Unity is making notable adjustments to its pricing structure. Beginning in 2024, the company introduces a new cost: the Unity Runtime Fee. This article explores the potential ripple effects this might have on developers, game distribution, and monetization strategies.
Unity's royalty-free licensing, which was once its hallmark, is taking a new direction. Starting January 1, 2024, the company will adopt a "per-install" fee system, activated once specific revenue and install thresholds are hit.
To break it down:
These fees will be standard across major countries, including the US, most of Europe, and parts of Asia. However, "emerging markets" will have distinct rates, ranging from $0.005 to $0.02.
Earlier, Unity's Personal tier devs who earned less than $100,000 a month enjoyed no additional fees. Now, this favorable environment is changing. Moreover, this shift isn't merely a minor adjustment; it fundamentally alters the entire cost-per-install (CPI) landscape for both mobile and PC Unity-based games. Let’s delve deeper into this topic.
In the past, developers operated with an assurance that the success of their game wouldn't lead to unforeseen financial obligations. Now the landscape is changing. Picture this: you release a game using Unity's Personal or Plus plan, unsure of its potential success. To create buzz, you price it at $0.99 on Steam. Now, let's dissect what you'd truly earn from that tag in the upcoming market conditions:
Given these conditions, would you set a $0.99 price tag? And if you went higher, would the buzz around your game be the same? It's just an example, but one thing's for sure: increasing costs may drive developers to reconsider their pricing, potentially altering the game's reach and overall success. Let us take a look at potential shifts that may take place in this field soon.
When there's only a slim margin between the Cost Per Install (CPI) and Lifetime Value (LTV), Unity's Runtime Fee can cause games' profits to drop by tens of percent. To bounce back, developers would be compelled to boost the LTV. This might mean upping game prices, charging more for in-game goods, or even slipping in more ads.
With Unity's new per-install fee, there's a rising buzz that developers might lean more into in-game purchases. Some industry folks believe P2P games with microtransactions might be the smartest financial route. Here's the logic: the game's initial price covers the install fee, while the in-game buys dodge it completely. The real question now is how will players react to this shift.
Games distributed via subscription models, like Microsoft's Game Pass, might be hit the hardest. Consider "Another Crab's Treasure," soon available to 25 million Game Pass subscribers for free. If just a tiny percentage of them download it, the Unity fees could seriously disrupt the developer's financial strategy.
Although Unity representatives assure that developers won't be directly billed for fees arising from subscription platforms—pushing this to the game's distributor—the domino effect of this cost redistribution might shift collaboration terms between developers and distributors.
The new Unity Runtime Fee will affect how indie developers work with major platforms like Epic Games and Steam. Consider the case of "The Fall," the rights to which were sold to the Epic Games Store at a minimal cost. Distributed as a free game, it was downloaded by players 7 million times. If the developer had to cover the Runtime Fee for all those downloads, it would cost more than they've ever made.
Fortunately, Unity has confirmed that installs before 2024 won't come with charges for developers. However, they'll still count towards the Install Thresholds.
Unity's pricing changes have developers worried. One of the big fears is "Install bombing"—similar to the notorious "review bombing." Imagine a disgruntled user constantly installing and uninstalling games, racking up fees for developers. While Unity plans to tackle this, we're still waiting on clear steps. If solutions fall short, developers might have to factor in these new risks, additionally driving up game prices and in-game asset costs.
Unity is adjusting its pricing structure, and it hasn't gone unnoticed by developers. However, the company has expressed an intent to engage with its community. There might be room to talk about discounts for those utilizing Unity's in-game ads or cloud offerings. Unity emphasizes that they're considering feedback, and future actions will reveal their responsiveness.
A glance at Unity's financials reveals a layered situation. Q2 earnings reported a notable $533 million, marking an 80% year-on-year rise. The Grow Solutions segment, which highlights monetization tools, accounted for $340 million. Meanwhile, the Create Solutions branch, focusing on development tools, contributed $193 million.
However, there's a catch. With all this revenue, Unity still posted a net loss of $193 million for the same period. In such circumstances, It's evident that Unity is aiming to adjust its monetization approach, and there’s no doubt that the Unity Runtime Fee will be introduced. The pressing question is how the company will navigate between earning revenue and addressing the concerns of the developer community. The future will show.