Posted on Tuesday, Jul 19th 2016
According to Gartner, the worldwide video game market, which includes video game console hardware and software, online, mobile and PC games, is projected to reach $128 billion by 2017. US video game companies recorded revenues of $23.5 billion in 2015 with software sales increasing 7% to $16.5 billion. Unity Technologies is the most recent entry to the Billion Dollar Unicorn Club from this market.
Unity Technologies’ Offerings
San Francisco-based Unity Technologies was founded in 2005 by David Helgason, Nicholas Francis, and Joachim Ante in Copenhagen, Denmark after the failure of their first game GooBall. They wanted to democratize game development and level the playing field for developers across the globe. They then developed in-house an engine that anyone could use for an affordable price.
Today, its development platform Unity is used to create games and interactive 3D and 2D experiences like training simulations and medical and architectural visualizations, across mobile, desktop, web, console and other platforms. About 31% of the 1,000 top grossing mobile games including Pokemon Go and Monument Valley use its engine. There are about 600 million gamers around the world who play games based on the Unity engine.
The emergence of virtual reality headsets like Gear VR and Oculus Rift have led to a renewed demand for 3D game development tools and Unity is used in about 90% of the games. Augmented reality is also another promising area of growth for Unity.
It had over 4 million registered developers in 2015. Its customers include Cartoon Network, Coca-Cola, Disney, Electronic Arts, LEGO, Microsoft, NASA, Nexon, Nickelodeon, Square, Ubisoft, and Warner Bros. It is also popular with smaller, independent developers who need help with creating and monetizing their games. It offers services like Unity Ads for growing revenue with ads and Unity Analytics for insights into player behavior.
It has a subscription-based business model. The personal plan is free while Unity Plus costs $35 per seat per month and Unity Pro costs $125 per seat per month. Enterprise plans are customized plans.
The main competitor to Unity is the Unreal Engine, made by Tencent-backed Epic Games. Amazon has also released Lumberyard, a game engine with code licensed from Crytek.
Unity Technologies’ Financials
Unity Technologies is a privately held company and does not disclose its revenues. It has raised $198.5 million from investors including China Investment Corporation, DFJ Growth, FreeS Fund, iGlobe Partners, Sequoia Capital, Thrive Capital, WestSummit Capital, and Vanedge Capital. Last week, it raised $181 million in a Series C round that valued them at about $1.5 billion. Unity plans to use the funding to invest in tools for virtual and augmented reality apps. The $25 million raised in the earlier round was used to grow to 1,000 employees.
There is a lot going for Unity: strong product validation and customer numbers, and based on these, it is funding its next phase of growth in a promising market.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
Photo Credit: Sadie Hernandez /Flickr.com
This segment is a part in the series : Billion Dollar Unicorns
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