Impact of Unity Runtime Fee on Game Developers and Their Projects
Unity switches things up, implementing a new cost called the Unity Runtime Fee from 2024. This marks a departure from Unity's previous royalty-free licensing, with fees based on per-install counts once specific revenue and install thresholds are hit.
Figuring out the Basics:
- Unity Personal and Plus users will face a $0.20 fee per install after achieving $200,000 in annual revenue and 200,000 lifetime installs.
- Enterprise and Pro tier subscribers will incur fees between $0.125 and $0.15 per install starting when their game grosses $1 million in yearly revenue and 1 million lifetime installs, potentially qualifying for discounts with a higher install count.
The per-install fees will apply across major countries such as the US, Europe, and parts of Asia, while "emerging markets" will have distinct rates ranging from $0.005 to $0.02.
This shift from the earlier "no additional fees" policy for Personal tier developers earning less than $100,000 a month and the revised pricing model significantly changes the mobile and PC Unity-based game's cost-per-install (CPI) landscape. Let's dive deeper into the implications.
Redefining the Business Model:
Previously, developers counted on the success of their game not causing unexpected financial obligations. Now, this model is transforming. Let's look at an example: developing a game under Unity's Personal or Plus plan with an uncertain potential success. To generate buzz, you might price it at $0.99 on platforms like Steam. Now, let's break it down under the new pricing structure:
- VAT Factor: With variable taxes like Value Added Tax (VAT) ranging from 5% to 30%, reducing the game price in the UK to $0.99 (initially at pounds) translates to $0.79 after 20% VAT.
- Platform Fee: Hosting the game on platforms like Steam isn't free. They take a 30% slice of the $0.79, leaving you with just $0.55.
- Unity Runtime Fee: The updated Unity pricing introduces a $0.20 install fee. After this deduction, you're left with $0.35.
Given the conditions, would you still set a $0.99 price tag? And if you planned to go higher, would you still generate the same buzz? It's just an example, but increased costs could potentially lead developers to reevaluate their pricing, potentially altering game reach and overall success.
Potential Changes Ahead:
Battling with reduced profit margins, developers are likely to explore various options in response to Unity's new Runtime Fee:
Raising Game Prices:
With thin margins between the Cost Per Install (CPI) and Lifetime Value (LTV), Unity’s Runtime Fee could drop game profits by tens of percent. To stay afloat, developers might increase LTV by upping game prices, charging more for in-game goods, or adding ads.
Opting for P2P Games with Microtransactions:
With the Runtime Fee, developers might gravitate towards “pay-to-play” games with microtransactions, as these models bypass the install fee. The question remains: how will players react to this shift?
Struggles for Subscription-Based Models:
Games distributed via subscription services like Microsoft’s Game Pass could be hardest hit. Consider a free game like “Another Crab's Treasure,” available to 25 million Game Pass subscribers. Even a tiny percentage of downloads could trigger significant Runtime Fees, disrupting the developer's financial plan. Although Unity has pledged to not bill developers directly for fees arising from subscription platforms, the redistribution of costs might alter collaboration terms, impacting developers and distributors alike.
The Indie Distribution Challenge:
The new Unity Runtime Fee affects how indie developers work with major platforms like Epic Games and Steam. For instance, "The Fall," acquired by the Epic Games Store at a low cost and distributed for free, amassed 7 million downloads. Covering the Runtime Fee for these installs would have cost more than the developer's earnings. Fortunately, Unity has confirmed that pre-2024 installs won’t be charged, but they will count towards Install Thresholds.
Unity's new pricing structure has put developers on edge. However, Unity has shown a willingness to engage with the community—potentially opening doors to discussions about discounts for users of Unity's in-game ads and cloud services. Meanwhile, Unity's financials reveal a complex situation: with significant revenue growth, its net losses still stand, indicating a need for adjustments in the company's monetization strategy. The future will show how Unity navigates this tightrope between earning profits and fulfilling developer expectations.
References:
[1] How Unity's fee change could affect game developers[2] Unity Launches 'Per Install' Model Amid Criticism Over License Change[3] Here's what you need to know about Unity's Unity Runtime Fee, and why it's troubling for devs[4] Unity’s new licensing model & runtime fee: what do game developers think?
The new Unity Runtime Fee may cause developers to reconsider their business models, leading to potential changes such as raising game prices, opting for pay-to-play games with microtransactions, or struggling with subscription-based models, especially for games distributed on platforms like Microsoft's Game Pass. The implications of these changes could significantly impact the cost-per-install landscape, potentially altering game reach and overall success, particularly for indie developers working with major platforms like Epic Games and Steam.
On the other hand, Unity's financial situation reveals a need for adjustments in their monetization strategy, showcasing a complex and challenging landscape for both Unity and the developers relying on their technology and services for their businesses.
