Unity Software Inc. Revamps Strategy to Focus on Video Games

Returning to Core Business

Unity Software Inc. CEO Matthew Bromberg announced a strategic shift back to its roots in providing software for video game development, pivoting away from failed metaverse endeavors.

Metaverse Detour

Former CEO John Riccitiello’s ambitious foray into the metaverse led Unity Software Inc. down a controversial path, resulting in layoffs and a significant stock downturn.

Company Reset

In response to mounting challenges, Unity Software Inc. made strategic changes, including reverting to a customer-friendly pricing structure and refocusing on its core customer base in the video gaming industry.

Future Plans

Despite setbacks in the metaverse space, Unity Software Inc. remains committed to leveraging AI technology to enhance game development processes and expand its offerings in the digital advertising realm.

(Bloomberg) — Unity Software Inc. is returning to its main business of providing software to power video games after a failed detour into the metaverse.

The company whose technology underlies Niantic Inc.’s Pokémon GO will refocus on its “core customer base in video gaming,” Chief Executive Officer Matthew Bromberg said in an interview on Bloomberg Technology Thursday, after releasing the latest iteration of its 3D video game design engine, Unity 6.

Former CEO John Riccitiello, who retired last year, dramatically expanded the San Francisco-based company’s ambitions during the metaverse hype in 2021, claiming Unity would become “the leading artist platform for literally everything.” The metaverse was supposed to be an online world where people shopped, worked, went to school and more. To fuel that vision, Riccitiello acquired the visual effects shop behind Game of Thrones and Avatar for $1.6 billion in 2021.

But as the promises of the metaverse faded and the company alienated much of its core customer base with a controversial change to its pricing structure, Unity faced a reckoning. In January, it eliminated 25% of its workforce after several rounds of layoffs in 2023 as part of a “company reset.” In February, the company announced it would exit some businesses, such as hardware components, to focus on its main products for video game creators. The stock plunged as much as 20% in extended trading on the news. The shares are down 48% this year.

In his five months since taking the helm, Bromberg has been flying around the world spending time with game developers to “test our ideas with them and to not surprise them,” he said in the interview. Unity recently announced it would roll back its unpopular pricing structure and will opt instead for “some annualized increases that are typical in the industry,” Bromberg said, adding “there won’t be much drama.”

“I’ve been really excited at how willing they are to reconnect with us,” Bromberg said, referring to customers and game developers who had balked at the earlier changes. Unity will now focus on helping game companies acquire users and sell advertising inventory through its platform.

Bromberg said Unity’s expansion into the metaverse stemmed from its special position at the intersection of digital advertising, 3D, video games and artificial intelligence. “You could be forgiven for wanting to pursue lots of wonderful things,” he said.

Even if the metaverse didn’t work out, Unity has plans involving the technology industry’s current craze: AI, which Bromberg described as “an important piece for us.” AI can help developers make games more quickly and efficiently, he said.

–With assistance from Ed Ludlow.

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