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Unity caps a turbulent year with layoffs, termination of its Peter Jackson deal

Unity purchased Wētā Digital in 2021 in a $1.6 billion deal

Kiri swims through coral and a pod of banana peel fish in Avatar: The Way of Water Image: 20th Century Studios
Nicole Carpenter is a senior reporter specializing in investigative features about labor issues in the game industry, as well as the business and culture of games.

Unity Technologies is laying off 265 people — 3.8% of its 7,000 employees — as it undergoes a “company reset,” according to Reuters. All 256 laid off workers were part of Unity’s Wētā Digital division; several Wētā FX tools and 275 employees were acquired by Unity in 2021 in a $1.6 billion deal.

A Unity representative confirmed the layoffs to Polygon, pointing to the Reuters report “for specifics.” Unity is the video game engine company that games like Pokémon Go, Marvel Snap, Outer Wilds, and plenty more are built on. Wētā FX tools are available to Unity members to assist in character creation, environmental design, visual effects work.

Alongside the layoffs, Unity is closing 14 offices and ending an agreement with Wētā FX, the new company made of the legendary VFX teams and owned by Peter Jackson, that’s been in place since the Wētā Digital acquisition. (That company was “expected to become Unity’s largest customer in the Media and Entertainment space,” according to the 2021 news release.) The two companies have also “amended certain intellectual property rights between the parties,” according to United States Securities and Exchange Commission filings.

Wētā FX announced, in a statement to fxguide, that will attempt to hire “as many of the team as possible” in a move to expand its research and development capabilities. Unity will keep the tools it acquired, all of which will also be available to Wētā FX, too, it said.

“Unity’s need to refocus its efforts on its core business, and change in its relationship with Wētā FX was not something we had planned for,” Wētā FX said in the statement. “We are endeavoring to hire back as many crew as we can, however, there may be a few roles that we may not be able to accommodate within our new structure.”

Unity announced in early November that it was likely to see more layoffs, despite its third quarter results meeting set expectations. The layoffs and other cost-saving measures — like less in-office support for its remaining offices, Reuters said — are intended to “deliver faster revenue growth, improved profitability metrics and increased free cash flow,” Unity wrote in its November shareholder report. Unity earned more than $1 billion in revenue in 2022, but was not profitable.

This is Unity’s third round of layoffs in 2023; the company laid off nearly 300 people in January and around 600 in May. In total, Unity’s laid off more than 1,100 people this year, preceded by at least 200 job cuts in June 2022. Large-scale layoffs are not unique to Unity, as the industry enters a crisis created by thousands of layoffs. However, Unity has had a uniquely bad year due to a controversial new pricing model that was essentially universally condemned by the game development community. The new policy originally added additional fees each time a game is downloaded, with some restrictions due to player base size. The fees were eventually revised after widespread backlash, including a mobile game developer protest that saw companies boycotting Unity’s ad tools.

Unity CEO John Riccitiello stepped down in October, just over a month after Unity’s massive pricing gaffe. James M. Whitehurst, an advisor at the Silver Lake equity investment firm, stepped into the role of interim CEO.

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