In case you haven’t heard, a quick catch-up. Unity, the video game development platform that’s favored among mobile game creators, has changed its pricing model.
Unity will remain a free-to-use game engine. It’ll also still charge a per-seat license fee if you reach a certain size, or if you want additional features. In summary, Unity’s previous pricing was generally considered favorable. That run has come to an end.
Now, additional pricing exists that is based upon a number of criteria. If you’re on a Personal or Plus license (more affordable options) you will incur a “Runtime Fee” if you make $200,000 in 12 months AND have 200,000 installs.
While those are high limits, Unity will look to charge 20 cents per install (at the high end) for those that have hit the limits.
Why Is This A Problem?
On the surface this might not seem like a problem, after all, the users have generated $200,000 in revenue, correct?
Yes, however, it’s important to consider the economics of a free-to-play mobile game before saying “it’s not a big deal.”
Free-to-play mobile games, which are often built in Unity, are given away for free. The games utilize in-app purchases for monetization, and those purchases count towards Unity’s revenue number.
So, let’s assume 500,000 downloads, and from that 300,000 in revenue (we’ll assume after Apple / Google’s take) over the game’s first year. Not too shabby, you would have earned 60 cents per user.
If you were a Unity Personal or Plus user, you’d be on the hook for $60,000 to Unity. Now, people will point out that if you’re making that much you’d probably move to Unity Pro, and that’s fair. The rate there is 15 cents per new install per month, so you’re paying Unity $45,000 for these incremental installs.
Fine, there’s still 45 cents in your pocket. The situation is less ideal, certainly, but not disastrous. Only we’ve not taken into account the cost of acquiring those users. Maybe that’s another 20-30 cents each. You’re now hovering down around 15-25 cents profit per install. That’s dangerously low for a free-to-play where users could slow down or entirely stop in-app-purchases at any time and leave you still having to pay 15 cents per new download.
My Scenario Isn’t Farfetched…
This scenario may seem far-fetched, right? It’s not. Check out this post on Reddit where a user pointed out that Unity will cost 108% of the company’s revenue.
Our studio focuses in mobile games for kids. We don’t display advertising to kids because we are against it (and we don’t f***ing want to), our only way to monetize those games is through In-App purchases. We should be in charge to decide how and how much to monetize our users, not Unity.
According our last year numbers, if we were in 2024 we would owe Unity 109% of our revenue (1M of revenue against 1.09 of Unity Runtime fee), this means, more than we actually earn. And of course I’m not taking into account salaries, taxes, operational costs and marketing.No_Storm7311 on Reddit
Does Unity know anything about mobile games?
These kinds of responses have been popping up all over the web since Unity’s announcement, and we’ll likely see more as things go into effect and people see the true impact of this new pricing model.
The Alternatives to Unity
Unreal is the largest and closest alternative, and I’d expect to see the company benefit from transplants looking to stick to a large scale game engine. It differs in that it’s C++, so some work and learning will need to be done to port from Unity which is traditionally C#.
Unreal is, and this is worth mentioning, more expensive. However, the math makes more sense. Unreal charges 5% of a company’s revenue over $1 million. That’s something you can plan for with a free-to-play mobile app, Unity’s pricing is not.
To avoid another situation similar to Unity’s new pricing, game developers might find Godot to be their best option. Godot is free and open-source, so you’ll not be on the hook for any future pricing overhauls.
How I Think It Plays Out
My speculation section… don’t hold me to it. I have to assume they’ll roll this back and play the “we listened to the community” card. Still, even if Unity does this, the damage to reputation may already be done.
If that rollback does happen I would speculate that the company may replace the silly structure that’s been put out there with a more flat revenue split like we see with Unreal.
If a rollback doesn’t occur, we’ve got a potential acquisition target on our hands here. The company is trading today at just $14.1B. Microsoft could be interested, Apple could even have some interest, maybe even Meta. At this price point it definitely seems like it’d be easy pickings for one of these big tech names that has interest in gaming / 3D world development.
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