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Unity Attempts Imposing Tax on Game Developers

by OtakuApologist

Every business prefers a perpetual subscription model. The golden grail of capitalism is forcing your product on the citizens with the government’s coercion. Unity is now attempting to incorporate a subscription model, affecting their existing customers. I’m awaiting with bated breath when they’ll approach the current administration to lobby for a ban on alternative engines.

Unity has the freedom and the right to set their business ablaze. Only problem is, and this truly is the only problem in a free market where consensual transactions are endorsed, they are retroactively changing the rules on established games, if we understand this correctly.

NOTE: I’ve tried gathering into this article enough information so that all questions are answered, including the official announcement from Unity where they address questions and frustrations of developers.

When the news broke out, the development related Discord servers I follow broke into fierce debates. Everyone scrambled to understand what’s happening. The below diagram represents somewhat the current understanding of devs.

There are a lot of open questions about this, like how this affects your established taxes to the government. It’s not like you can file for deductions to these fees by showing receipts of your expenses to Unity’s customer service to bargain for exemptions from this tax. One erodev I talked with just today said, and I quote with corrected spelling, “My devs are Unity focused, but let’s just say they started reading the technical papers of other engines”.

As a capitalist, it would be hypocritical of me to criticize their greed. Greed is good, when you’re creating both value and great ways for customers to reciprocate their gratitude. But when so many game companies that use Unity have already established their businesses with certain cost structures, decisions which were informed by information available at the time, it’s a rug pull. Many developers would simply not make the same decision to use Unity, if they knew in advance.

Denying people informed consent is unacceptable. It goes against the fundamental principles of a free market.

I visited forum.unity.com where developers were debating the change. The poster nicknamed “museypoo”, who also contributed the above diagram, said this:

“This will prob get buried, but I just wanted to share a quick graph of how this pricing will hit at different levels.
As we’re aware, unlike a flat % royalty, the fixed cost amount means that the less you make “per install” the higher effective royalty your paying. It works the other way as well, so you’d actually be paying a very low effective % royalty on higher priced games.

Additionally, I think they could have made this more clear by just not including unit pricing under $200,000 and requiring you upgrade to pro and start paying a royalty (or whatever). There’s almost no case where you would make that amount and stick with a personal plan, so we can all basically ignore it. Only games with above 1,000,000 installs will matter. So it then becomes very much hinging on what Unity calls an “installation”. Again, if you’re making more than $200,000 a year, you upgrade to Pro and this won’t hit you unless you’re actively making $1,000,000 a year and also have a lifetime download count of 1,000,000. Not a ton of full-price games hit those numbers, and if you do the effective royalty is actually very low.

As you can see it’s a very favorable plan for full priced game developers selling above about $5- actually better than the default 5% from unreal (though you can negotiate with Unreal for lower rates). It’s just so odd because it’s mainly going to target mobile F2P developers or low price Steam games (like Vampire Survivors) who do achieve those high download counts, and can easily become above a 100% royalty in those cases with low costs. Insane! They are on crack to think this works for that model, but that’s basically what they seem to be targeting instead of succesful full-price games. Wack.

All that aside of how this plan could be adjusted and trying to count installs being insane, it’s really that they’re walking back keeping the TOS on a given environment. That’s awful, insane and just straight up sounds illegal.”

Here is the original official announcement from the Unity team:

“Effective January 1, 2024, we will introduce a new Unity Runtime Fee that’s based on game installs. We will also add cloud-based asset storage, Unity DevOps tools, and AI at runtime at no extra cost to Unity subscription plans this November.

Please read our blog post for the details and consult our FAQ for additional information. If you have any questions about these changes, please let us know here in this thread so we can address them.

Highlighting some of the question/answer pairs from this thread below for visibility
Q: How are you going to collect installs?
A: We leverage our own proprietary data model. We believe it gives an accurate determination of the number of times the runtime is distributed for a given project.

Q: Is software made in Unity going to be calling home to Unity whenever it’s run, even for enterprise licenses?
A: We use a composite model for counting runtime installs that collects data from numerous sources. The Unity Runtime Fee will use data in compliance with GDPR and CCPA. The data being requested is aggregated and is being used for billing purposes.

Q: If a user reinstalls/redownloads a game, will that count as multiple installs?
A: We are not going to charge a fee for reinstalls. The spirit of this program is and has always been to charge for the first install and we have no desire to charge for the same person doing ongoing installs.
(Updated, Sep 14)

Q: Do installs of the same game by the same user across multiple devices count as different installs?
A: Yes – we treat different devices as different installs.
(Updated, Sep 14)

Q: If a game that’s made enough money to be over the threshold has a demo of the same game, do installs of the demo also induce a charge?
A: If it’s early access, Beta, or a demo of the full game then yes. If you can get from the demo to a full game then yes. If it’s not, like a single level that can’t upgrade then no.

Q: When in the lifecycle of a game does tracking of lifetime installs begin? Do beta versions count towards the threshold?
A: If you can get from the demo to a full game (like via an in-game upgrade), then yes. If it’s not (like just one level that can’t upgrade), then no.
(Updated, Sep 13)

Q: Do Charity bundles qualify for the Runtime fee?
A: Any installs driven by charities or installs driven by charity bundles are excluded from the Runtime Fee.
(Updated, Sep 13)

Q: How will we approach fraudulent or abusive behavior that impacts the install count (bombing, piracy)?
A: We won’t count fraudulent installs or “install bombing” either. As part of our model, we are creating solutions to address the problem of double-counting reinstallations.
(Updated, Sep 14)

Q: Does this affect WebGL and streamed games?
A: No, the Unity Runtime fee does not apply to WebGL games.
(Updated, Sep 13)

Q: Does the Unity Runtime Fee apply to gaming subscription services?
A: For creators using gaming subscription services, the game dev isn’t responsible for the runtime fee in this case.
(Updated, Sep 14)

Q: Are these fees going to apply to games that have been out for years already? If you met the threshold 2 years ago, you’ll start owing for any installs monthly from January, no? (in theory). It says they’ll use previous installs to determine threshold eligibility & then you’ll start owing them for the new ones.
A: Yes, assuming the game is eligible and distributing the Unity Runtime then runtime fees will apply. We look at a game’s lifetime installs to determine eligibility for the runtime fee. Then we bill the runtime fee based on all new installs that occur after January 1, 2024.

Q: Are these charges applied retroactively?
A: No, the Runtime fees will not be applied retroactively. If, starting on Jan 1, 2024, you meet both the revenue and install threshold for a given game, you will only pay for net new installs happening after Jan 1, 2024. We’ll look at your cumulative revenue and then installs from the past 12 months to see if you qualify for the thresholds of the new install fee but you won’t pay for any installs or revenue that happened before Jan 1, 2024. Starting Jan 1, 2024, if you continue to meet the thresholds then you’ll only pay for net new installs. Also, your qualifying for the install fee is measured every month on a rolling 12-month basis to ensure you’re paying the correct amount.
(Updated, Sep 13)

Q: Isn’t this a huge impact on indies?
A: This price increase does not impact the majority of our customers. In fact, based on internal data, more than 90% of our customers will not be affected by this change
(Updated, Sep 13)

Q: Does changing your plan apply the revenue threshold immediately?
A: Yes
(Updated, Sep 13)

Q: Is the revenue calculated before or after the platform fees?
A: Revenue calculations applied to the threshold for the Runtime Fee are gross – before any platform or other fees.
(Updated, Sep 14)”

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