Unity Technologies & Game Engine Economics | In Practise

Unity Technologies & Game Engine Economics

Former Head of Strategy APAC at Unity Technologies

Learning outcomes

  • Positioning of Unity vs Epic's Unreal engine
  • Unity's shift from perpetual licenses to SaaS business model
  • Unit economics of a large studio using Unreal vs Unity engine
  • How Unity can increase LTV for studio customers
  • Why Unity is best placed to win market share in engine applications outside of gaming
  • Risks to Unity from Unreal given Epic's publishing success
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Executive Bio

Joonsoo Ryu

Former Head of Strategy APAC at Unity Technologies

Joonsoo is the Former Head of Strategy for the APAC region at Unity Technologies where he spent 5 years transforming the gaming engine business from a perpetual license to SaaS model. He was responsible for optimising the LTV of gaming studios using Unity’s engine and he explored new applications for the engine in markets such as Architecture, Engineering, and Construction. Joonsoo left Unity in 2019 and is now the COO of bitsensing, a radar technology company. Read more

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Can you start by just laying out exactly your role at Unity?

I was heading APAC strategy where Unity was running strategies as a task force group, so I engaged in a couple of significant transformations, in terms of business model change and going out of gaming. From that perspective, I have much to share.

So you were working mainly with the developers, but also branching out into new sectors and industries?

Exactly. My later experiences with Unity was working with developing businesses with automative film and animation and architecture and engineering companies, as well, for VR and AR companies.

I want to start by diving into the engine market. How would you compare Unity versus Unreal?

If you’re interested in game development, you definitely know but, very simply put, Epic Games, they develop games by themselves. They are the user of their own engine. Unity, on the other hand, had opportunities to develop their own games, but they decided not to, for over a decade. What I’m trying to say is, Epic has their own view of developing a game engine, probably for the sake of their own development. Whereas Unity is developing businesses and technologies, mainly for the longer tail of game development and their studios.

Why did Unity decide not to move into publishing?

I think it was just a strategic decision as to where we should focus. If you really focus on developing your own game, there will be a certain type of segment or genre of games that you want to develop. But I think you need to want to be more universal. Unity’s mission was, basically, democratize game development. That means anybody who is interested in developing their own games, to represent themselves, their taste, they can develop their own. From that perspective, the hurdle to adopt Unity, learn Unity, should be lowered. Unity is approaching it as game engine development platform, rather than wanting to build their own games.

How would you split the market share of Unity versus Unreal and the different platforms?

There’s no hard number that I can share but, from my perspective, I would say in mobile games globally, I assume that Unity’s share would be around 50% and, probably, Epic Games would be less than 20%. But it really depends. If you look the game share for the top 20, globally, the Epic ratio would increase quite significantly. Whereas if you look at the top 1,000 games, I think Epic’s share would go down to less than 5%. Unreal has been used mainly by the bigger studios.

That’s because Epic is more complex or is used for more complex games and graphics and technology?

Exactly. One interesting example is how the game market evolved in the South Korean market. The South Korean game market has grown rapidly, for the past 20 years, driven by PC games. The South Koreans are huge PC game users. 10 years ago, they shifted to mobile, with the legacy of Epic Games or the Unreal engineering team. Then it actually expanded into the China market and they have some Unreal legacies, as well. Going back the early 2000s, there was no Unity and there was no third-party engine; there was no other competitive third-party engine. A lot of Korean major game studios didn’t have competitive in-house engines and they adopted Epic’s Unreal engine. Then the legacy continued about 10 years. Junior and senior engineers and developers are very acquainted with Unreal; that’s where legacy started and it still continues in South Korea and in China and neighboring countries.

How would you compare the technology between the two engines?

I think one of the greatest assets that Unreal has is AAA quality, overall, and the branding. If you think about how developers perceived Unity versus Unreal, there was a very clear separation or distinction, between the images and the branding they have. Unreal is for AAA quality games and Unity was more for casual games. But then Unity really tried hard to catch up on performance and technologies and filling the branding gap so that they could produce AAA games, as well.

I think the gap is now minimal. Although there could be some gaps, I don’t think it’s really significant, as of now. What’s more interesting is the gap that needs to be filled in, not technology or performance wise, but more branding and marketing wise, or perception wise.

Is that just because Unreal has a perception that it is more complex or better quality, versus Unity?

Exactly. It is also interesting, if you look at what’s going on outside gaming. A lot of AR/VR content used to be created by real-time render and I think they have a different perception, compared to the perception that gaming developers have.

What’s the perception of the AR and VR developers?

Let me put it this way. If you look at the market share of game engines, in the gaming industry, let’s say that Unity’s market share will be approximately 50%, whereas if you look at AR/VR content, Unity’s market share goes up to 80%, maybe even 90%. That means that the legacy of the brand that was deep rooted, doesn’t exist in industrial applications, outside gaming. Developers in the gaming sector or the industrial sectors, they have different experiences; they have different brand images. Epic’s presence is, I think, much weaker, outside the gaming industries.

Does the engine suit AR/VR much better at Unity, or is it, again, just a marketing perception thing that increased their market share?

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Unity Technologies & Game Engine Economics

July 9, 2020

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