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Comment by cojo | Hacker News Reader

I have to say, the only thing more surprising to me than seeing the board actually hold Riccitiello responsible for this (with consequences) is seeing that their interim replacement / transitional CEO is someone with a pedigree that, on the surface, seems even more management consulting / investor / revenue focused than Riccitiello was himself.

To be clear, I know essentially nothing about James M. Whitehurst other than what is readily publicly available (IBM / Red Hat, advisory roles, etc.).

But my read on a lot of the Unity crisis, as a long-time game industry veteran myself, was that one of the increasingly common "management consulting" / investor- & revenue-focused type of gaming executives (e.g. Riccitiello, Don Mattrick [Zynga replacement CEO when Pincus stepped down], Kotick [Activision-Blizzard]) had finally overstepped their bounds and let revenue goals drive decision-making just a bit too far without customer consideration.

So, I had assumed that if Unity did make a leadership change here, it would be in a direction away from that - i.e. a more industry-seasoned executive with less of a pure revenue / "business" focus.

I think I clearly misjudged the situation here in light the Whitehurst pick; while it's possible that is truly just an interim role and they will still pivot to this in the final hire, or that I simply misjudge "the label on the tin" and Whitehurst is very culture / customer focused, I don't think I would bet on it. This seems like the board actually "doubling down" on driving revenue results - and fast.

View on HN

Interim CEOs generally tend to be either a board member or a C-level executive that take on the role just to manage day-to-day CEO duties while the board searches for a more permanent replacement.

In this particular instance, Whitehurst isn't a board member, but per the press release[0] he is a "Special Advisor at Silver Lake". Silver Lake is one of Unity's largest shareholders (~10%) and Egon Durban is on the board.

EDIT: Also worth noting Silver Lake, along with Sequoia, committed an additional $1Bn into Unity at the time of the IronSource acquisition in the form of convertible notes with a conversion price of $48.89 / share[1], which is at a slight premium to the price at which Unity's stock traded then (7/15/2022) and at a meaningful discount to their current share price of $29.70 -- which supports the (admittedly speculative) argument that SLP's voice on that particular board is all the more prevalent today.

——————————

[0]: https://www.businesswire.com/news/home/20231009494331/en/Uni... [1]: https://investors.unity.com/news/news-details/2022/Unity-Ann...

This is helpful context as well, in addition to doomlaser's explanation of his background re: IBM and Red Hat. Thanks for sharing it.

I wonder to what extent Silver Lake drove this overall decision (vs. others on the board potentially initiating it)

Ah, Silver Lake, of Skype acquisition and zeroing-out employee equity fame.

https://www.wired.com/2011/06/skype-silver-lake-evil/

I didn’t realize they screwed over some of the execs by zeroing out options.

The night before the same transaction, they issued a pile of diluting shares to themselves, effectively clawing back something like 50% of the rank and file employees’ stock options.

I might have the date and percentage wrong, but it doesn’t really matter.

Silver Lake are total bastards and probably belong in jail. Avoid.

I thought stocks represented ownership of a company. If a company has 100 stocks and I own 50, I own 50% of the company. If the company issues 100 more, shouldn't 50% go to me, since a share represents a part of the company ownership and I own a known percentage of the company?

How is it legal to say "you bought 50% of this, but now I've arbitrary decided that I own 99% of it because I gave myself more percent"

You can bring in investors, go in retirement, sell your company. So ownership of a company can change. One way of doing that is to sell shares, another way is to give new ones to the newcomers. I don’t know this precise story with Silver Lake, but emitting new shares and diluting past investors to inject cash into the company is sometimes the only solution to bring cash on the account.

You can always create more stocks, but that delays the value of each, so investors might not like that.

delays -> devalues, dilutes?

Nothing on paper says "You own 50% of the company".

The company starts up, it has 100 shares, you get 50. If you calculate it, you own 50%.

Later on the company needs to raise cash, so it issues another 100 shares. Company now has a ton of cash in the bank. Total shares outstanding is 200. Now you own 25%.

Then whats the point of buying a stock if it doesn't even entitle you to ownership of a company?

There's for example non-voting stock where you only participate in a potential exit or dividends.

Depending on the company bylaws you typically need at least a simple majority of the votes / stocks to issue new stocks. The company can also have a rule that says that existing share owners must have the right to purchase before everyone else, to "defend" their stake.

In general companies typically raise money because they think the cash infusion will benefit the existing shareholders in the long run, either by not going into ≈bankruptcy or having the cash to do investments / move into new markets etc.

It does entitle you to ownership, you as an investor in the company presumably approved the issuance of new shares on the belief that the additional capital would make your investment worth more in the future.

At least in theory the extra cash raised by selling the new stock makes the company more valuable, so your shares remain worth the same before and after. Actual practice is a lot more nuanced - the company might not be able to sell the new stock at a high enough price, or they might spend the new money immediately on hookers'n'blow^W^W^W unsound investments.

what does ^W^W^W mean

Remove previous word

The other answer to this is correct, but a little more detail in case you're interested:

^W is a control code. This specific one represents the keys ctrl+w, a keyboard command in Vi and Bash among other things. It deletes the previous word. You often see something similar with ^H as well, which is a single-character backspace. https://en.wikipedia.org/wiki/Backspace#^W_and_^U has some more information about these.

Some people use them more to make visual jokes in written text, more or less the same way you'd use strikethrough formatting in text.

And in my experience ties in nicely with the fact that when a dumb terminal glitched or lost sync with the server, control codes would start to litter the screen instead of being interpretted. You'd see things like:

…thsi typo^Ŵ^H^H…

start to appear, sometimes followed by several random letters hit in frustration, before the final hard-reset of the terminal and resignation to the fact some unsaved work has been lost.

I wish there were more people like you on the internet.

Shares do not imply ownership but participation. That participation can take different shapes, depending on the type of shares and the bylaws of the company: some will be entitled to dividends, some will be entitled to voting on decisions, some will entitle to a form of ownership, etc etc.

It sounds like you are thinking of publicly listed companies which have to adhere to strict regulation, much different from privately held companies.

