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Miniclip's Sérgio Varanda does the math on Unity's controversial new pricing

The Miniclip senior executive vice president decides that "Unity's new pricing model can have a massive impact on profitability."
Miniclip's Sérgio Varanda does the math on Unity's controversial new pricing
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Unity's new pricing model has been criticised throughout the industry since its announcement earlier this week, with claims that the imposition of a 20 cents fee on every install past a set threshold could negatively impact developers.

Now, Miniclip senior executive vice president Sérgio Varanda has taken to LinkedIn to discuss the pricing model, and the true implications of the move.

"Under Unity's new pricing model, consider this scenario:

"A company invests 1 million to attract 10 million users to their hypercasual game. If they're fortunate, they might earn 1.2 million in return. They've made a profit of 200k.

"Let’s assume this company possesses a Unity enterprise license. They must now pay Unity for the 9 million installs beyond the set threshold. The breakdown is as follows: 46.5k for the first million installs and 80k for the subsequent 8 million. This sums up to 126.5k. Additionally, if we factor in the cost of an enterprise license for 5 developers at 3k each, that's an added 15k.

"In essence, from the 200k profit, Unity claims 141.5k, leaving the developer with just 58.5k to cover salaries, overheads, and other expenses. One can't help but wonder what we’re they thinking when they came up with this pricing model."

In short, it appears that the new pricing model, despite being a relatively small number in and of itself, can have a massive impact on profitability - and thus the ability for developers to effectively scale.

Equitable alternatives

This could, in turn, result in a hightened need for monetisation, rising costs, or a higher number of in-game ads, which could potentially turn users away from affected games.

In another post, Varanda goes on to criticise the company for its methodology - namely, the fact that "installs and revenue are not correlated in the same way across the myriad businesses within the video games ecosystem," noting that under the proposed model a Steam game which sells for $50 would pay the same fee as a free-to-play title which sees millions of downloads but marginal revenue from each.

"If the goal is truly to extract more money from developers, then a more equitable approach would be to devise a model where charges are based on a percentage of revenue, ideally with an upper limit. This is still crap, but at least is fair for everyone, compared to whatever they just came up with."

We listed Unity and Miniclip as two of the top 50 mobile game makers of 2023.