Unity Engine’s recent announcement of a new per-download royalty fee for games has sent shockwaves through the indie developer community. The popular engine has long provided free access for studios until they reach $100k in revenue. But the new fees threaten to undercut indie developers right as they start finding their footing.
In this in-depth analysis, we’ll explore how the fees could impact small studios and solo creators. We’ll look at financial burdens, engine choice, monetization, and more. By the end, you’ll understand why many developers feel the fees counter Unity’s image as the “indie friendly” option.
Overview of the New Per-Download Fee Policy
First, let’s outline the key details of Unity’s new royalty fee structure:
- Applies once a studio passes $200k in annual revenue
- Up to $0.20 per install of each game
- Rates vary based on licensing terms
- Expected to generate ~$300 million annually for Unity
At first glance, the $200k threshold may seem high. But for a successful indie hit, it’s quite achievable. And even $0.20 can quickly add up over hundreds of thousands or millions of copies.
For context, Unity currently provides two pricing options:
- Unity Personal – Free with revenue limit of $100k
- Unity Plus – $399/month subscription
Previously, developers could use Unity for free until crossing the Personal plan’s revenue limit. But now, regardless of plan, all developers face downstream per-install fees after hitting $200k in revenue.
Financial Impact on Indie Studios
One key concern around the new fee involves the financial burden it places on studios, especially smaller teams with limited budgets. A few dollars here or there may not seem like much. But it all adds up when your game starts gaining traction.
Tighter Profit Margins
Even large studios count every penny. For indies, a few cents per download eaten into margins can have big implications. This fee gets taken off the top before studios reinvest or take home profits.
What if your game averages $0.50 in profit per copy and now $0.20 goes to Unity? You’ve suddenly lost 40% of your earnings. This can restrict growth and delay future projects.
When scoping projects and creating budgets, studios now have to account for the downstream per-install fee. But it’s impossible to accurately predict eventual revenue or sales volume, especially for unproven studios.
This makes projecting costs tricky. Do you plan for 1 million units? 10 million? It’s a guessing game that could create financial headaches later.
Cash Flow Crunches
Even if profit margins remain stable, the absolute cash outflow for the fees could strain finances, especially during periods of high sales. Monthly costs can spike rapidly.
For example, if a game sells 300k copies one month when promotion is strong, that’s $60k in Unity royalty fees. For small teams, such sudden large payouts could disrupt financial planning and operations.
In summary, while the fee only applies above $200k in revenue, it nonetheless introduces myriad financial considerations and liabilities. For developers running on thin margins, every cent matters.
Comparative Cost Analysis
To better understand the impact of Unity’s revenue share model, let’s compare it to Unreal Engine’s pricing structure:EngineRevenue TermsUnityNo fee up to $200k revenue <br> Up to $0.20 per install after $200k revenueUnreal5% gross revenue after first $1 million revenue
In Unity’s model, you pay per user and the cost scales directly with sales volume. Even a small fee adds up. Unreal’s model is based on overall revenue. Once revenue gets sufficiently large, the 5% cut stays reasonable.
For example, assuming $10 average revenue per user (ARPPU):Units SoldUnity FeeUnreal Fee100k$20k$0500k$100k$01M$200k$50k5M$1M$250k
For large AAA studios, Unity’s model generates more profit share. But for indies, especially during scaling phases, Unreal’s flat revenue share is less prone to sharp cost spikes.
Advantages of Revenue Share Model
- Costs scale predictably with overall business
- No per-unit fees adding up
- Manageable margins even at high sales volumes
- Smoother cash flow curves
Unity’s fee, while perhaps necessary for their business, demonstrates the problems of a per-download model for developers. It may suppress growth during the most fragile period.
Strategic and Technical Impacts
Beyond just dollars and cents, the fee could also influence strategic decisions by indies when it comes to features, platforms, and engine choice.
To minimize fees, developers may limit upgrades to new Unity versions or avoid premium plugins. While understandable, this could result in games built using an outdated or limited feature set compared to their full potential.
The per-install model incentivizes developers to focus on platforms with higher ARPPU. For example, prioritizing a PC launch over mobile. This could lead to suboptimal platform decisions.
As alternative engines like Unreal and Godot improve their workflows, the new fees make evaluating options more appealing. However, switching engines still requires significant resources.
The royalty fees incentivize delaying or limiting releases on platforms with high expected volumes. For example, staying in Early Access longer to limit installs. This could constrain growth.
In summary, while indirect, the fee structure can influence decision making in areas far beyond finances. Indies may start evaluating choices more on fee minimization than what’s best for players.
Potential Impacts on Game Design
Game design and development dynamics could also shift in the wake of the new royalty model:
More Aggressive Monetization
To maximize revenue per user, developers may pursue more aggressive monetization including:
- More forced ads
- Heavy in-app purchases
- Subscription plans
- Upfront purchase instead of free-to-play
While potentially increasing per-user profit, excessive monetization could degrade gameplay integrity and user experience.
