Following news of AppLovin attempting to undercut the Unity/Ironsource merger and acquire competitor Unity, industry experts from a range of companies have provided their thoughts on the deals – which one makes most sense and what would either mean for the industry? Here's what the industry is saying so far...
James Draper, founder and CEO of in-game advertising business Bidstack, believes that the deal will make the new combined entity an attractive prospect for both developers and shareholders.
"This is a fascinating move - not least because it puts a question mark against Unity's acquisition of ironSource. If the Unity and Applovin deal goes ahead, it will supercharge the UnityAds business and revenue potential for game developers, while creating an immensely powerful combined company that will be appealing to shareholders,” said Draper. “AppLovin has acquired-in content (game studios/games), which drove up its gross margins as the external pay-aways were eradicated and targeted advertising content to its consumers, the gamers, became easier to control as it owned the gamers' data, as both studio and adtech provider.”
“This deal also provides greater momentum to in-gameplay advertising as a category, where ad placements will be combined with existing ad formats and create even greater always-on revenue for game creators and publishers. With AppLovin, Unity becomes an even more attractive engine to build out on for game developers large and small, with such easy access to monetisation and revenues. We're interested to see how this all plays out."
Arkadiy Kuznetsov, CMO of developer and publisher Gismart, was more hesitant to call the deal a wise move.
“It appears as if AppLovin is attempting to build an “all-in-one” ecosystem, having recently acquired Adjust and now looking to acquire Unity. In my opinion, it all leads to establishing some kind of monopoly within the market, which might potentially negatively affect traffic acquisition and monetization in the long run,” said Kuznetsov. “The monopolised market will also obviously have its pros, yet it’s always best to have a healthy competition, driving the industry forward”.
It's almost too grown up.Kelly Vero
Kelly Vero, co-founder or NFT Consult, stated that while the move could prove successful in terms of tech, it could also limit the new entity's scope."
"I think it presents a series of new KPIs that are more targeted towards tech rather than a scattergun approach to verticals of recent times. It's almost too grown up. Could it be too corporate to evolve from this line in the sand?"
Mike Hawkyard, lead producer at Team17, thinks that this acquisition would be a wise move for AppLovin.
"Good time to acquire them as their share price had tanked. I thought Adobe or Apple might make a grab for it. Best of luck to them as Unity made Mobile Game Dev in my books."
Supremacy Games CEO and co-founder Jari Pauna fears what the acquisition could mean for the wider industry.
“So after the deal AppLovin would have every possible nugget of information of what makes a successful game, and then release competitive games through their own companies? Conflict of interest to the third degree?”
Technological University Dublin lecturer Peter Lynch, believes that it would be wise for Unity to consolidate their mobile interests, and that AppLovin could prove useful in this regard.
“Unity is the clear market leader when it comes to mobile games development tech, with Unreal beginning to really own the console and AAA PC game space. From a business perspective, it makes sense for Unity to consolidate their mobile dominance and as far as I know, AppLovin has a much longer history in mobile monetization. Plus they have the resources to buy Unity shares (which is still loss making) rather than a consolidation."
"Unity still has a pile of cash but that is from investors, not profits. With my game dev hat on, I think this deal would make sense as it would give Unity the financial stability to continue with their engine pricing model. With mobile game dev, Unity’s tech and pricing still needs to be attractive a wide pool of developers.”
Michael Hudson, CEO and founder of Gamebake, believes that the offer is a strategic effort of AppLovin's part to maintain their competitiveness, as a merger of Unity and IronSource could see them dominate the market.
"I feel this is a move by AppLovin to try and stop what it sees as a potential threat to its position in the market. With Unity being the development platform of choice for roughly 70% of all mobile developers, then you can see why AppLovin, with its Ad network and its Mediation platform, may see Unity and ironSource merging to be a big blow to their business."
"I like to try and find the upside of all of this though, therefore, whoever wins, the new entity will definitely provide the development community with a boost in resources and services to make deploying into the market simpler and potentially more effective."
