Gaming
EGDF: UNITY’S INSTALL FEES ARE A SIGN OF LOOMING GAME ENGINE MARKET FAILURE
Step by step, video game engines are becoming key gatekeepers of European cultural and creative sectors. Currently, Unity dominates game engine markets, Unreal being its primary challenger. These two engines are not just clear market leaders in the game industry but increasingly vital market actors in film, architecture, and industrial design and simulations. In 2022, Unity reported that globally, 230,000 game developers made and operated over 750,000 games using the Unity Engine and the Unity Gaming Services portfolio of products.
Unity’s new fee structure is going to have a drastic impact on the game industry.
Over the years, the Unity game engine has reached close to unofficial industry-standard status in some game markets. Its well-designed tools and services have lowered the market access barriers in the game industry. Furthermore, it has played a crucial role in removing technological barriers to cross-platform game development. Now, Unity has informed the game dev community that it will move from subscription-based fees to subscription and install-based fees, which will significantly increase the game development costs for most game developers relying on their services. EGDF finds it unfortunate that Unity has significantly damaged its reputation as a reliable and predictable business partner with these sudden and drastic changes in its pricing principles.
Bigger game developer studios have the luxury of being able to develop their own game engines. Consequently, market uncertainty and significantly increased service provider risks caused by Unity’s new fee structure will hit, in particular, SME game developers. It will be much harder for them to build reliable business plans, make informed decisions on game engines, and run a profitable business. Many of these studios struggled to access risk funding before Unity’s announcement, and it has only worsened their situation.
Unity’s decision will have a broader impact on the whole game industry ecosystem. Many professional game education institutions have built their curriculum on the Unity game engine. If Unity’s new pricing model starts a mass exodus from Unity’s engine, it will lead to rapid changes in professional game education itself and place many young industry professionals who have built their career plans on mastering Unity’s tools in a very difficult position.
Although Unity’s decision will cause significant challenges for the industry, EGDF kindly reminds that instead of focusing on blaming individual Unity employees for the changes, it is far more productive to focus on taking measures that increase competition in game engine markets.
Unity’s anti-competitive market behaviour must be carefully monitored, and, if required, the European competition authorities must step in.
Unity is an increasingly dominant market player in the game markets. According to Unity’s own estimate, in general, 63% of all game developers use its game engine. The share can be even higher in some submarkets. Unity estimates that 70% of top mobile games are powered by its engine. Unsurprisingly, Unity’s game engine is now a de facto standard in mobile game markets to the extent that whole formal professional game education degree programmes have been built on training its use. However, Unity’s market dominance is not just based on the quality of its game engine. It is also an outcome of aggressive competition practices and systematic and methodological work of making game developers dependent on Unity services.
How Unity bundes different services together potentially distorts competition in game middleware markets. Over the years, Unity has, step by step, bundled its game engine more and more together with other game development tools under the Unity Gaming Services portfolio. Unity is not just a game engine; it is also a player sign-in and authentication service, a game version control tool, a player engagement service, a game analytics service, a game chat service, a crash reporting tool, a game ad network, game ad mediation tool, an user acquisition service and in-game store building tool. This creates a significant vendor lock risk for game developers using Unity services. It also makes it difficult for many game middleware developers to compete against Unity and, all in all, significantly strengthened Unity’s game engine’s market position compared to its rivals.
Now, Unity is strategically using install fees to deepen the lock-in effect by creating a solid financial incentive to bundle other Unity services even closer to its game engine: “ Qualifying customers may be eligible for credits toward the Unity Runtime Fee based on the adoption of Unity services beyond the Editor, such as Unity Gaming Services or Unity LevelPlay mediation for mobile ad-supported games. This program enables deeper partnership with Unity to succeed across the entire game lifecycle.” This will, of course, drastically impact Unity’s direct competitors.
Unity’s install fees are an excellent example of Unity’s potentially anti-competitive market behaviour. It is clear that if Unity’s pricing model had, in the past, been similar to the now-introduced model, it would likely never have achieved the level of dominance it enjoys today, as more developers would have chosen another alternative in the beginning.
The fact that Unity’s new install fees are only targeted at video games and do not apply to other industries logically leads to a question: Is Unity setting prices below cost level at different market segments, or is Unity charging excessive prices in game markets? Furthermore, does the fact that Unity is now introducing an install fee on top of the licensing fee mean that licensing fees have before been below cost level? Or does the introduction of install fees on top of the licensing fees of their game engine allow them to provide other, lock-in generating, services below cost level?
In the end, Unity has built its dominant position in game markets for years and systematically made game developers more dependent on it. It is a good question if Unity has now crossed the line of abusing its market dominance on weaker trading parties that deeply depend on its services. Game productions can take years, and game developers cannot change their game engine at the last minute, so they are forced to accept all changes in contract terms, no matter how exploitative they are. Unity must know that if they had given more notice, many more developers might have had a realistic chance of abandoning Unity altogether by the time the new pricing came into play.
