Unity CEO John Riccitiello commented on the company’s merger with ironSource and how to better help game developers.
He also addressed the issue of falling stocks and recent layoffs. Riccitiello revealed in an interview about serving game developers prior to the ironSource merger.
Riccitiello notes that Unity has no plans to leave the creative side of its business. Although the Engines division has a lower revenue share than Active Solutions, he believes the units. This taste will be “almost evenly balanced” in the future.
Talking about merging ironSource, Riccitiello noted that it would fit both of the aforementioned divisions and allow Unity to offer more different tools to developers. “It’s designed to help them create a product that people will love more,” he said. He once again said game development is not just about being creative, because developers have to use all the tools available to run the product and find success in the market.
We see it as our mission and vision in life to help them create and solve the next complexity of operations and solve everything from storage to voice, multiplayer to analyze and monetize when appropriate.
Unity stock is now down 84% from its peak of $210 in November and is down nearly 40% from its 2020 IPO, Riccitiello noted, though he doesn’t know the specific reason for the drop, but he does. Game companies often trade at the value of their businesses, which can be 5-6 times their annual revenue. Unity was trading at 50x revenue in November 2021, so the stock price may have been overstated.
“I don’t know why we’re trading at that high. We are not a game company. We deal with a basket of other tech companies, and against the companies that we’ve made public, believe it or not, Unity has outperformed significantly,” said John Riccitiello.
Unity has not reported a profitable quarter since it was founded in 2004. Riccitiello, who joined the company in 2014, attributes this to continued growth and associated costs. According to him, the most important step Unity has taken is the transition from releasing ready products to a software-as-a-service model. The company has increased its annual R&D investment 16 times since 2014, which is also a significant portion of the cost. As a result, Unity’s market share has grown to over 70%, allowing the company to enter a period of strong growth.
In June, Unity laid off hundreds of employees, representing 4% of the company’s total staff. Riccitiello notes that in reality, layoffs only affect 1% of the company’s employees, as most of those employees can apply for other jobs at the company. Talking about the reasoning behind the decision, he said Unity had to shut down “a number of inactive projects”. “We feel about 4% of employees are not making the company better,” said the Unity CEO.