Publishing Timing Manipulation
As noted earlier, some developers may intentionally delay full launches or leave games in Early Access longer to limit installs subject to fees. This could reduce availability of polished content.
The increased financial considerations around releases may incentivize indies to pursue safer, proven game styles and narratives vs innovative but commercially riskier ideas. This could constrain creativity.
Some teams may artificially inflate features and scope to try achieving higher ARPPU to offset royalty fees. Resulting “bloatware” games could exhibit feature creep and lack focus.
Premium Game Pricing
Instead of a standard $20 price point, indie teams may test pricing games as high as $40+ in hopes the increased margin per unit outweighs lower sales volume. This could restrict accessibility.
In essence, the fee structure demands that developers think about monetization strategies earlier in the process. This could distract from simply building great game experiences.
Sentiment Across the Indie Developer Community
Let’s sample reactions across blogs, forums, and social media to gauge broader sentiment:
- In this r/LinusTechTips thread, a user expresses concern about the cost of the engine and how it may affect smaller developers.
- Another thread from r/gamedev discusses the same fee change and its impact on developers. Users in this thread also express concern about the cost of the engine and how it may affect smaller developers.
- This r/Unity3D thread includes a Q&A with Unity representatives about the fee change. They confirm that the fee applies to eligible games currently in the market that continue to distribute the runtime.
- In this r/Unity3D thread, a user calculates the cost of the fee for a game with 200k installs, which comes out to $40,000. They express frustration with having to pay for something that they feel they did not benefit from.
- A thread from r/Unity3D discusses the new business model and how the fee is based on a one-time fee per player. The fee scales depending on revenue thresholds, which some users in the thread find concerning.
- Finally, this r/Games thread discusses the increase in subscription prices for Unity Plus and Pro subscriptions. Some users express frustration with the cost of the engine and consider switching to other engines like Godot, which is free.
The above comments demonstrate the range of frustrations, uncertainty, and perceived betrayal among indie developers. The policy change contradicts Unity’s cultivated image as the “indie friendly” engine.
Many developers acknowledge the increased costs for Unity to maintain their platform. But the fee structure seemingly targets indies right as they gain self-sufficiency.
Key Considerations and Takeaways
Looking at the full picture, a few important key points stand out:
- The downstream fee presents notable financial burdens, especially for smaller studios.
- It could disproportionately impact developers during crucial growth phases.
- Secondary impacts on game design, features, and platform plans may emerge.
- Sentiment leans very negative across much of the indie community.
- The change counters Unity’s indie-friendly brand and image.
However, all hope is not lost. There are still steps Unity could take to ease the burden:
- Phase the fees in slowly over $200k+ in revenue vs all at once
- Implement a temporary fee reduction program for indies under 5 developers
- Shift to a net revenue share model similar to Unreal over pure per-install
- Increase the Personal plan revenue cap before fees kick in
- Unity’s new per-download fee marks a major shift for indie economics.
- Be aware of direct and indirect impacts on budgets, tools, design, and release plans.
- Carefully evaluate if the fee structure changes the Unity cost/benefit analysis.
- Provide feedback to Unity through official channels respectfully but firmly.
- Don’t panic, but start preparing now – knowledge is power.
The fee introduction may or may not mark a seminal moment for Unity’s market position. But one thing is clear – they can no longer claim the “indie engine” crown uncontested.
Unreal, Godot, and others now have a chance to step up their support for solos and small teams. With some refinement to the model, Unity can perhaps reclaim goodwill.
For now, uncertainty reigns as developers parse the implications. But with careful planning, resourcefulness, and integrity, the indie community will adapt as they always have.
The games will go on.
Unity’s new per-install royalty fee marks a major inflection point likely to reshape budgets, tools, and release plans across the indie space. Small teams now face downstream considerations that could constrain creativity and growth during crucial phases.
But indies are nothing if not resilient. While the policy shift stings, developers will adapt to the new economic realities as they have adjusted to past platform changes. Careful financial planning, feature evaluation, and release optimization can help minimize impact.
Meanwhile, Unity faces blowback in the court of public opinion over the fee’s target on low-budget teams. To regain goodwill, they must open dialog with the community and find ways to ease the burden. With refinement, their already wildly successful engine can continue empowering indie developers rather than hindering them right as they gain traction.
Call to Discussion
What do you think of Unity’s new per-download fee model for developers with over $200k in revenue? Does it seem fair or excessive? How might it impact your studio and projects? What alternatives could Unity provide?
Join the conversation below! We want to hear from you. And be sure to subscribe to the blog for more analysis on trends in game development and the engine landscape. Thanks for reading!