To The Moon

Today, I mainly want to talk about $Unity Software Inc.(U)$ Unity, because Unity is one of my most promising companies like$Alphabet(GOOG)$ $Microsoft(MSFT)$ and$Tesla Motors(TSLA)$ for a long time, and the company finally officially announced the change of the new charging model today. I am personally very satisfied with this change. It can be said that the management was stupid at the beginning, but in the end, the remedy was still in place, but it took a little longer. After this change, public opinion also began to turn around. Public indignation has gradually subsided, and even many developers have begun to support Unity's new charging model. The mood of the Internet really changes. Of course, in the end, some developers decided to leave unity because of the first announcement. So next, let's take a look at what specific changes Unity has made to the new charging mode.

First of all, in today's latest announcement, Unity apologized to everyone again at the beginning and said, "We should have listened to everyone's opinions earlier and thought more before announcing the new fee policy. We just launched this policy to ensure that we can continue to support everyone and continue to improve our game engine. Then he said, "You are the souls of Unity. We have to listen harder and strive to win your trust. We have heard the question you raised. We are changing that policy. It can be said that the first three sentences are like PR. The first announcement is really not human at all. Since you want everyone to pay taxes, you must first have a good attitude. The writing style this time is also very different from the last time, and the probability of writing PR last time has been replaced. 

However, back to the topic, the changes in the new charging mode this time mainly include the following.

1) The Unity personal version plan will remain free, and there will be no runtime fee for games built with Unity personal version, that is, users of the personal version will not be affected by the new charging mode. At the same time, two benefits have been added. The first is to increase the income limit of using the personal version from $100,000 to 200,000, and to cancel the requirement to use the opening screen of "Made With Unity". This is obviously very pleasing to the small developers, and it is also what I have been looking forward to this change of Unity. Because this is the best way to calm the anger of small developers, and at the same time, unity will not pay too much, which is one of the lowest-cost remedies.

2) In the past 12 months, games with an income of less than $1 million will not need to pay for the new charging mode. Only games with an income of more than 1 million will be charged. There will be two options for the amount charged, either 2.5% of the income, or the fee will be calculated based on the number of new players in the monthly game interaction. These two numbers are self-reported by the developers themselves, and Unity will charge the game developers the lower amount of the two. It means that the cap of additional expenses is 2.5% of the revenue. This change just allows Unity to directly benchmark with Unreal's charging mode. In comparison, it can be clearly seen that Unity is much cheaper than unreal. As for this 2.5%, it is actually not low, because the initial charging model is actually 1%-3%, but the company did not calculate it for everyone. And the specific cost of each player who can choose to be billed with the number of new players is not mentioned. Unity has thought about it internally for a week and may have done some calculations. The final result of these two options should not be very different. But no matter what, the actual charge% has not been reduced, but now it is easier to understand and better to compare with Epic, especially the foreigner's math is really not good. Now many developers on the Internet are also satisfied with 2.5%.

3) Most importantly, this charging policy will start with the new LTS version of Unity in 2024, which means that previous games and projects will not be charged unless they upgrade Unity to the new version in 2024. This is good news for developers, which means that the old games will not be charged until they upgrade to the new version. Only by upgrading this version or games developed with the new version will be charged. In a word, as long as the developer continues to use the current Unity version, the relevant terms will not change. However, for shareholders, this is a bad news. After all, developers will not upgrade their engine version at the same time next year, so the bonus of this new charging model to EPS will not be as high as before. Maybe it will not start to react significantly until the end of 2024 or 2025. Performance. The stock price did not rise after the change this time, which may also be the reason.

It can be said that this public relations crisis has passed, and the public anger has gradually subsided. Many developers have even begun to speak well for Unity, and they also think that they are listening to users' opinions. However, the damage caused by the first announcement has occurred, and the company's image and trust have been damaged to a certain extent, which can only be regarded as a remedy now. With the competitive advantage of Unity, it should not be difficult to retain existing customers in the newly changed charging mode, which I am not very worried about. However, the losses caused by the previous boycott to the advertising business will become a risk that Q3 performance may be lower than expected. Therefore, I don't plan to add more positions for the time being before the next financial report comes. Even if the stock price rises before the financial report, I may reduce my position a little to avoid risk. After the financial report comes out, I plan to add it back. Of course, it depends on the trend of the stock price and other factors.

For the long-term fundamentals, I have always been optimistic about the layout of this company in the field of industry, digital twins, and MR, but the management class is really a little crazy. This time, the problem of management's execution has been exposed. The current situation is that the company and the product are good, but the leader can't. Therefore, I am also confused about whether to lower the temporary target of Unity. Because of the bad management, I don't know what to do next time. The stock price is really tossing around. However, there is still time to think about it. After the vision pro comes out, the chaos in the MR market may start later. The management at least made a good remedy this time. So now I plan to control the parts of Unity more strictly in the short term, and even reduce the position to do the band at the appropriate time. But after all, I am optimistic about what Unity does and the layout, and I also feel that there will eventually be a catalyst period of chaos in the MR field, so I don't plan to give up Unity, but I will guard against the management first. If the CEO or senior executive is replaced, I will reconsider.

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