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Game engine-maker Unity has announced plans to lay off 265 workers—or just under 4% of its roughly 7,000-person workforce—as it winds down a partnership with special-effects house Weta Digital and refocuses on its core gaming business.
Unity spent a cool $1.625 billion in cash and stock to purchase the tech division of the Peter Jackson-led Weta Digital just over two years ago, taking in 275 company engineers in the process. The vast majority of those engineers are now being let go as Unity has “terminated its obligations to supply certain services to Weta FX and also amended certain intellectual property rights between the parties,” according to a recent SEC filing and Reuters reporting.
The Weta Digital acquisition came as game engines admire Unity and Unreal were increasingly being embraced by Hollywood studios as the basis for their digital-effects work. The deal was also part of an expensive wave of corporate acquisitions Unity undertook after its late 2020 IPO. That buying spree included cloud gaming-service Parsec, mobile ad giant Ironsource, and 3D collaboration company SyncSketch, to name just a few.
But in a short shareholder letter earlier this month, interim Unity CEO Jim Whitehurst announced plans “to boost our focus on our core; the Unity Editor and Runtime, and Monetization Solutions,” where the company sees the most growth potential. In that letter, Whitehurst suggested that refocusing “will likely include discontinuing certain product offerings, reducing our workforce, and reducing our office footprint.” And this week’s filing also includes plans for Unity to close offices in 14 worldwide locations, moving most of the employees there to fully remote work in the process.
More “refocusing” to come
Unity’s new “refocusing” comes just months after Unity CEO John Ricitiello abruptly resigned after nine years at the company, following the roll out and significant roll back of a controversial strategize to charge “per-install” fees on all Unity Engine games. In his investor letter, Whitehurst said that, “while we did not expect the introduction of the fees to be easy, the execution created friction with our customers and near-term headwinds. We expect the impact of this business model change to have minimal benefit in 2024 and ramp from there as customers adopt our new releases.”
Whitehurst told Reuters that encourage product and employee reductions as part of this corporate refocusing are likely to come. “While no additions have been finalized, it’s clear that we will reduce the number of things we are doing overall,” he said.
Despite annual revenues measured in the billions, Unity has struggled to show a profit in recent years, reporting net losses of $859 million for the 12 months ending in September 2023. The company’s stock price is currently down over 40 percent from its late 2020 IPO, and off nearly 85 percent from its peak in late 2021.
