Many game developers rushed to oppose this decision, and some pledged to boycott Unity when these pricing changes go into effect on January 1, 2024. Under the new model, developers will be charged a “runtime fee” on all games built with its video engine, given that they meet a minimum revenue threshold and a minimum install threshold. On September 12, Unity announced major changes to its pricing model. Unity’s biggest challenge today is repairing its relationship with developers who are calling the company to backtrack on recently announced pricing changes. On the back of this stellar revenue growth, the company topped Wall Street estimates for earnings, but the stock initially sold off after earnings as investor focus shifted to the challenges looming on the horizon. Unity reported revenue of $544.2 million for the third quarter, a year-over-year improvement of 69%.
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