The new install fees will limit game developers’ freedom to conduct business as it pushes them to implement Unity ad-based business models even in games that otherwise would not have ad-based monetisation. Furthermore, this will create a competitive disadvantage for those game distribution platforms that do not use ad-based monetisation at all (e.g. subscription services and pay-per-download games), as Unity is de facto forcing them to increase their consumer fees compared to channels that allow the use of Unity’s ad-based monetisation tools.
The new install fees will likely lead to less choice for consumers. Install fees will allow Unity to extract value from games that generate a lot of installs through, e.g. virality, but do not necessarily generate money. Install fees will lead to markets where game developers want to limit the downloads and try to avoid installs from the wrong players. This can potentially kill part of the game market. For example, indie developers that have an unfortunate mix of being a success on the number of installs but that are struggling to generate revenue, or hyper-casual game studios based on combining a huge install base with minuscule revenue generated per game.
In the long run, the EU needs to update its regulatory framework to answer the challenges caused by dominant game engines.
Unity’s install fees demonstrate why the EU needs a new regulatory framework for unfair, non-negotiable B2B contract terms. Contract terms Unity has with game developers are non-negotiable. With the new non-negotiable install fee, European game developers have to either withdraw their games from markets, increase consumer prices or renegotiate their contracts with third parties. For example, if a game memory institution makes games available for download on their website, a game developer studio must now ask for a fee for it or ban making European digital cultural heritage available to European citizens. The three-month time frame Unity is providing for all this is not enough.
The Commissions should introduce a specific regulation for non-negotiable B2B contract terms. The regulation should provide sufficient time (e.g. in a minimum, six months) for markets to react to significant changes in non-negotiable terms and conditions that a service provider has communicated to their business users in a plain, clear and understandable manner (e.g. now it is unclear how Unity counts the installs). Furthermore, the Commission should bring much-needed market certainty by banning retroactive pricing and contract changes.
The Commission should include game engines in DMA. While reviewing the recently adopted Digital Markets Act (DMA), the Commission should consider lowering the B2B user thresholds and adding gatekeeper game engines under its scope. This would, for example, ensure that Unity cannot use data it collects through its game engine to gain an unfair competitive advantage for its other services like advertisement services.
The Commission should increase its R&D support for the European game industry. The fact that there is no major competitor for Unity Engine that does not require constant back-end server connection is a market failure in itself. The Unity Game engine is not fully scalable because Unity has built its engine in a way that it calls home every time it is installed to report instals for Unity. Consequently, the Commission should strengthen its efforts to support the emergence of new European game technology and business service providers. In particular, the Commission should increase its support for privacy-friendly open-source alternatives for game engines, like for example Godot or Defold or similar, that do not require constant back-end server connection and thus have no need for scalable revenue-based fees or install fees.
Gaming
The mobile gaming market is growing and attracting new companies. GAMIVO is the latest example
Usually, consoles and PCs come to mind when discussing the gaming industry. The mobile sector is often treated as a child of a lesser god, even though it generates almost as much revenue as console and PC combined. Some companies can see this potential. For instance, the e-commerce platform GAMIVO has recently entered the mobile market, allowing players to buy in-game items cheaper.
Back on course
The entire video game industry has evolved incredibly, but the most spectacular has been the growth of the mobile sector. It expanded from 36.9 million dollars in 2016 to 93.2 billion in 2021. Unfortunately, the gaming market suffered from a decline that stemmed from the overoptimism of the pandemic era. As a result, the mobile gaming industry revenues dropped to 92.2 billion in 2022 and to 90.5 billion in 2023. Recent information has indicated this was a necessary correction rather than a long-term trend.
The latest Newzoo report, issued in August 2024, shows that the industry is on the right track again. According to analysts, the mobile sector will generate revenues of $92.6 billion, representing +3.0% growth year-on-year. It’s nearly half of the entire gaming industry.
Billions of players
Revenues are crucial, but they only show part of the story. To fully understand the size and potential of mobile gaming, it’s necessary to consider the number of players, which constantly grew even when revenues dropped. Newzoo estimates that it will reach 2.8 billion in 2024. It means that almost twice as many people play on mobile devices than on PCs and consoles combined. Currently, every third person on Earth plays on mobile devices, and there’s still space for further growth.
“There are emerging markets where smartphones and mobile networks can expand, providing new potential players. Furthermore, this type of entertainment has a low entry barrier because most popular games are free and don’t require high-end devices,” explains Mateusz Śmieżewski, the CEO at GAMIVO.
One hobby, different habits
GAMIVO is an example of a company that has recently joined the party to get a piece of the mobile pie. “We examined the mobile market for a very long time, trying to find a suitable place for us. It’s essential to understand that mobile gaming and mobile gamers differ from their PC or console counterparts. You can’t do the same things you do with PC and consoles and hope to replicate your success,” said Mateusz Śmieżewski.
Studies confirm this observation. Average PC and console players spend about 2.1 hours a day in virtual worlds. It’s half an hour more than mobile gamers. However, things get interesting when we take a look at playtime per week, which is the same for mobile and console (5.4 hours) and slightly longer for PC (5.7 hours). Moreover, typical PC and console owners play 2.6 and 2.7 days a week, respectively, while mobile players play 3.4 days per week.
