Exclusive-Unity Software to cut 25% of staff in ‘company reset’ continuation

By Anna Tong

(Reuters) -Videogame software provider Unity Software will target laying off approximately 25% of its workforce, or 1,800 jobs, the company said in a regulatory filing and internal company memo on Monday.

After the announcement, Unity shares were up nearly 5% in after-hours trading.

This is the San Francisco-based company’s largest layoff ever, with completion expected by the end of March, the company said. While Unity is not widely recognized outside the gaming industry, over 1.1 million game creators rely on its software toolkit each month, including the maker of the popular “Pokemon Go,” “Beat Saber” and “Hearthstone” games.

Monday’s deep job cuts will affect all teams, regions and areas of the business, the company told Reuters.

The layoffs come shortly after interim CEO Jim Whitehurst announced a “company reset” in November.

“We are … reducing the number of things we are doing in order to focus on our core business and drive our long-term success and profitability,” Whitehurst wrote in the memo to all Unity employees on Monday.

While Whitehurst provided no specifics on structural changes to come, a company spokesperson confirmed there will be additional changes coming. This is the fourth round of layoffs the company has conducted since July 2022.

The layoffs and company reset follow a tumultuous period for Unity.

In September last year, the company tried to impose a new “runtime fee” pricing policy, which charged new fees to its game developers if certain revenue and install thresholds were met. Following a developer revolt and a steep dropoff in share price, the company revamped the new fees.

Following the controversy, then-Unity CEO John Riccitiello retired, and the company appointed former IBM president Whitehurst as interim CEO and president and Sequoia Capital partner Roelof Botha as board chairman.

In November, Whitehurst announced the first part of the company reset, which included terminating an agreement with a visual effects company founded by the “Lord of the Rings” director, closing offices and no longer mandating employees work from offices. Monday’s layoff is the second part of the company reset.

Unity was founded nearly two decades ago by three Danish engineers, and gained popularity among game developers for its “game engine” that makes it simpler to develop and publish games across different platforms, such as via mobile or virtual reality.

It is also used in other industries like film and automotive for 3D visualization and virtual reality. After its IPO in 2020, Unity's stock reached a peak of around $200 in November 2021, but subsequently fell below $30 last year.

Its shares have jumped nearly 40% since Whitehurst announced the company reset.

(Reporting by Anna Tong in San Francisco; Editing by Nick Zieminski and Sonali Paul)