Unity is not a game company!
But maybe it should be?

The discussion about whether or not Unity should make its own games has been brewing since the engine's inception more than a decade ago.

However, Unity's former CEO John Riccitiello made it very clear that Unity does not want to make games [1] [2].

One of the arguments is that Unity is not a games company. This is true, albeit in a different way than many people think.

Unity's primary sources of income are advertisements and in-app purchases (70%) [3]. So in truth, Unity is an advertising company. After the merger with IronSource, it has become even more so.

Why Unity should make games

Anyone who has been developing some reasonably complex software knows that no plan survives first contact with the customer. There always is something that was so obvious to the developers and testers that no one thought it could be a problem. There is an endless list of reasons why projects change after release.

If asked, Unity employees will tell you that of course, they listen very closely to what their customers say. Some people at Unity are very dedicated and even reach out on their own to get some feedback. It's not a problem of motivation or skill.

The problem lies in the lack of hands-on experience. Hearing about a problem and maybe standing by the developers and watching over their shoulders is one thing. Experiencing the excruciating pain of releasing a game into a real market with real players is something else entirely. It's a realm that Unity has not yet dared to enter. Or has it?

There was an attempt

Unity's project "Gigaya" was a worthy attempt to finally make a game on its own. I was very pleased when I heard that Unity was actually trying to make a game.

FINALLY, I thought.

Well, in June 2022 the project was canceled with a big round of lay-offs [4].

The statement that really grinds my gears is this:

"Any further learnings would have been minimal during the additional required time to get it to the finish line and would have been disproportionate to the necessary investment."

Are you kidding me?
Getting a game over the finish line is exactly where MOST of the learning experience is. You know, the last 20% that usually take about 80% of your time!

It seems the "we are not a games company" group is firmly in control of this enterprise. There won't be a push toward game development anytime soon. I was (still am) very disappointed by this.

It was a real blow to those of us who would have liked to see Unity grow as a game engine.

Why Unity should not make games

Unity is a publicly traded company. And what are publicly traded companies interested in? Right, money, aka fiscal reports.

Making games is a risky business. I understand that pitching a project like Gigaya against something like improving the advertisement revenue by 0.2% by doing X or Y is very hard.

The former is a big investment into something indirectly related to the division that only makes about 30% of the company's revenue (Engine). Would there have been a quick ROI on Gigaya? Surely not. Any measurable ROI in the long run? Questionable at best.

In comparison, the latter increases the bottom line by a lot and it is in alignment with an ad company's goals.

From an investor perspective, I can see why the project was canceled.

Also, Unity has quite a dominant position in low to mid-budget projects. There is not much room left to grow. Especially with the AAA competition (*cough* Unreal *cough*) pushing back. It may be more lucrative to invest in other areas like 3D visualization, the film industry, VR, automotive, ... . If Unity wants to keep expanding it is a reasonable idea to look beyond games.

Interesting articles for you:

Sources

1. "We have no intention of competing with our customers. We will never make our own games."
   GamesIndustry.biz interview with John Riccitiello (2016): https://www.gamesindustry.biz/articles/2016-09-07-unity-ceo-we-have-no-intention-of-competing-with-our-customers

2. "We are not a game company. We make technology to empower game developers to build their own games."
   VentureBeat interview with John Riccitiello (2020): https://venturebeat.com/2020/06/24/unity-ceo-john-riccitiello-interview-2020/

3. "Create Solutions revenue" = Engine (30%), "Operate Solutions" = Ads and IAP (70%)

   Unity fiscal report (2022): https://investors.unity.com/news/news-details/2022/Unity-Announces-Fourth-Quarter-and-Full-Year-2021-Financial-Results/default.aspx

4. "Gigaya will remain as an internal resource at Unity but there are currently no active plans to publish it."

   Unity Forum (2022): https://forum.unity.com/threads/introducing-gigaya-unitys-upcoming-sample-game.1257135/page-2#post-8278305

5. Picture of John Ricitiello - Unity CEO: https://en.wikipedia.org/wiki/File:Web_Summit_2017-_PlayerOne_DF2_4636_(26486427939).jpg