"Many find this consolidation frightening and I can agree to some extent that these behemoths being created are going to be hard to not work within the industry, but, giants move slowly and I feel this gives many start-ups with game-changing ideas and concepts a chance to shake up the industry and beat these big dogs at their own game."
Metanomic CTO Evangelos Pappas says that this merger is something which will become increasingly common as the mobile space develops further.
"As we transcend from a web-first-browsing experience to more immersive and ubiquitous interactions, traditional ad networks have fewer and fewer ways to monetise their channels. Virtual-world development platforms are in the forefront of interacting with these new types of applications (like games, VR, AR and metaverses). In these worlds, tracking based on user IDs and cookies is failing, and ad networks need to find new ways of serving the demand from brands that seek new, innovative ways of reaching out to new user segments, and the next generation of consumers. So, these types of mergers and partnerships, like Microsoft's with Netflix, are something we'll see plenty more of in the near future."
I for one, doubt that either suitor will make a happy bride out of Unity.Jacki Vause
Dimoso CEO and founder Jacki Vause believes that regardless of the outcome, Unity has become rather volatile, in part due to Riccitello's statement in a prior interview with us.
"It’s going to be fascinating to see how this plays out from a leadership and a cultural perspective. AppLovin’s CEO Adam Foroughi plays it straight down the line - a clever and considered communicator, who has earned industry and investor confidence, Foroughi nails it from a CEO comms and reputational standpoint. Unity’s Riccitiello, on the other hand, does not. He’s gone way ‘off piste’ with recent comments that game developers who are not interested in monetization were the “biggest fucking idiots”, and appears to be the loose cannon in the middle of this merger melee. IronSource, as a company, takes a different approach and rolls out its founding C-Suite to be front and centre who, equally, are more about building investor confidence."
"Developers and publishers who have been stuck in the ‘happy traps’ of these two mediation behemoths are going to be watching with great interest. Whatever happens - be it AppLovin or ironSource the big question mark will be over just how two very different cultures can merge effectively - I for one, doubt that either suitor will make a happy bride out of Unity. And the stock market reflects this uncertainty. And when the proverbial hits the fan it will be interesting to see who Riccitiello thinks the next ‘fucking idiots’ are!”"
Hype Hype COO Teemu Mäki-Patola wonders whether Unity is undervaluilng their own market share and earning potential should it accept the offer, as opposed to continuing with the planned IronSource Merger.
"I don’t fully understand why the offer would be good for Unity. Applovin market cap is 91% of Unity. One year peak of Unity is 170% of Applovin. Unity owners would have a bit more of the merged company (55%) but Applovin would have vote majority (51%). Wouldn’t Unity be a bit low on self esteem to take this instead of snatching IronSource for 4B? IronSource seems big enough addition to Unitys own ad business to be able to grow to cover the use cases they need? Is it likely that the new entity of the all stock deal would remain worth 17,5B usd for the Unity owners (55%)? Probably if they clearly seem to support and complement each other. I though Unity to be bigger than it is if it takes this deal."
Once the full value creation of a combined Unity and Ironsource is realised, they will be in a better position than the AppLovin offer.Tim Carter
depub.space CEO Henry Oh had some thoughts on how the public nature of all three companies involved could affect the outcome, and the opinions of shareholders.
"It’s interesting to me how the public status of all 3 companies play into all of this. Unity’s board and executive team will face much more scrutiny than they would have as a private company if they don’t give fair consideration to the Applovin offer."
News International's Tim Carter agrees with this assessment, stressing the potential of IronSource and Unity as a combined entity.
"Once the full value creation of a combined Unity and Ironsource is realised, they will be in a better position than the AppLovin offer."
Games Ône director Evan Van Zelfden stated only "IronSource now must make an offer to buy AppLovin' — and the circle will be complete."
We will continue to provide more commentary on this developing story as we receive the opinions of industry insiders...
N.B. We listed both AppLovin and IronSource among our top game makers last year. We'll be unveiling our list for 2022 in the coming month during Gamescom.