Unity’s new CEO pitches ‘fundamentally different company’ after rough year

Five months into his tenure as CEO of Unity Software, Matt Bromberg is overseeing his first big product launch as he tries to push the company past an extended stretch of challenges.

On Friday, the video game software company announced the sixth version of its flagship product, Unity Engine, a set of tools developers can use to produce games across a number of devices, including iPhones and Android phones.

Unity 6 is emphasizing stability, predictable updates and the ability to support hundreds of players in the same virtual world at the same time, Bromberg told CNBC. The company is seeking to rebound from a dark period that’s included layoffs, significant losses, a troubled relationship with many customers and a shake-up at the top.

“With the release of Unity 6, we’re interested in reconnecting with customers and help them understand that it’s our commitment to deliver what matters to them, and that we’re going to be a fundamentally different company in that regard,” Bromberg said.

Bromberg, a veteran of the gaming industry, was appointed CEO on May 1. He previously spent almost six years as COO of mobile game company Zynga, which was acquired by Take-Two Interactive in 2022, and more than four years at Electronic Arts.

Bromberg’s predecessor, John Riccitiello, announced his retirement last October following a controversial pricing change that frustrated numerous developers. James Whitehurst, former CEO of Red Hat, was serving as interim CEO until Bromberg joined.

The new CEO’s first big challenge was unwinding Riccitiello’s decision to implement what became known as the “Unity Runtime Fee.”

Traditionally, Unity sold its software by the seat, so companies paid an annual fee per user for the engine. In September of last year, the company said customers would have to start paying a flat fee any time an app or game using Unity was downloaded. Game developers rebelled and threatened to find alternative game engines.

Last month, Unity scrapped its runtime fee. Unity Engine 6 will cost about $2,200 per user per year for companies with revenue of more than $200,000. Negotiable pricing will be available for the largest customers. Unity says it will raise its prices on a predictable annual schedule.

“We’re saying to our customers, hey, this is something you can build your multibillion-dollar game business on,” Bromberg said.

Unity is used to build the majority of mobile games, including Monopoly Go, which has grossed an estimated $3 billion, according to one estimate.

Unity’s problems go beyond the shifting business model. The stock is down 23% over the past year and has lost 90% of its value since peaking in November 2021, which was a little over a year after the company’s IPO.

For the second quarter, Unity reported a net loss of more than $125 million. In January, the company said it was cutting about a quarter of its workforce, or roughly 1,800 jobs, in order to improve long-term profitability.

Even after a tumultuous stretch, the company has maintained its strength with game developers. Morgan Stanley analysts wrote in September that Unity’s game engine still has 70% of the mobile market, proving “how deep its moats truly are, as competitors have been unable to gain share at Unity’s expense.”

Bromberg told CNBC that Unity is staying away from the generative artificial intelligence hype. Game developers tend to be skeptical of generative AI, as many say it rips off work from other artists and represents lower-cost competition.

“We’re less excited about making investments in generative AI,” Bromberg said. Instead, Unity will support using AI-created artwork and character designs, and will use AI behind the scenes to speed up the release of a game.

Another area of focus for Bromberg has been simplifying the company’s push into the enterprise. In previous years, Unity has said that its game engine can be used for all kinds of 3D simulations, including “digital twins,” a buzzword that describes creating a full digital simulation of a complicated operation, such as a factory.

Now it’s more about games, which can include plenty of 3D elements.

“Our strategy going forward is going to be to be focused a little bit more narrowly on the organic uses of our engine in industry,” Bromberg said. “That comes down to 3D visualization.”

Bromberg said he remains optimistic about virtual reality and augmented reality, including Apple’s Vision Pro headset, which is supported by Unity 6.

“The real strength of Unity is we take really big, immersive experiences that are created in our engine, and then you can distribute them on any device, no matter how light it is — the world’s worst phone, a set of glasses, a headset,” Bromberg said.