Even then, there are no guarantees. A company can simply be mismanaged and overvalued as we saw recently with this Danish airline: https://apnews.com/article/scandinavian-airlines-air-francek...

Now you own a smaller part of a more valuable company, given the the money is well spent. Your net worth shouldn't change much.

Either way, if you had a majority of the voting shares, you could've stopped the issue.

I thought that if the company is issuing new shares, it was customary to give first refusal to existing investors (a "rights issue"?)

There may be a preexisting contract between investors that grants this right of first refusal. In some scenarios (e.g. startup seed rounds) it is customary to require such a contract as part of the investment deal, however, if you don't contract for this right you don't have it, and it may well be that some shareholders (e.g. investors) have this right and other shareholders (e.g. initial employees) don't.

Entirely up to the company.

Conversely companies can buy back shares so each share is a larger percentage of the company.

Apple has been doing this aggressively for the past 10+ years.

It generally requires a shareholder vote to do this, so this is mostly a concern for someone who owns a minority stake in the company. And then it depends on the rules that are actually set up for the company as to what is and isn't allowed with issuing new shares. So it's very much a "read the fine print" situation.

Umm, is this still consequence free in USA?

Yes.

The most famous Interim CEO was Steve Jobs.

He was also employee #2 and #0 at the same time, so Quantum CEO?

He also aggressively recruited and hired the guy (Sculley) that got him fired from Apple on the first pass.

Amateur move on his part, hiring an 'MBA head' CEO

Tim Cook is also MBA and it looks like it is working fine for Apple.

Yes but he spent a lot of time inside Apple and grew within it

The problems you have selling sugar water are not the same problems that Apple has today (or since Cook moved into the post).

yeah I know but issue is not MBA it is what kinda culture you come and where you are good. Selling sugar water (you need to be like super good at marketing) and leading tech firm need different skills.

I think he's good at operations. But he doesn't lead the same way jobs did. apple can still turn the crank, but I don't think they innovate like when sj was around. Jobs worked with the outside world well, and cooperating well with the rest of silicon valley.

I think apple is now heavily navel-gazing. Their products point inwards into their ecosystem, they don't interoperate, the customer is trapped, they have few choices. maybe I should say egosystem?

> I don't think they innovate like when sj was around

I would have agreed with this before the M1 Macbooks came out, but when it did it caused a big change in my opinion.

Compare them to when apple switched from powerpc to intel.

When that happened, basically the mac was a better pc, since you could run windows natively on your mac. The mac now shared hardware and software with the pc industry, and innovations transferred over, like graphics cards. Apple let its customers benefit from multiple ecosystems, and they have more choices.

The apple switch to arm, went the other way. how many PCIe cards from a pc work in a "mac pro"?

I've read Sculley's book as a teenager and I remember that it made a big impression on me, even though I don't remember much. I think the PepsiCo part was really gripping.

Silver Lake being one of Unity's largest shareholders explains their recent behavior perfectly. It's a private equity firm whose sole concern is squeezing blood out of a rock.

Accidentally funny name

https://de.m.wikipedia.org/wiki/Silbersee_(Bitterfeld)

That's basically the reputation of a significant number of private equity firms. Their standard operating procedure is to load the company up with debt, cut R&D, cut investment into the product, cut wages and raise prices to increase short-term profits while pretending you're trying to turn around the company and save it. That's basically why Sears and K-Mart don't exist anymore[0] and why so many newspapers fired their journalists and replaced most of the local news with national news from the wire services[1].

[0]: https://www.cnn.com/2018/10/16/investing/retail-sears-privat...

[1]: https://www.stern.nyu.edu/experience-stern/faculty-research/...

Sounds like Twitter.

Elon's Twitter acquisition was exactly to do that but he muffed it.

Elon's twitter acquisition was a play to sell lots of incredibly overvalued TSLA stock without tanking the price.

May a lot of noise, declare you're done with Twitter's bots and BS, sell a ton of stock -- not because it's overhyped, no it's for Twitter -- and then back out of the sale.

And he would've gotten away except he tried to back out 3 times and they held him to it. So now he's got this trainwreck situation, and he's doing what he thinks is the right play, lemons into lemonade.

Everything except short-term profits. X seems decently focused on the long term, especially with subscriptions being introduced as a (new) revenue stream.

Also not sure about R&D, as I don't know what R&D Twitter was doing pre-acquisition, but there's been an extraordinary increase in the rate of addition of new features and changes to the platform.

> especially with subscriptions being introduced as a (new) revenue stream.

I don’t think that’s ever likely to offset the massive amounts of debt Musk offloaded to Twitter’s balance sheet to fund the acquisition.

> changes to the platform.

Likely one of the most horrible rebrandings in the history of corporate rebranding?

He fired the ML Ethics Transparency and Accountability team. They did a lot of high quality work on understanding bias in opaque ML models.

https://www.wired.com/story/twitter-ethical-ai-team/

Exactly. Most of the Twitter acquisition money was borrowed, and that debt is now sitting on the company's balance sheet as liabilities.

It confirms the concern. The board broad on someone to look after the needs of the largest shareholder

Silver Lake (along with Qualtrics founder Ryan Smith) bought Qualtrics after a dizzying sequence of planned IPO, acquisition by SAP, and then IPO. They're busily evicerating it, having just announced their second big round of layoffs, and apparently there gonna be even more job losses next March. Everyone I know there is planning their escape. What's hilarious is that this round of layoffs has impacted their ability to deliver on a major internal project because a key player was canned, so the project is now in hold (again).

I wonder how many of these $$$ people are looking at Musk and saying, 'hold on, we could do that too'. It's amazing how resilient a company can be to code rot and infrastructure stagnation. It takes a long time to kill a company, once it has a customer base and decent revenue streams. You could probably fire everybody outside strictly operational teams and simply coast along on the momentum for a few years, creaming off gigantic profits. And what the hell, jack up your prices too, right?

Musks takeover of Twitter is not a particularly compelling example of this model. In a year he’s cut revenue by 40% (with every month trending worse than the last), not made it cash flow positive even with massive cuts, and is burdened it with tons of debt while making it worth much less. Twitter may turn around but right now I can’t imagine corporate raiders are looking at it as a positive example.

https://www.reuters.com/technology/elon-musk-says-twitters-c....

https://www.reuters.com/technology/us-ad-revenue-musks-x-dec...

