Unity Software (U.N) is finding out just how hard the revenue game will be. The $14 billion company’s new plan to climb out of an unprofitable hole makes sense, but also faces considerable pushback.
The strategy seeks to impose fees on video-game developers after certain revenue and install thresholds are met, eliciting a harsh response on social media on Tuesday. After all, even a small charge could make a difference to many of its smaller clients.
Unity’s main problem is that its bread and butter is helping mobile games sell ads, a volatile form of income. And privacy initiatives, such as Apple (AAPL.O) allowing customers to opt out of data sharing, are hurting. Unity reckons the market will be mostly flat for the rest of the year.
The situation evokes what other technology companies, including office-sharing provider WeWork (WE.N) and meal preparation service Blue Apron (APRN.N), experienced. They initially subsidized consumers, some of whom revolted or disappeared when asked to cover the actual costs. Unity may retain its customers, as switching suppliers can be a pain, but deeper-pocketed rivals such as Epic Games may see an opportunity to pounce. Silicon Valley’s revenue struggle is real. (By Robert Cyran)