Unity’s New “Fee” on Indie Developers: A Betrayal or A Necessary Evil?

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Unity used to be adored by people in the gaming world, especially indie game developers, who saw it as a source of hope and opportunity

Offering a powerful yet affordable game engine, Unity enables developers from all walks of life to bring their visions to life. Fast forward to today, and a cloud of disillusionment has begun to dominate this once-hallowed institution.

When Unity announced its decision to implement a “Unity Runtime Fee,” essentially a per-download levy on games developed using their engine, shockwaves rippled through the indie development community.

This is not just about another fee in the industry. This touches the very heart of the indie dream — a dream that Unity once championed.

To understand the depth of the dismay, one must first appreciate the symbiotic relationship Unity has cultivated with indie developers. The engine’s affordability and adaptability provided the perfect springboard for many legendary titles such as CupheadRust, and Pokémon GO. Its charm lies in its simplicity: buy a license, and your subsequent revenue is entirely yours.

Yet, with the snap of a finger, Unity seems to have rewritten this unspoken pact.

The new fee activates when a game either hits $200,000 in revenue over a year or garners 200,000 installs. Depending on a developer’s license with Unity, this could mean a staggering additional charge of up to $0.20 per install.

Garry Newman, the mind behind Garry’s Mod, succinctly voiced collective disbelief, asking if Unity can indeed

“start charging us a tax per install unilaterally.”

Here is a table to show Unity’s new free subscription tier, markets, and download thresholds:
Unity’s New “Fee” on Indie Developers: A Betrayal or A Necessary Evil?

Beyond the mere financial aspect, the proposed system presents a quagmire of logistical challenges. How, for instance, will Unity differentiate between original installs and mere re-installs on new hardware?

More pressingly, what happens when a game gains traction on subscription platforms like Xbox Game Pass or gets featured on charitable endeavors such as the Humble Bundle? Suddenly, widespread exposure, instead of being a boon, could spell financial doom.

Why Did Unity Decide On an Install-Based Pricing Model?

Given the economic challenges the world has faced since 2020, many major companies, including giants like GoogleAmazon, and Meta, have had to adapt, with some resorting to layoffs. Unity is no exception.

John Riccitiello, Unity’s CEO, shed light on the company’s transition towards an install-based pricing model.

According to him, this was designed to create a more equitable “value exchange” between Unity and game developers. However, due to Unity’s recent financial hurdles, some analysts are speculating that this change might have deeper motives beneath the surface.

In 2023, Unity made the difficult decision to lay off nearly 900 staff members. Their Q2 financial statement for 2023 showcased impressive revenue of $533 million, but it was overshadowed by a significant net deficit of $193 million.

Such figures have made many question the fiscal stability of Unity and ponder whether their change in the pricing model is a tactical response to these financial setbacks.

A point of contention arises when examining Unity’s proposed fee structure for free-to-play game developers. Developers with a high number of game installs, dictated by their business models, are presented with the opportunity to avail of fee discounts. This is conditional upon them partnering with Unity for additional services, such as LevelPlay. While LevelPlay itself doesn’t come with a fee, Unity profits from any expenditure associated with ad mediation.

For developers who have already integrated these services, this is a welcome benefit. However, for those relying on alternate ad mediation services, a crucial decision lies ahead. They need to determine whether LevelPlay offers an equivalent or better value proposition.

There’s a looming question for some: Why should they be liable for a fee ranging between $15,000 and $20,000 monthly if they choose not to adopt Unity’s ad mediation service?

Whitten describes the discount initiative as merely one of the many “tools” at their disposal to aid developers, aiming to ensure they incur fees proportional to their revenues.

He clarified,

“We didn’t create this program with a mandate that developers must use LevelPlay. It’s simply one of the many options available.”

Whitten also emphasized that game developers stand to gain through in-app monetization once users download their games. Importantly, developers are not required to share any of this in-app revenue with Unity.

How Will Developers React to This Increase?

Well, as we see from this point, game developers are not happy with this increase, and they have not hesitated to voice their frustration on social media.

This has led to noticeable anger and disappointment among independent developers.

A significant number of them have openly announced plans to leave Unity in favor of transitioning their projects to alternative game engines, such as Godot or Unreal.

Unity defends its new pricing structure by stating that it will allow the company to provide better support and services to developers and that it is necessary to cover operational costs.

However, these explanations have done little to appease developers’ frustrations and concerns. Some developers have mentioned their intention to part ways with Unity, opting instead to move their projects to different game engines.

Their primary motivation appears to be the belief that Unity’s new pricing model is detrimental to developers, suggesting that these changes threaten the sustainability of their projects.

Many developers are beginning to question their association with Unity, fearful that their already slim profit margins might further shrink.

What is the Future of Unity and Game Development?

Unity’s recent move marks a significant juncture in the indie game sphere. While the future remains uncertain, the resilience and adaptability of developers have always shone through.

It remains to be seen how both Unity and its community will navigate this new terrain, but the passion of indie developers is undeniable.

As the gaming landscape shifts, their determination and creativity will continue to shape the path ahead.