Well, Musk did several things in close succession.

Sure, he scared off advertisers by welcoming nazis onto the platform. That's not something you'd want to replicate.

But he also fired 80% of the workforce, and the product kept working. If you have some subscription software where users keep paying $$$$ whether you add new features or not - getting rid of 80% of those expensive developers could be pretty tempting.

This is an extremely common private equity playbook, that hasn’t seen as wide adoption in software as it has in other industries because there is a presumption that software clients aren’t particularly sticky and the software space allows faster innovation. Twitter is a story that confirms that bias (so far).

I think Unity is the next big test case. If users leave the platform in droves and revenue tanks it will continue to confirm the current hypotheses. That said private equity firms will keep trying it no matter what as the market biases make it an easier space to compete so I’m not sure it matters much to software companies.

Eh, software can be pretty sticky if your users have lots of files in your proprietary format nobody else can read.

A company that uses Photoshop, or Altium, or SolidWorks, isn't going to move off it easily. Hell, existing users will often initially be thankful when product managers stop moving the buttons every 6 months.

Of course you'll stop attracting new customers as your product gets surpassed - but there could be a lot of $$$$ to be extracted before revenue drops to zero.

I would argue that much of Microsoft is built around legacy applications and code that prevents moving to alternative solutions. A lot of companies do not want to spend the time and money to pivot, not have the labor to do so. The true tech debt is a hidden cost where change is a visible cost.

Oracle and MSSQL enterprise owned my last org.

SAP offered to migrate us -- on to their new HANA platform. Guess how much that would cost?

So we still have these ancient Oracle boxes and newish MSSQL kicking around. They should be entering high school before too long...

Private equity firms are already an absolute blight even before Musk's handling of Twitter. I've seen plenty of companies get purchased, completely gutted and then they try to extract maximum value from customers as quickly as possible before all customers abandon ship as the product(s) fall apart. They truly are scum.

Oh I agree. I just think that Musk upped the ante by not being a private equity firm and still outdoing them:

1. Fire most of the company

2. Introduce new charges (blue tick worked, but the API cost was just stupidly high)

3. Then start tearing into the platform, breaking shit

The 3rd bit is what's weird. Private equity don't usually want to destroy the product that they just bought. Perhaps he thought that Twitter needed to be simplified in order to be manageable with a skeleton crew, but it still doesn't explain a bunch of user-friendly changes or the lame "X" rebranding.

I'd argue that what Unity needs is someone who's got a background in enterprise software, because selling to game developers is very different than selling games. No one with (successful) executive experience in enterprise software would have signed off on Unity's original revenue plan, simply because the number one rule in enterprise is "don't fuck with the customer's business model," which the "pay per download" model certainly did. Hiring a game industry CEO who pioneered predatory monetization models and was responsible for horrifying managerial practices within and between studios was a terrible choice for Unity, and his evident contempt for developers showed through often.

Whitehurst, on the other hand, has a history of strong execution across multiple industries, and built a reputation as someone who protected Red Hat's culture against attempts from within IBM to "Big Blueify" it (possibly to the detriment of his own role within IBM). Even as an interim, having him onboard is a good sign for how Unity is looking to repair its relationships with developers.

> simply because the number one rule in enterprise is "don't fuck with the customer's business model,"

On the other hand, the continued growth of gaming revenues, for both developers and services providers, compared to all other creative industries, is all attributable to innovations in business models. I suppose if people rocked the boat as little as you suggest, the only software being sold to game developers would be Denuvo.

Something tells me there is a fair bit of wiggleroom on the line between "no innovation whatsoever" and "making a large number of my customers situation untenable." I think innovation will continue just fine. Disrupting a business model is not the same as selling software to people under terms that are obviously and immediately harmful. Unless you are really clever and they are really dumb, I guess.

You're making the exact mistake that OP warned against at the beginning: "selling to game developers is very different than selling games".

Even game studios can't just change things willy nilly. If Baldur's Gate 3 had been a microtransaction-funded F2P game, it would have been a flop—their target player base doesn't like that business model and wouldn't have gone for it. It's better to try out a new model with a brand new franchise than to try to pivot an existing franchise.

Enterprise software has these same constraints and more, because monkeying with the business model doesn't just mildly irritate prospective customers, it can and does throw off years of planning for thousands of people per company. They can't just shrug and decide to not invest in the next installment in your game franchise, they have to re-do their corporation's 5- and 10-year plans.

[M]onkeying with the business model doesn't just mildly irritate prospective customers, it can and does throw off years of planning for thousands of people per company.

This, very much so. Unity made two cardinal sins: creating a pricing model that didn't align with customers' business models (tying price to downloads rather than revenue), and then attempting to apply it retroactively to existing contracts (which, at best, would have resulted in high-profile and ugly legal battles against their largest customers and, likely, would have ended in a judge slapping their lawyers around with a copy of Williams v. Walker-Thomas).

In both cases, creating business model risk and uncertainty drove developers towards other software choices, not because developers are opposed to Unity asking for an engine license fee (after all, they already incorporate console fees, app store fees, etc. into their business models), but because Unity created financial uncertainty: they couldn't forecast those fees with decent probability and precision, and because they no longer trusted Unity not to try to retroactively screw them years down the road. Unity fixed the first problem, but now they've got to work to win back trust on the second.

Thanks for introducing me to Williams v Walker-Thomas. In the ocean of Paywalled Law School Study Guide SEO, I can't find anywhere that tells the last chapter of the story. In light of Wright's decision, how did the lower court finally rule? After being given permission, did they actually follow through and throw out the contract?

It seems obscure, you’d probably have to pay for the records.

https://chat.openai.com/share/537dd325-1c5c-422b-8b4a-a44852...

Apologies for not seeing this earlier; faced with an unfavorable ruling (and, I believe, the UCC coming into force in DC around that time, which surely couldn't have helped their position), the store dropped its attempts to repossess the furniture in question, and settled the case with a damages payment to Williams.

