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Unity set for more layoffs amid “painful” reset

Game engine firm plans to "rip off the band-aid" to position itself for future growth and become profitable
Unity set for more layoffs amid “painful” reset
  • Unity cuts losses in half to $125.3 million
  • Tech company admits negative customer feedback to runtime fee changes resulted in a slowdown of new contracts and renewals
  • Firm plans to discontinue products and close offices
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Unity is likely to conduct layoffs, discontinue products and close offices amid a “painful” reset of the company’s operations, says interim CEO Jim Whitehurst.

The tech company today released its first financial report since the Unity runtime fee controversy. Following a backlash, the company altered the proposed changes to its business model, with then CEO John Ricitiello leaving the company within a month of the fallout.

In a statement to shareholders, Whitehurst said while he believed there was “significant opportunity to accelerate revenue growth”, the firm was “currently doing too much”.

"Rip off the band-aid"

Moving forward, the company plans to focus on core products including the Unity Editor, Runtime and Monetisation Solutions, as well as AI.

To that end, Unity is currently undergoing a “comprehensive assessment” of its product portfolio, with plans to enact changes to the business in Q4. “This will likely include discontinuing product offerings, reducing our workforce, and reducing our office footprint,” said Whitehurst.

Expanding on the plans in an investor call, Whitehurst stated it was “looking at peeling off some things that we were doing that frankly aren’t profitable”, and described it as a “rip off the band-aid reset” to position it for future growth.

Unity previously laid off as many as 600 employees earlier this year.

Rising revenue and cutting losses

Unity reported what the CEO called a “mixed” third quarter. Revenue in Q3 was up 68.5% year-over-year to $544.2 million, while the company posted a net loss for the period of $125.3 million, reducing losses by 50% compared to Q3 2022.

Create Solutions generated $189 million in revenue during the quarter, which was flat Y/Y. Grow revenue, meanwhile, rose by 166% Y/Y to $355.3 million.

Whitehurst admitted that the company “experienced revenue softness” at the end of the quarter and in October following the introduction of the runtime fee. Unity had faced a boycott of its Unity Ads and Ironsource monetisation from a number of leading mobile games publishers following the initial announcement.

The firm said it had experienced a “high volume of negative customer feedback” and a slow down of signing new contracts and renewals as a result of its proposed changes.

Unity did not provide any revenue guidance for Q4 of the full year for 2023 as it undertakes the restructure.