Unity’s Problem

(Unity the company, not Unity the engine)

Unity have recently announced their third recent round of layoffs, and pretty much everyone is blaming CEO John Riccitiello for persistent mismanagement.

There may be some truth to that, but the fact is that Unity has a bigger problem than its CEO, or its technical flaws. A problem rarely mentioned that explains most of the rest.

It’s the competition. Mostly from Unreal Engine (UE). For the last few years, Epic Games has owned an infinite moneyspout called Fortnite, and they’ve been pouring the proceeds into their engine.

This includes:

Unity cannot compete with this, even under ideal management and development. It’s close to classic “price dumping“.

Godot is also a serious problem for Unity at this point. Unity cannot compete on price with Godot, and they are increasingly evenly matched technically. Unity had a substantial moat in the form of console and phone support, but Godot is now making inroads there as well.

Between UE and Godot, there’s almost no niche left for Unity, and it shrinks every year. Most of the value remaining in Unity for game development is from the large base of developers, who are reluctant to switch engines, and the large community. 

But those are shrinking resources as new developers are less and less likely to pick Unity. Riccitiello likely thinks he can only wring a few years more profit from the game developers market. What is a CEO to do when the facing such an unwinnable battle?

Well, the answer is not “make the best game engine you can”, and really has more to do with business and finance than anything else.

Mergers and Acquisitions

This is a classic move for companies that are overvalued, and have poor future prospects. By exchanging your still pricey but doomed stock for another non-doomed company, you have made a great deal.

Finding new markets

I’m sure Riccitiello looks at the accounting figures of his company. It’s got to be a bleak sight, but there are some rays of sunlight – Unity’s ad teams are still doing well. It’s an area that Godot and Unreal have almost no stake in too. So it only makes sense to focus the company on what remains that is profitable. Some of Unity’s mergers have brought them closer in this direction.

This also explains Unitys interest in real-time SFX for film/tv. This is a new market, and holds some possibility. But Unreal is trying this one too, and they are better poised technically, so I don’t think it’s likely Unity will win.


When facing doom, sometimes it just makes sense to reduce the size of a company. There’s no point investing in their engine if those costs are never going to pay themselves back, no matter how loyal your community is. It’s better to acknowledge internally that the battle is lost, and engage in cost saving exercises to preserve what value does remain in the company.

Of course, you never say this out loud. That would be counterproductive. Instead, it’s better to spout nonsensical ideas like laying off jobs is good for growth.

If that causes people to think the problem of Unity is a deranged CEO (temporary, fixable) , rather than structural, then all the better.  I’m sure the layoffs are discussed differently in the privacy of the boardroom.

I too honestly wish I could blame Riccitiello for the collapse of Unity. I’d love to see the situation turn around. I was on one of the last lifeboats out of the collapse of Flash under Adobe’s actual mismanagement, and it’s an experience I’m not keen to repeat.

Perhaps the situation will turn around. Fortnite’s supremacy won’t last for ever. Godot has yet to weather some of the issues of being a seriously large engine with a need for backwards compatibility. But if Unity Engine does recover, it’s almost entirely beyond the control of Unity the company.

7 thoughts on “Unity’s Problem

  1. I don’t think most of this is true.

    Besides Unity does need to downsize, they have over 8000 people over at Unity, the entire Epic games team is a bit over 2,000 people and most of that are people working on Fortnite.

    And sorry but the whole idea that Godot and UE5 don’t leave space for unity is nonsense, Unity market share is bigger than these two combined.

    Currently I wouldn’t switch engines, Godot has too many issues in different hardware, and UE5 require more resources and optimization, I would need to create multiple versions of my game if I were to make full use of it and still be able to target my consumer base.

  2. As a hobbyist and aspiring indie gamedev my perspective may not align with bigger companies that could use Unity, but I disagree completely. In the last 10 years Unity has made a lot of jumps in many directions without ever following through and finishing things completely. Often scrapping things when they start to show potential, like Gigaya, what reason could they have for scrapping that when it was nearly done?
    I’m very experienced in using Unity but my trust in a stable platform for the future has dried up and I see that as a big reason for people to look into Godot and Unreal instead.

  3. Unity makes most of its money on services – ads, multiplayer etc. The engine has always been the smallest bucket.

    They recently shuffled the UGS (backend / multiplay / vivox) groups under create to make the two divisions seem more balanced on paper, but the engine itself gets a almost no investment from leadership other than lip service.

    The weta / ziva etc side is a joke. You don’t build a billions dollar business selling Maya plugins, and they are in utter chaos internally, led by people that have zero experience in the industry. Unity lost the battle for film when Unreal woo’d Favreau away after the Lion King for the mandalorian. That war is over.

    Fwiw I was at Unity for 7 years up to the latest round of RiFs, specifically on the film side of things

    1. Well, yes, it sounds like we agree. I’m explaining why there is no engine investment. It’s only natural to focus on the things that actually make money.

      I am a bit confused about Unity’s push for film. Perhaps you know the timing better. Maybe 7 years ago it looked like they could win here? But I’d agree that now, it doesn’t seem a smart investment.

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