>Unity made two cardinal sins: creating a pricing model that didn't align with customers' business models (tying price to downloads rather than revenue)

Everyone is assuming the majority of Unity's customers ("most" as measured by $$$, not by quantity of devs) aren't F2P games. I'm not sure that's actually the case; if most of their revenue comes from F2P then shafting everyone else in order to shore up their F2P business would likely be the correct business decision.

I'm not sure I follow. Aren't F2P games most misaligned with pricing per download since that means they end up with a bunch of negative value consumers and complete uncertainty whether they will end up with a positive or negative balance since they can't know much they will expend?

The traditional game developers can just go "Unity takes 1$ per download (or whatever), the average player downloads 3 times, the game costs 10$, 3$ goes to the storefront, so we have am average profit of 4$", which seems simple enough to deal with to me.

> complete uncertainty whether they will end up with a positive or negative balance since they can't know much they will expend?

Which forces them to use Unity’s Ads and other services which can be used to offset the per install fee. So on paper Unity would win either way.

>st change things willy nilly. If Baldur's Gate 3 had been a microtransaction-funded F2P game, it would have been a flop

Hot take, but I think it would have been fine financially. Would the online consumers and even media drag it through the mud? Definitely. But I reckon console gamers have less than a 10% chance in correctly predicting some f2p model would crash and burn.

Now I can't say if it'd be more profitable than selling as premium, because it didn't target mobile and that is the real market for that monetization. But I doubt it would have crashed.

It would've had to have been an extremely different game though. F2P P2W shovelware games are designed as such from the ground up. You can't just add micro-transactions to a normal (especially story driven) game and hope to make significant amounts of money.

Riccitello is the poster boy for failing this lesson:

- Dungeon keeper mobile - Ultima Forever

> Whitehurst, on the other hand, has a history of strong execution across multiple industries, and built a reputation as someone who protected Red Hat's culture against attempts from within IBM to "Big Blueify" it (possibly to the detriment of his own role within IBM). Even as an interim, having him onboard is a good sign for how Unity is looking to repair its relationships with developers.

100%

I was at IBM at the time. We really hoped he would eventually take over from Ginni once she left... nope. We really could have used someone who wasn't drinking the blue koolaid. Well.. the rest is history.

All this other crap about Silver Lake being a giant POS is concerning though.

Arvind Krishna seems like a pretty cool guy though, and definitely has engineering background.

It's interesting that everybody focuses on Red Hat after acquisition but no one ever asks how IBM is doing now. Maybe it's delusional to think that Red Hat could change something of its new overlord, but perhaps the acquisition was already showing the desire to change IBM from within?

IBM is doing okay, but not great. Their fiscal peak was a decade ago, and in terms of real dollars they aren't even at pre covid numbers yet. And on what little I know of the mainframe side, IBM is still very IBM-like, except they will now occasionally concur with consultants who point out places mainframe consumers are needlessly spending money.

It just felt like more of the same. I left soon after (2020) so perhaps things are changing. Was gutted to leave, IBM was always one of those mythical places to work for me, but in the end I made the right choice. Perhaps one day I'll go back, ha who knows!

“When you are six hours into playing Battlefield and you run out of ammo in your clip and we ask you for a dollar to reload, you’re really not that price sensitive at that point in time" - John Riccitiello

Amazing that he could so correctly identify why price-blinding tactics would work on people trying to have fun, but not do the inverse and see why it wouldn't work on people trying to develop a product.

You're right that selling a game engine is more an enterprise software business than game publisher, but Unity isn't trying to be a software company at this point, they're an ads and analytics service company, maybe doing a 'big tech' cosplay.

I was at Red Hat while Jim was CEO. He’s very culture focused and is an excellent choice for restoring faith there. He got great results while at Red Hat, but they plucked him out for a non-CEO role at IBM after the acquisition. IMO that has been IBMs greatest sin in its handling of Red Hat.

Jim was active on memo-list and seemed to listen to people. That doesn’t mean he’s perfect, but I’d give him very high marks and I think that he had a lot of goodwill among Red Hatters as CEO.

If anyone can save the stinking ship that is Unity, it’s Whitehurst.

This is said by someone who wants nothing more than to see Unity die.

Whitehurst was pretty instrumental in getting Red Hat sticky in places where it was just RHEL. Open Shift, Open Stack, etc all drove value-add for the business and for their customers. Cloud is fickle though so selling tools to studios and trying to compete with Unreal in the VFX space is how Unity moves forward. Take your lashings from the game devs. Shore up your presence in VFX, Movies, Film. Evolve.

The tsunami has squarely landed on Godot’s doorstep. It will be up to them on how they manage the swell.

While I don’t think you deserve to be downvoted for this, your comment is full of opinions that, as a game developer, sound 200% wrong to me. For the sake of curiosity… what are you talking about?

I’m talking about Jim Whitehurst taking Unity in a different path and leaving us game devs the f#^k alone. We’re done. Go sell to movie studios, VFX shops, Video Wall Warehouses, digital twin and construction. Sell enterprise software subscriptions.

I think we both agree that small indie studios will not be returning no matter what promises are made, who is CEO, or what new shiny monetization idea they come up with next.

I wish him the best of luck.

> I think we both agree that small indie studios will not be returning no matter what promises are made

One thing I agree on: more often than not, behind an interesting piece of art lies an interesting personality.

To advance the conversation based on some substantive facts, based on my conversations with creators of large free to play Unity games, all were already using IronSource and were not impacted by the changes anyway. As a game developer who publishes himself, I do not plan to migrate away from Unity, and I wasn't really impacted either. I can't speak for the 30 or so studios who posted pleas to revert the changes, but based on what happened, I believe they got what they wanted. So if their decision-making is rational / based on facts, I don't think they're migrating either.

This is all to say that when you have no budget, so you value your time at zero and you have no visual art you didn't author yourself, it's easy to put 100% of the personality into the product, and make that The Thing. There are people I know who turned 20,000 followers on a TikTok about games into a $1m check for a game studio! This is a viable strategy, it is uniquely suited to people to have opinions about game engines. But my facts-informed opinion is that this isn't representative of most game developers, and that they are actually really happy with Unity and relieved that the pricing changes found a middle ground that is less emotionally charged.

