Unity will “likely” initiate layoffs to improve profitability

Unity's new interim CEO has announced plans to make the company more "agile" to create "value" for customers and shareholders.
Unity Runtime Fee update september 2023

A new Unity shareholder letter penned by interim CEO Jim Whitehurst has indicated layoffs are on the horizon for the company, as it deals with economic stressors, and a desire to become more agile. While plans are not currently in place, Whitehurst wrote that to take advantage of “opportunities to emerge as a leaner, more agile, and faster growing company” it would “likely” need to discontinue certain products, reduce its workforce, and reduce its office footprint.

While fairly glossed over, the implication here is that Unity will initiate layoffs as a means to provide that all-important “value” for company shareholders and its customers. For now, an exact timeline has not been provided for these changes – and the company is also refraining from providing financial guidance for its upcoming fourth quarter.

“We are committed to a customer-first business model,” Whitehurst said. “This business model is enabled by the right product portfolio, the right initiatives and clear focus. And when executed with excellence, this business model is designed to deliver faster revenue growth, improved profitability metrics and increased free cash flow.”

“Several weeks ago, we started a comprehensive assessment of our product portfolio to focus
on those products that are most valuable to our customers. We are also evaluating the right cost
structure that aligns with the more focused portfolio.”

Read: John Riccitiello steps down as Unity CEO after weeks of controversy

Unity will reportedly act quickly to implement changes within this financial quarter, with all “interventions” completed by the end of Q1 2024.

Notably, the company has had a tumultuous year so far, with upcoming changes likely inspired by a recent wave of controversy. In September 2023, Unity management announced a new pricing structure for its flagship game engine that would have required game developers to fork out additional funds to continue developing games on the platform.

Backlash against these plans was so severe that many developers threatened to discontinue their use of Unity – and while the company quickly amended plans, the damage was seemingly done. Many developers claimed Unity had broken their trust, and that they would not continue using the engine in future.

“At the end of September, we introduced runtime fees on the Editor to complement our seat-based subscriptions, a critical step to make Create a sustainable business,” Whitehurst said of the controversy. “While we did not expect the introduction of the fees to be easy, the execution created friction with our customers and near-term headwinds. We expect the impact of this business model change to have minimal benefit in 2024 and ramp from there as customers adopt our new releases.”

It’s difficult to quantify how this backlash has impacted Unity’s bottom line overall, but it has seemingly forced a shift in thinking around its approach to its products.

At this stage, Unity has yet to announce when and if its “likely’ layoffs will occur, but we anticipate any changes will take place in the coming months.

Unity joins a growing array of game companies planning or initiating layoffs in 2023. So far, companies including Digital ExtremesUbisoftMedia MoleculeBlizzardTeam17EACD Projekt RedRiot GamesAmazonAscendant StudiosPrivate Division, 2KVolitionFiraxisTelltale GamesCrystal Dynamics, and Epic Games have all announced layoffs – with more than 6,000 games industry jobs cut in the last year.

Leah J. Williams is a gaming and entertainment journalist who's spent years writing about the games industry, her love for The Sims 2 on Nintendo DS and every piece of weird history she knows. You can find her tweeting @legenette most days.