Years ago, before joining the Davillier Law Group, two members of the Davillier team ran a small software company that sold assets and middleware for games developed with the Unity game engine, one of the largest video game and special effects engines in the world. So it struck close to home when we heard last week that Unity, long a darling of smaller independent game developers, announced it would begin charging developers that use its software a fee for each installation of games made using the Unity engine. 

This has sent shockwaves throughout the game development industry. Unity is used disproportionately by small developers in large part because their pricing and terms of service were once considered developer-friendly in comparison to engines such as Unreal and Cryengine, which were perceived as favoring larger “AAA” games and the developers that could produce them. But even more significantly, Unity has announced that the policy applies to games that developers have already released under its old pricing and terms of use. This is potentially an existential threat to developers who have relied on a model of selling games in large numbers at low prices.

“This is free”

It was not so long ago that Unity treated developers very differently. In 2015 John Riccitello, the then-and-current CEO of Unity, famously declared:

“If you’re a seven-figure developer, you can afford $75 a month,” Unity CEO John Riccitiello told GamesIndustry.biz. “But if you’re not, if you’re just getting started or just choose for artistic reasons to give your games away for free, or if you’re a hobbyist screwing around or a student, this is free. You get the full power of Unity 5 for free. There’s no royalties, no fucking around. It’s simple. That’s really what we’re announcing.”

At the time, Unity also offered a “perpetual license” for $1500, and their Terms of Service clearly stated that even if Unity changed their Terms of Service in the future, games developed under the old ToS could continue to rely on them as long as they didn’t update to newer versions of Unity. Developers felt safe investing their time learning Unity and investing in the Unity ecosystem.

Unity’s newly proposed fees. (Source)

The New Deal

On September 12, Unity announced their new fee schedule. Games with more than $200,000 in annual sales and 200,000 in lifetime installations would be charged $0.20 per installation. While Unity has not clarified the exact method or terms by which installations would be counted, at the time of writing they have suggested they will count each installation on a distinct device, even if the user only purchased the game only once.

Many developers have written about the threat this new fee poses to their business:

• The developers of hit lighthearted horror game Cult of the Lamb have said they will delete their game on January 1st, 2024, when the new fees would take effect.
• The developers of social deduction game and living meme Among Us stated that the changes would force them to delay development of new features in order to work on porting the game to another engine.
• The developers of deck-building roguelike Slay the Spire announced that they would switch to a new engine for their upcoming project– already 2 years in development– unless Unity reverted their proposed pricing changes.
• DaniDev, the developer of a number of delightful but free games, calculated that they would have owed Unity $5,600,000 in fees if they were subject to the new pricing and were to the reach the revenue threshold.
• The developer of the cartoony soulslike game Another Crab’s Treasure made a statement noting that through Xbox GamePass their game could be made available to millions of people for free, many of whom might install the game without ever paying for it.
• The developers of the stylish gothic horror roguelike Darkest Dungeon said they could not imagine developing another game in Unity unless they felt protected from future pricing changes, as the pricing certainty is a large part of why they chose Unity in the first place.
• The developer of the brooding side-scroller The Fall, Over the Moon Games, noted that their game was installed millions of times for free as part of an Epic Games Store promotion, which would have incurred charges despite bring the developer no direct revenue.
• The developers of the stylish open-world Dead Static Drive calculated how a freemium game could owe more than their total revenue in installation fees.
• One of the developers of Paper Trail, Henry Hoffman, requested that no-one install his game demo to avoid bankrupting him. While the fees are not yet in effect, demos would incur charges under the new pricing.
• Garry Newman developer of Rust, calculates that they would have owed Unity an additional $410,000 under the new terms.

Unity’s Trap by Tom Francis of Suspicious Developments, the developers of Gunpoint, is a comprehensive response to the problems with Unity’s changes.

The problem, as the developers above make clear, is twofold. First, the fees are designed very poorly for the way video games are sold. They do not account for demos, giveaways, freemium and other promotional strategies common to the industry in which games are installed many more times than they are sold, allowing for situations where Unity would charge developers more than their revenue. They do not account for the generous refund policies of two of the largest game marketplaces, Steam and the Epic Games Store, which allow no-questions-asked refunds within the first few hours of play. Every major storefront allows purchasers to continue to download and install their games indefinitely, potentially incurring charges decades after a games’ sales have tailed off.

Second, and far worse: the fees are being imposed by Unity unilaterally, on games which have already been developed under previous terms, to developers that may have paid Unity for a “perpetual license”, and under an older Terms of Service which once promised developers that they could continue to rely on it even if Unity updated to new terms in the future. Unity presumably gave those assurances precisely because they understood how important clear terms and pricing were to their customers. As Ars Technica cheekily notes, they are altering the deal.

Buy-In

Many game developers have already announced that they plan to transition to a new game engine by January 1, 2024, unless Unity retracts the proposed changes. This does not mean such a transition will be easy; in fact, it may be somewhere between extremely difficult and impossible for many developers.

Game engines are extremely complex pieces of software, a combination of a high-performance runtime and a content creator which developers spend years developing expertise in. Many of them have bought assets and built asset creation pipelines tailored to Unity. Middleware, not unlike what the two members of the Davillier team once made, may not be transferable at all to a new engine. And in the worst case scenario, a developer may have invested years of development in a game which is soon to be released– or has already been released– which will now cost drastically more when installed by their customers. 

When You Need a Lawyer, You Need a Lawyer

Unfortunately, business partners can’t always be relied on to honor their word. Fortunately, in the United State there are legal options to seek restitution when you have relied on their representations.

In the case of Unity’s dramatic shift, the legal ramifications may different substantially between users of the engine. A small company who relied upon Unity for freemium mobile game development will likely have very different considerations than a large company already paying Unity under their previous revenue models. Further, companies who kept their engine version at the bleeding edge of development would have alternate possible causes of action compared to a company that reasonably relied on Unity’s Terms of Service that promised a stable, permanent fee model based on an older version of the game engine.

Regardless of the circumstances, the Davillier Law Group is here to help. Schedule a free consultation to learn the legal options you have available when Unity, or any other business partner, supplier, or provider, breaches an agreement or damages your relationship. Our representation revolves around you.

Update: “We f**ked up on so many levels”

In a social media post on September 17, Unity apologized for “the confusion and angst”, and promised to share a new update in a few days. They have not yet agreed to change their impending pricing changes, but at least some of the upper level have realized they have an issue. As David Helgason, the former CEO of Unity makes clear on Facebook, at least some of Unity has recognized that they have made a mistake. It remains to be seen if they are willing to fix it.