What did I just read??? "Substantive facts"? That was all opinion. You didn't even directly respond to the poster until your last sentence and there you declared your opinion to be "fact-informed" and assigned both the feelings and actions of the average Unity dev using your, at best, subjective experience.

Just want to second this.

I've been using unity for almost a decade now and enjoying it despite the many caveats and idiosyncrasies I come across.

The bottom line is, I definitely don't want to throw away the decade of experience I have using Unity if I can help it. Ultimately I want them to learn from their mistakes and move forward. While Unity has had a fair share of missteps ultimately it's the devil I know.

I'd like to ask (only out of genuine curiosity): Do you also build your own engines or are you fully entrenched and dependent on Unity? I would feel very disappointed if I spent a decade on something only to depend exactly on that one thing and not be able to create it myself, especially when it's such a tractable problem in a sub-year time frame even with learning happening. The fit you could have with your own engine with a bigger up front investment of time and energy seems like it would easily pay off vs. just using Unity for years and years.

Not only sunken costs, but building an engine is no easy task. It’s easier to write a game than to write an engine (most of the time).

I do think this is the right approach. This is the approach I took. I was dependent on an engine for a long time until I realized it was just a facade and that I already possessed the knowledge to do it myself. So when XNA died, and MonoGame wasn’t mature yet, I had no choice but to write my own. Some of that effort went into MonoGame’s early days, most of it didn’t (I respect keeping the API the same but we, devs, could have done better to improve it).

Unity made it easy to build games without having to know the underlying proponents that do what they do. Instead, it’s presented through a massively opaque interface called a MonoBehavior. Because of this opaque abstraction, it’s almost impossible for a Unity game developer to know exactly what’s going on under the hood.

My first game engine took me 3 years to get to a point where I could ship something. My second was 1 year. My latest was 3 months.

Eventually, it becomes just adding another interface to your GPU abstraction to support wgpu or DX14, or Vulkan2, or Metal, any graphics api becomes just a Buffer, a Queue, and a sync lock.

Small studios absolutely will return to Unity. This whole debacle will be a faint memory a year from now, the marketing machine will continue and indie developers will become entrenched in Unity's C# ecosystem, build tooling, all-in-one package + asset store. Some indies won't return sure, but Unity will continue to maintain it's foothold with indie developers.

> entrenched in Unity's C# ecosystem, build tooling, all-in-one package + asset store

instead of indies, i think this applies much more to mid-level studios. Indies tend to be much more flexible and agile, esp. very small indies. Mid-level studios, with a dozen people that have gotten used to the toolchains and have existing investment in it (any custom plugins for example), would have a harder time switching away.

However, this whole debacle just goes to show that proprietary software may be a trap, unless the T&C explicitly clarifies and makes it _not_ a trap. This is what unreal engine has done (you at least will always remain on the same T&C for the version you signed it for).

Open source is a much safer bet for the long term for an indie, esp. if they're just starting out now and do not have toolchains attached to unity. And the godot ecosystem is just budding right now, which means the opportunities are also great there.

> which means the opportunities are also great there

Opportunities to spend significant amounts of time working on tooling and other engine features (with a non insignificant likelihood of still ending up with something inferior to Unity depending on your use-case) instead of actually making your game?

Yes, what Unity's management tried pulling off was stupid. However The engine itself is remarkably cheap from the perspective of many developers compared to any open source options.

> unless the T&C explicitly clarifies and makes it

Funnily enough IIRC Unity had a similar issue with the T&C back in 2019 when they promised to never change it retroactively again. Somehow they managed to "forget" it in a couple of years...

I guess one important difference with Unreal is that Epic has way less bloat (several times less employees) and make huge amounts of money from Fortnite so they don't need to try and squeeze as much as possible from their engine clients (currently anyway..)

> T&C back in 2019 when they promised to never change it retroactively again.

it's not about changing it, it's about including a clause in the T&C that the version they signed is the version in perpetuity for their version of software (obviously, an upgraded version may have the T&C changed).

Unreal has this clause iirc, but not in unity.

Yeah, I was talking about retroactive changes of course (and not changes for future versions).

Their founder/CTO (who seems to be MIA these days) published this back in 2019:

https://blog.unity.com/news/updated-terms-of-service-and-com...

"For this reason, we now allow users to continue to use the TOS for the same major (year-based) version number, including Long Term Stable (LTS) builds that you are using in your project."

Which is something they presumably "forgot" about...

yea, they did "forget" it. It's because this condition is _not_ in the TOS! It's a side-channel communication/agreement.

The unreal terms[1]:

> 7. The Agreement Between You and Epic

> a. Amendments

> If we make changes to this Agreement, you are not required to accept the amended Agreement, and this Agreement will continue to govern your use of any Licensed Technology you already have access to.

vs the unity terms[2]:

> 23.2 Changes to Terms

> To the maximum extent permitted by applicable law, Unity reserves the right from time to time to (and you acknowledge that Unity may) modify these Terms (including, for the avoidance of doubt, the Additional Terms) without prior notice.

[1] https://www.unrealengine.com/en-US/eula/unreal

[2] https://unity.com/legal/terms-of-service

> _not_ in the TOS! It's a side-channel communication/agreement

I never implied it was otherwise.

However if we look at their TOS from 2019 (the time of this blog post) they do have this:

> if the Updated Terms adversely impact your rights, you may elect to continue to use any current-year versions of the Unity Software (e.g., 2018.x and 2018.y and any Long Term Supported (LTS) versions for that current-year release) according to the terms that applied just prior to the Updated Terms (the “Prior Terms”). The Updated Terms will then not apply to your use of those current-year versions unless and until you update to a subsequent year version of the Unity Software (e.g. from 2019.4 to 2020.1)

I don't think the section is still there anymore? But presumably it still applies to you if you haven't upgraded past 2018/2019 versions. But it was actually in the TOS (just like for Unreal) which I didn't expect.

*https://github.com/thaliaarchi/unity-termsofservice/blob/243...

They probably will now, but if they had gone through with those changes, they would've lost a lot of studios.

