Unity Software (U) saw its stock surge by over 12% on Thursday after announcing the cancellation of its controversial “runtime fee” pricing model.
The fee, introduced nearly a year ago, had sparked widespread backlash from game developers who rely on Unity’s engine for creating and monetizing mobile games. The pricing change, which charged developers based on the number of game downloads, led to customer revolt and caused Unity’s share price to plummet.
In response to the negative feedback, Unity reverted to its traditional seat-based subscription model, with price increases for its Unity Pro and Enterprise tiers taking effect from January 2025. The rollback has been met with relief by the developer community and a surge in investor confidence.
The cancellation of the runtime fee signals a shift back to more transparent and predictable pricing. Unity’s Pro subscription will see an 8% price hike, while its Enterprise plan will increase by 25%. Meanwhile, the free Unity Personal plan will now allow developers earning up to $200,000 annually to use the platform at no cost, doubling the previous limit. The move is aimed at making Unity more attractive to smaller developers.
Despite the price increases, the market’s reaction suggests that the rollback of the unpopular runtime fee outweighed concerns over higher subscription costs. Investors viewed the changes as a positive step towards restoring trust with developers and stabilizing the company’s outlook. Unity’s shares, which had fallen 50.9% year-to-date, bounced back strongly following the announcement.
Volatile Stock Amid Economic Uncertainty
Unity’s stock remains volatile, with frequent swings exceeding 5% throughout the year. The company’s previous major move came six days earlier when shares dropped 6.4% following economic uncertainty fueled by an underwhelming jobs report. However, the latest pricing changes have provided some clarity to investors on Unity’s future, with many expecting revenue growth from the upcoming subscription adjustments.
Still, questions remain. Unity faces the challenge of retaining customers amidst the pricing changes and must prove that the latest version of its software, Unity 6, will be compelling enough to mitigate any lingering frustrations from the “runtime fee” fiasco.
With Unity trading 55% below its 52-week high, investors will be closely watching its performance as it navigates this transition period.
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