Those statistics prove that PC and console players are more dedicated, spending more time in games’ worlds once they enter them. However, mobile gamers prefer shorter but more frequent sessions. They play while commuting or have a short amount of free time.
“Mobile players are more willing to uninstall games and give another title a chance. Hence, the gameplay has to be captivating and designed to provide quick but intense sessions.
Furthermore, even though the average weekly playtime is identical to PC players, many mobile players don’t think of themselves as gamers,” clarifies Mateusz Śmieżewski.
Another major difference regards the way in which revenue is generated. PC and console games traditionally represent the premium model, where players buy the game. Most popular mobile releases are free and generate revenue with microtransactions. Almost all titles allow players to spend their real money on virtual coins, crystals, and other items that can be used to unlock additional content or reduce cooldowns.
Entering the mobile market
Those contrasts and nuances scare most companies from the mobile market. Let’s see how GAMIVO has coped with this.
“We decided to launch a new product category dedicated to mobile gamers. Our model allows them to top up in-game accounts cheaply. As a result, they can save up to 30% on buying virtual items, upgrades, and other content. The GAMIVO offer includes the most popular mobile titles, such as Genshin Impact and PUBG Mobile, and still extends,” describes Mateusz Śmieżewski.
“We dedicated a lot of time to research and analyses. Also, the development process required a lot of work to provide GAMIVO customers with safe transactions and a user-friendly environment. The first reactions are very positive, confirming our belief that our decision was right and there is still more space in the mobile game market,” concludes the GAMIVO CEO.
Gaming
AI Gives Horses for Courses True Meaning in ‘Owners Club’ Racing Game
Invincible GG, a groundbreaking competitive gaming platform and technology company, has outlined the latest AI developments of its interactive mobile horse racing game, Owners Club, which is set to provide a new injection of interest into the ancient sports of kings.
Following a successful game launch in Q3 2024 and activations at the Doncaster St. Leger and York Ebor festivals, thousands of Owners Club players have started to formulate an expansive game world that gives the masses the true feeling of horse ownership, breeding, and racing experiences.
Being founded on the latest in AI and Web3 technologies allows the game to evolve with more nuance over time, with the former being implemented to enhance users’ strategic horse development and create developing traits and performance benefits that can lead to further self-training opportunities in-game.
Each horse has its own unique, nuanced genetics and racing traits. These can be trained via evolving in-game activity—which will include collaborative intelligence in future releases and passed on to future colts and fillies to create racing dynasties that will stand the test of time while also bringing in lucrative in-game winnings and potential syndicate stud earnings.
Further features include an AI-powered event simulation engine (instead of predetermined RNGs), and sophisticated algorithms that factor in horse health, jockey decisions, and environmental factors that ensure Owners Club races maintain tension and excitement throughout, just as racing fans in the real world would experience from the grandstand.
Jonathan Strause, Invincible GG CEO, said: “Gamers of today want more than static, insular game worlds. They’re looking for immersive experiences in evolving ecosystems, multiplayer competition, and the feeling that they’re fully integrated into the game. Owners Club is offering just that for both current racing enthusiasts and the next generation of racing fans.
“With unrivaled AI integration into the theoretically unlimited stable of in-game horses, combined with back-end Web3 technology that empowers players to easily realize what true thoroughbred ownership and training feels like, Owners Club players can forge their own relationship with horse racing via the gamification of training, racing, and trading in the app, which can only help the future engagement of this ancient pastime.”
Owners Club will be showcased to its biggest live audience yet at the QIPCO British Champions Day on 19th October, 2024, with live races broadcasted as-live to screens around Ascot, with various prizes on offer for the winning owners.
Gaming
Evoplay introduces action-packed skill-based title Adrenaline Rush to wider operator network
Evoplay, the award-winning game development studio, is expanding the availability of its flagship 3D racing title Adrenaline Rush to all of its operator partners, following a successful exclusive release.
Adrenaline Rush combines the thrill of high-speed racing skill-based gaming mechanics, providing an immersive experience for players who enjoy a strategic and competitive edge in their gameplay. Players can engage in intense races where success is determined by both speed and skill, making it a standout title in Evoplay’s diverse portfolio.
Following its main global release on October 8th, Evoplay is set to launch two additional versions of the game, slot title Adrenaline Rush: Super Boost on October 22nd, and crash game Adrenaline Rush: XCrash on November 5th, creating an expanded offering that caters to a variety of player preferences.
Released initially as an exclusive, Adrenaline Rush has already garnered attention for its innovative mechanics and immersive gameplay, earning the Skill Games Supplier award at the prestigious EGR B2B Awards. With this wider release, Evoplay’s global operator network will now be able to offer the title to an even broader audience.
Ivan Kravchuk, CEO at Evoplay, said: “Adrenaline Rush is a one-of-a-kind experience that perfectly blends competitive racing with skill-based gaming. Since its launch, it has resonated strongly with players, and we’re thrilled to now offer this exciting title to all of our operator partners globally.”
“The upcoming releases of the equally popular slot and crash versions will ensure that Adrenaline Rush remains a fan favourite across multiple formats.”
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