I'm not so optimistic. They changed the model and JR is out. Unreal is way too bloated for many indie dev projects and Godot isn't ready yet. That may be enough goodwill for now.

maybe if this happened two years down the line and W4 Games had more time to establish itself (maybe even make it's own game to inspire confidence) it'd be a different story, but I can still see indies coming back. If they ever left to begin with. And this isn't even talking about the corporate giants in the mobile space.

> I think we both agree that small indie studios will not be returning

Why are you so certain that a significant proportion of them even left in the first place?

As an employee at Unity, I can assure you they did.

So they actually cancelled their subscriptions and/or stopped development of their current games? What proportion of all developers did that?

> As an employee at Unity

I don't think they are even remotely close to being as transparent internally as they used to be a few years ago. Also as far as I'm aware sales data wasn't accessible to every single employee even back in those days?

Unity is common in small indie studios because, for so many use-cases, it's the only game in town. for most 3D projects, Godot isn't ready yet, so their only option is Unreal. Which is substantially what Unity replaced in the first place.

Give it 5+ years and another screw-up from Unity at the tail-end, and I 100% agree that Unity is sunk for indie devs. But as it is, Unity has a grace period where devs are locked-in and if Unity can demonstrate stability over the next few years, then people will forget it.

And yes, if. Unity's current PR position is in a fully-stocked rope warehouse, but they could navigate out relatively unscathed.

>”Unity is common in small indie studios because, for so many use-cases, it's the only game in town”

I wholeheartedly disagree. There’s more choice than ever. A search on GitHub would show you.

Unity has had one thing going for it. It was easy to get started and it had a ton of learning material. It is NOT the only choice. Off the top of my head there’s:

- Ogre3D

- O3DE

- MonoGame

- GameMaker

- Godot

- Cocos2d

- GDevelop

- Pandas3D

- Reactor

- Stride3D (formerly Xenko)

- Three.js

- Babylon.js

Unity’s editor first approach and their C# “everything’s a behavior” is why so many think it’s the only game in town. It’s not. It never was.

RedHat customers and Unity customers make for two very different types of beasts...

It will be interesting to see how his Whitehurst's pedigree translates to this smaller-scale, higher-touch sales motion.

Forgoing the core Unity audience of game developers and gunning for studios / VFX when Unity is clearly not the graphically superior engine sounds risky at best, reckless at worst.

>”RedHat customers and Unity customers make for two very different types of beasts...”

You misunderstand. They have different verticals but Jim’s mission is the same. Sell them tools at enterprise subscription prices. Per seat, per project, per shot if they can. Forget the indie game devs and their small studios. That bridge is burned beyond recognition or reconciliation.

I'd rather fix that bridge than bank on an non-existing bridge to enterprise customers with an inferior offering and no cash flow to meaningfully fund R&D to outpace competitors.

The problem is that in gaming, its often the indie studios that are the most profitable. They may have only 10 staff, but easily make 50 mil a year. Traditional industries rarely have such lopsided staff/revenue ratios.

And small indies may transform into large enterprises surprisingly fast. Mihoyo was a small indie only 10 years ago.

Its much much easier to repair bridges with indies, who don't really want to move off unity as much as you think, and can be placated by backpedaling and the CEO replacement.

> They may have only 10 staff, but easily make 50 mil a year

Considering Unity's previous pricing model (per seat) it really didn't matter that much whether their client made 5, 10 or 50 mil unless they massively increased their hiring because of that, unless they can charge per install/% of revenue.

> Traditional industries rarely have such lopsided staff/revenue ratios.

A negligibly small proportion of indie developers are even close to that.

Do you have examples for indie game studios (with 10 employees) that make 50mio a year?

It's an industry of booms and busts, we've all heard about the head of Xbox discussing the risky model of large publishers, making expensive sequels until the well dries, and everything collapses. Selling to the largest companies is more difficult too: Slower decision making, more negotiation. It's the road to having a working business, but not one for growth.

It's just so much easier to get your product ingrained into a company that is growing, as long as you are getting your revenue tied to theirs. Their growth becomes your growth. But it has to be done in a way that makes them not run away. Offer different funding models depending on the project on the other end, and let the customer pick their pricing plan. When the plan for the small company starts looking too expensive for the big one, you get to renegotiate when your tools are already everywhere, and moving away is a hassle.

It works for AWS, Stripe and the like. It should work here.

I wouldn't call Unity a sinking ship. It's the overwhelming choice of game engines in the mobile market. Raising prices is unpopular and may decrease their share of the market. But there is no way Unity is going away anytime soon.

And I love Godot -- love it-- but it doesn't do all the things Unity does. Even if it did, it would take years to get all the teams to switch. Think how long it took people to move away from Flash!

You underestimate the game industry I think. It constantly invalidates its own technology every 2-3 years and is extremely sensitive to business model risks.

> It constantly invalidates its own technology every 2-3 years

I'm not sure about that. Unity itself is not at all a particularly modern engine (just like most engines being iterations of something designed in the 00s or early 10s)

Rule of thumb in AAA: After 3 years devtime you are starting to pay serious debts by tech updates - that’s the descent into development hell.

This. It’s easy to criticize or idolize from the outside. When you’re in it, any time spent beyond innovating is wasted R&D. It might be justified. It probably isn’t. This is one of the main reasons Unreal went open source. Let the community drive R&D on their own dime.

Well if whitehurst follows his normal playbook he will just Aquirehire the godot project leads so then unity does not have to worry about it

Don’t curse us. That would be the MO but please, leave some choice in the markets.

On the bright side, if they do that Godot will just Fork, the same way Urho3D did. This would be a big bow but it may also be a small chance to truly dig in and fix some of the issues that were talked about for years in the community.

But I'm probably just daydreaming.

Wait, what happened with Urho? I thought they were going strong (aside from a few who tried to take their code and just rename it)… did I miss some news?

This link gives a brief explanation: https://gamefromscratch.com/urho3d-is-dead-ish/

You can also see that the Urho3d repo is readonly on Github. I don't know which fork is the most active but there are a few that sprung out of the mess.

