Unity’s recent announcement of a new pricing model has stirred up controversy in the gaming industry. Many developers are concerned about the potential negative impact of a 20 cent fee on each install beyond a certain threshold.
Sérgio Varanda, Senior Executive Vice President at Miniclip, took to LinkedIn to share his thoughts on the pricing model and its true implications.
“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 lucky, they might earn $1.2 million in return, resulting in a profit of $200,000.
“However, if this company has a Unity enterprise license, they are now obligated to pay Unity for the 9 million installs beyond the threshold. The breakdown is as follows: $46,500 for the first million installs and $80,000 for the subsequent 8 million, totaling $126,500. Additionally, if we factor in the cost of an enterprise license for 5 developers at $3,000 each, that’s an additional $15,000.
“In summary, out of the $200,000 profit, Unity claims $141,500, leaving the developer with only $58,500 to cover salaries, overheads, and other expenses. One can’t help but question the reasoning behind this pricing model.”
It’s clear that the new pricing model, although seemingly small in terms of numbers, can have a significant impact on profitability and the scalability of developers.
This may lead to a higher need for monetization, increased costs, or a higher volume of in-game advertisements. Unfortunately, these changes have the potential to drive users away from affected games.
In another post, Varanda criticizes Unity’s methodology, highlighting that “installs and revenue are not correlated in the same way across the myriad businesses within the video games ecosystem.” He points out that under Unity’s proposed model, a Steam game sold for $50 would be subject to the same fee as a free-to-play title with millions of downloads but relatively low revenue per download.
“If Unity’s goal is truly to extract more money from developers, then a more fair approach would be to create a model where charges are based on a percentage of revenue, preferably with a maximum limit. This is still far from ideal, but at least it would be fair for everyone, unlike whatever they have come up with.”
In our top 50 mobile game makers of 2023 list, we included Unity and Miniclip as two prominent companies in the industry.