In its latest shareholders letter, Unity has revealed plans for potential layoffs, office closures, and product discontinuations as part of the game development software company’s broader cost-saving measures. Read on to know more.
Unity Announces Potential Restructuring
Changes to Take Effect Before the End of Q1 2024
Despite reporting Q3 earnings within expectations, Unity acknowledged the need for measures to enhance its profitability metrics. Unity is currently assessing its product portfolio to focus on the products they deemed are most valuable to their customers.
Simultaneously, the company is “evaluating the right cost structure that aligns with the more focused portfolio,” according to interim CEO Jim Whitehurst. Changes are anticipated during the fourth quarter, including potential discontinuation of certain product offerings, workforce reductions, and a decrease in office footprint. Unity aims to complete these changes before the end of Q1 2024.
Past Challenges and Controversies
Unity has faced challenges over the past few months, notably in September when it introduced a controversial pricing model. This model sought to charge developers meeting specific criteria each time a user downloaded a Unity game, resulting in vocal backlash from indie developers and the whole gaming community, an increased interest in competing game engines, and a subsequent boycott.
Jim Whitehurst Acts as Interim CEO
The company apologized and revised its plans based on feedback. On October 9, Unity announced the immediate retirement of CEO John Riccitiello, and the pricing model was eventually amended.
However, the damage to the company’s reputation within the game development community has already been done. With Riccitiello’s retirement, former Red Hat CEO Jim Whitehurst stepped in as interim chief. The new fees are set to go into effect at the beginning of 2024.
Unity has stated that the management is actively working to determine the most effective way to charge clients for its products and plans to implement a new strategy during Q4 2023. As mentioned, the new approach may involve product discontinuations, layoffs, and a reduction in office space.
In May, the company had previously announced it had cut a total of 600 employees, approximately 8% of its workforce. Regarding the permanency of Jim Whitehurst as CEO, Whitehurst himself has stated that Unity’s board members are still conducting a search on the matter. Unity’s finance chief, Luis Felipe Visoso, affirmed that changes to the business will be completed by the end of the first quarter of 2024.
