Bad Pricing Reveals Leadership Deficiencies

2023-09-24

Unity has been in the news in the past few weeks due to the following two posts:

In summary, they announced a pricing change, which was met with community protests. Within 10 days, they partially reversed their announcements.

This entire story highlights how pricing reflects the mindset of leadership. Bad pricing demonstrates:

A lack of understanding of the market and its consumers:

Unity's leadership seemed unaware that most games struggle to make profits, and those that do operate on thin margins. They also underestimated the impact of Apple's App Tracking Transparency (ATT) on these margins. Following ATT, Voodoo announced that "Hypercasual is dead," and Playtika mentioned they wouldn't be developing new games for a while. Despite this, Unity chose to inform developers and publishers that they would be taking a larger share of their profits.

A lack of understanding of monetization opportunities:

Unity, as a company, offers various services for its developers, from advertising to a marketplace for assets and plugins. Everything Unity has done so far has been in service of game developers using the Unity Engine. One could argue that they aimed to expand the market of game developers and maximize their charges.

Greed and incompetence:

There isn't much more to say here; they decided to harm the proverbial "Golden Goose."

While Unity and many other organizations are at a crossroads due to the end of Zero Interest Rate Policy (ZIRP), the transition to more efficient business models and profitable balance sheets must be better managed.