Per the CEO in today's meeting:
"This is a ploy to gather more people to use Level Play [advertising network]. The mediation provider [advertising network] makes a cut off every ad, and right now a lot of people are on AppLovin Max [not Unity's], so a big part of this is they want people to switch to Level Play, and by doing that they'll make way more than the install pricing they're suggesting. It's too early to panic, but it is a big change"
If that sounds like a ramble, it's because it was, but the tl;dr is it seems Unity is giving a secret pass to companies that switch to use Unity's advertising solution.
Also some quick fun facts:
- Unity was never profitable
- Unity gave up competing with Unreal over a year ago
- Godot is a free and open source engine that competes with Unity professionally
- The trash App Store/Play Store games spy on you extensively, although Apple and Google have significantly limited their spying ability over the last couple years (i.e we used to open your camera in the background, can't do that anymore)
Update:
CEO is in talks with some Unity folks. The impression is "this decision came from very high up in Unity" from an exec who "had no idea how bad of an idea it was". We're expecting a public revision shortly (next couple days)
How are buybacks functionally different in that regard than dividends, which have always existed?
Apple, for instance, paid out $14 billion in dividends in 2020. The only difference between paying that directly in dividends as opposed inflating the value of stock through buybacks is that dividends are directly taxed while stocks won't be until they're sold.
Sure, it enables a bit of tax tomfoolery (which also benefits anyone with a 401k, I might add), but the simple matter that companies return value to shareholders isn't new, and stock buybacks don't represent some meaningfully different form of this.
I'm going to assert a few things up front:
Since you are reading a lot into my comment I'm going to read a lot into yours. Why are things different now? The rules of the (United States) game changed, and checks against this behavior have been nullified. Value creation is a means to an end: acquire as much power as possible, and flex that to siphon value off for your shareholders.
That's what Unity is doing. They are flexing their power to extract value from its customers. If you use Unity, what are you going to do? Unreal is a different beast with a different target audience. Godot is untested, and I don't blame anyone that hesitates hitching themselves to a noncommercial open source project. Porting a game to a different engine may not even be realistic anyway.
So everyone will stomp their feet and complain and mostly keep on using Unity. Some day they'll push too hard and that'll be the end of them, but what do the shareholders care? They got paid. Onto the next one.
The 11 million is irritating given how it's more than most will make in a lifetime being paid to someone who is incompetent. The 2.5 billion is why Unity is forced to resort to destructive behaviors to stay afloat. The incentives for companies to act this, and lack of checks against it, are why the economy is broken.
Dividends only work if the company has profited. In Unity's case, if you bought shares in 2017 and waited for dividends, you'd only get them last year.
Buybacks are basically paying for investor "promises", "I know you're not profitable, but I'll buy 1 million shares today if you promise to buy them back 2 years from now". Works great with companies that "need" to operate in the red for several consecutive years until they're actually profitable, like Twitter or Uber