Unity Software’s Revenue by Segment (2019-2022)

Operate Solutions

Operate Solutions offer customers the facility to grow and engage their user bases and to run and monetize their content irrespective of where it was created. This revenue is generated through a combination of revenue-share and consumption-based business models. The first set of Operate Solutions products by Unity Software was monetization products, which are primarily based on a revenue-share model, introduced in 2014. These currently account for a majority of revenue from this segment. It is recognized when an end-user:

• Installs an application after viewing an advertisement (contracted on a cost-per-install basis), and
• When an advertisement begins (contracted on a cost-per-impression basis).

Unity Software also provides cloud-based services to support the ongoing operation of games and applications. These include application hosting services, end-user engagement tools, as well as voice chat services. Such services are generally sold based on consumption and billed monthly in arrears. Some of their consumption-based contracts include a minimum fixed-fee consumption amount. On a QoQ basis, there was an increase of 15.7% in the revenue generated as compared to the 34% YoY increase. 

Create Solutions

Create Solutions are a set of dynamic tools for the creation of high-definition, real-time 2D and 3D content. This can be created once and deployed to more than 20 platforms, including Windows, Mac, iOS, Android, PlayStation, Xbox, Nintendo Switch, and others. This revenue is primarily generated through subscription fee arrangements for the use of their products and related support services. Unity offers subscription plans at a variety of prices. This revenue is recognized over a service period that generally ranges from one to three years and is typically billed on a monthly, quarterly, or annual basis, depending on the size of the contract.

Unity even generates additional Create Solutions revenue from the sale of professional services to their subscription customers. These services consist of training, integration, consulting, and custom application and workflow development and are billed in advance or on a time and materials basis. On a QoQ basis, the revenue from this segment increased by 1.1%, however, on a YoY basis, it increased by 54.2%. 

Strategic Partnerships and Other

This revenue is primarily generated from partnership contracts with hardware, operating system, device, game console, and other technology providers. These are generally recognized from contracts as the services are performed. Such partnerships are typically multi-year software development arrangements with payments that are either made in advance quarterly or milestone-based. In addition, certain partners pay royalties based on the sales of applications sold on Unity’s platform.

Apart from the above-mentioned revenues, Unity even generates other forms of income. These primarily come from sales from Asset Store, a marketplace and scaled aggregator for software, content, and tools used in the creation of real-time interactive games and applications. It also includes Verified Solutions Partners, which sell software and tools certified for quality and compatibility with their platform. On a QoQ as well as YoY basis, there was a decline of more than 3% in the revenue generated. 

About the Company

Unity is a leading platform across the globe for creating and operating interactive, RT3D content. Their platform provides an all-around set of software solutions to create, run, and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices. Unity Software offers two distinct, but connected and synergistic, sets of solutions – Create Solutions and Operate Solutions. 

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