I don't think the strategic action of a CEO is too relevant right now. The need to focus on rebuilding trust and I just cannot see how they will do that. They introduced an insecurity for developers, which already operate in an extremely high risk industry.

If there weren't people at Unity that could influence or stop the former CEO, the problem probably also didn't vanish with his termination.

I agree with all of what you said but having known Jim Whitehurst, he’s a guy who’s die hard about culture. Fixing the anxiety from within and giving people the space is what he’s known for. Whether he makes the right strategic decisions is up to him but if you have read anything from him you’ll know he seeks to improve excellence within to then champion externally. He did this with Red Hat before IBM. His book, The Open Organization is still relevant.

"doubling down" indeed...

One possible interpretation of events is that he was ousted not for the initial proposal and backlash but precisely for how he backtracked after the fact -- perhaps the board gave a clear mandate and Riccitiello was unable to successfully change pricing structure to match financial expectations. That would explain the replacement.

Things aren't looking great for Unity right now...

Yeah, I think this could definitely be one explanation.

Other commenters in the thread have also given good thoughts / potential scenarios in similar veins - essentially that this was actually a failure of messaging, sticking to the plan, and / or both, plus some other combination of "no, seriously, we need to make money and become profitable, nothing else matters as long as the boat still floats, make it happen and keep this ship going."

And I do suspect that Whitehurst will likely be a better fit for that. A seasons gaming industry executive (regardless of investor / revenue focus) may actually be a negative if that's the goal right now... I'll be very interested to see how this all turns out.

I think that's reading too much into, what is fundamentally a very normal and common way of dealing with CEO turnover -- appoint a safe, business-friendly steward of a CEO, while you stabilize the crisis and decide who the real long-term leader should be.

The word "interim" was clearly used, and there's no hint in the PR statement about this being a permanent appointment. So I don't think it's reasonable to equate this to a clear doubling down of anything.

At the same time, a guy like Whitehurst is a safe, relatively unimpeachable medium term choice, not like someone you'd use for a truly short interim 30-90 days while you execute an executive search quickly. If you need him for 1-2 years of just don't rock the boat leadership, it'll probably work out fine for the company and the board would be satisfied.

Boards don't micromanage to that level (or more, they shouldn't)

There might have been an explicit mandate that Unity's pricing structure should be changed, but more likely it was just an explicit or implicit mandate that the Unity division should produce more revenue (or profit).

The actual details of how to achieve that mandate would be left up to Riccitiello and his management team.

My interoperation is that while the board probably agrees with the need to change Unity's pricing structure, Riccitiello is being ousted for the poor implementation with a proposal that generated so much backlash and then some pretty poor handling of that backlash.

I think back to Ellen Pao at reddit. Ellen was brought on as CEO, and was the face of a number of very unpopular decisions. All those decisions had one purpose -- jettison the things that made the site rough around the edges, and find ways to monetize, so they could make investors happy and work on going public.

The backlash was staggering, and much of what they tried was rolled back. Ellen Pao took the blame for it, but it wasn't actually her fault. The founders just scapegoated her in order to make changes they needed for investors -- and depending on how cynical you are, they picked an asian woman so that they could channel internet racism and sexism as part of the distraction. Years later, they did the same thing, making multiple unpopular monetization changes, but this time the CEO taking the backlash is Steve Huffman himself, not a scapegoat put in front of him.

CEOs don't make decisions on their own, not really. This pricing change was the direction the company wanted to go in, and they got put on their heels, but only temporarily. They're still going to try to find ways to aggressively monetize.

That is some incredible revisionist history.

Elaborate?

What is there to say? The decisions that OP says were not hers, were hers. And the claim that they chose an Asian woman for the intended purpose of setting a racist mob against her is completely unfounded and frankly racist itself. Believe it or not, there are some Asian women out there that have qualities other than being the target of racism.

Most of the decisions Ellen Pao made, especially the banning of the FPH subreddit, was genuinely for the better. She bent over backwards, IMO, to avoid the hate - and should not have.

Sure, I'm not defending the unhinged behaviour of Redditors. But the claim that Pao is not responsible for these changes is just not true.

Ehh, given that reddit doubled down on pretty much every decision they made post Pao, I'm inclined with hindsight to think she was indeed scapegoated. Not necessarily for sexism reasons (try would happily do the same thing with Hitler as a CEO) but that's just a semi-common strategy with big business, especially towards an unpopular board member when the opportunity arises.

Really taught me not to celebrate these "CEO steps down" stories. Short of an entire board replacing itself it's just a new shade of black coming in to lead the change they want all along.

It can be both. If you are the CEO, the buck is meant to stop with you. Don't weep for her.

No sympathy for someone who can retire off their "resignation" regardless of how undeserved.

I'm just saying that I care a lot more about actions than playing the blame game. And it's clear Reddit took the bait here, hook, line, and sinker. Should have been the best time to work on an alternative and it would have been ready for the API schism if they invested those 6 years in to polishing the experience and fostering a community.

instead we got... Lemmy. Oh well.

FPH essentially put itself into a position where it had to be banned:

1. Imgur blocked its images from being shown on FPH, essentially crippling the subreddit

2. In response, the FPH mods put a collage of Imgur's overweight staff in the subreddit sidebar

3. Reddit will have had to ban the subreddit to maintain their relationship with Imgur (who they ended up buying).

> they picked an asian woman so that they could channel internet racism and sexism

Prove it.

It can't be proven, which was the entire point.

The board at the time was I think Yishan, Alexis, and someone from Advanced. Maybe Sam Altman. Ellen Pao was the natural choice because she had the most business experience of all the staff, but it wasn't the right experience. She was always more of an investor, and she got her job there by investing money in reddit and asking for a job in return. She headed up BD and what turned into reddit labs for a while. She built up a reddit labs team, but they never found the next big thing for the company.

Part of the API drama goes back to her time doing BD, making partnerships with apps, and possibly buying apps.

I doubt there was a master plan to making her CEO, but I believe Alexis's line was "it's her job to lose." At the end of the day, she was bad at making friends, was an awkward fit for the company, and was more experienced in politics and climbing the ladder than running a company.

Good background on her: https://www.vanityfair.com/style/scandal/2013/03/buddy-fletc...

Ellen Pao was a glass cliff hire.

I don't think you can really draw conclusions from an interim pick like this one.

It's who they choose after the search that will tell you something.

But things don't look good no matter who they choose. Unity has to become sustainable... that, or go out of business. Their fundamental problem is somehow getting revenue and costs in line with each other.

Here are some general ways that could be done...

* Squeeze a lot more money out of existing customers * Get a lot more paying customers * Cut spending on things that impact revenue a lot less than the cut saves

The first one is what the last CEO tried with that cockamamie licensing scheme. You could go at it in other ways but in the end the impact on customers is the same so I don't think the reaction would be a lot better.

Is there any clear way to accomplish the second, at least without an even larger negative impact on revenue?

For investors, cutting cost is the least desirable -- they want to grow, not shrink. And customers also don't like to get less for the same price. But perhaps there is a way to cut costs that would spare what provides the core value to customers, and perhaps a business guy could get shareholders to accept that it is the only way.

I concur with this, their interim CEO is the person who can do the needful things with respect to cutting executive pay, laying off people, and outright firing others. Once the organization has been pruned, the "real" new CEO comes on board and is given a shot at rebirth with a new point of view.

I don't understand how their cash burn rate is so high that a billion in revenue isn't enough to stay in the black. What are they spending so much money on?

Marketing and sales costs have increased tremendously

They've been on a hiring spree, with a ~50% annual growth rate for the past several years [1].

[1] https://stockanalysis.com/stocks/u/employees/

I’d be careful drawing too many parallels between running Unity vs running a game publisher.

Unity is a developer platform/tooling company. They don’t care about hits or franchises - they need service, stability, community, and technology innovation.

Game publishers are creative industry plays, like movie studios. Completely different business.

Of course Epic confuses things by being in both camps but I don’t think Unity is confused that they are competing with Epic in the sense of needing to outmatch Fortnite.

I feel it's unfair to include Mattrick in here - he came up as a gamer, making games as a teen and rolling that into his own company so at least he has roots as a developer and I feel a dev/gamer connection but I respect your opinion.

I think yours is a fair opinion as well, to be clear - I actually debated editing him out for a couple of minutes after I first posted, because I do know that his background was truly heavy on the gamedev side of things early in his career.

I have my reasons for thinking things changed later on, but they are subjective / personal opinion based on personal experience, so I respect anyone who would disagree and exclude him from a list like this.

> was that one of the increasingly common "management consulting" / investor- & revenue-focused type of gaming executives

My read of this debacle is that the Unity CEO did not pay attention to details. It's as if he had ever thought of how the policy would play out -- a signature move of a corner-office boss who simply delegates everything about product to his lieutenants. Or worse, to the lieutenants of lieutenants.

This is in such contrast with those founder CEOs, who painstakingly think through product and policy changes.

It's the standard playbook. By having the CEO leave it gives the impression that it was his decision and so the bad decision-making is gone and now the company can be trusted again. Of course it wasn't his decision; it was the whole board's, but it's convenient for them and their stock price to make it seem like it was his.

No way to know, I suppose, if it was him + the board vs everyone, or him vs the board... but unless somebody leaks the details, I'd assume the board is just as culpable.

Right now, I'd imagine Unity is more concerned about placating their investors that the company isn't going to fall off a revenue cliff.

Appointing a "developer-friendly" candidate would have caused more uncertainty.

As a temporary pick, I'd guess Whitehurst is intended to message "We realize we screwed up, but there won't be any sudden changes."

The reaffirmed guidance for current quarter is hilarious though, given any changes would play out in future time (e.g. developer flight for next project).

Agreed - the reaffirmation of guidance almost felt to me like a "seriously guys, why are we down 22% up front, you know this doesn't impact short-term revenue..." which... definitely misses the point.

It's interesting that after-hours / future trading doesn't seem to have responded positively (yet). Maybe that's just another symptom of lost trust as well.

Given the information posted about Whitehurst in another comment, https://news.ycombinator.com/item?id=37825689 , I strongly disagree with your assessment of him.

I agree!

I posted before that comment, which was definitely helpful - that context (and some other helpful replies here and elsewhere in the overall thread) have changed my assessment as well.

"interim replacement / transitional CEO is someone with a pedigree that, on the surface, seems even more management consulting / investor / revenue focused than Riccitiello was himself. To be clear, I know essentially nothing about James M. Whitehurst other than what is readily publicly available (IBM / Red Hat, advisory roles, etc.)."

To me, it seems he has plenty experience with managing companies.

I agree - this may be unclear phrasing on my part.

What I meant in my original comment was, "wow, this seems like a hire that is only focused on finding someone with lots of experience managing, and not at all on the gaming industry / customer goodwill".

So I think you're right - and I also think this shows how I misjudged how I originally thought a scenario like this would have played out.

Bring back engineer CEOs. I'm sick of this trash.

Unfortunately, in our economic system this is not allowed unless that engineer CEO happens to have incredible clout, financial control or both.

Don't be silly, we're in the era where engineers are both smart enough to wrangle massive technical goals yet also need many layers of babysitting from their betters.

You may know what a CRDT is, but (apparently) the Trello board is beyond you.

You have a rosery view of the board. I on the hand believe that the it was the intention of the board to sell that ridiculous plan. The CEO was a scapegoat, or rather, he was going to leave anyway, so he took the blame in place of the others.

Who do you think made these decisions? The board still wants profits, and they're perfectly happy to let Riccitiello take the fall while they find another tool to take his place.

If none of the board is industry, and none of the major shareholders are industry, why would they hire industry? Finance is becoming the only job that exists.

It doesn’t seem that wild for a board to be looking to increase revenue results/shareholder value, especially in current economic headwinds.

“with consequences”

Depends how many millions he’s accepting to walk away.

> board actually hold Riccitiello responsible

It could also just be a PR move. Riccitiello is disliked among Unity customers, so you get goodwill by firing him.

Isn't Riccitiello stepping down a standard operation procedure in a situation like this?

You're acting like the board had no say in the horrible decisions.

Reply on news.ycombinator.com