Gaming technology company reduces workforce and restructures in response to financial and operational challenges
Unity Software, a leading gaming technology company, announced Monday a drastic cut to its workforce, which will see the loss of 1,800 jobs, or approximately 25% of its staff. This decision is the latest in a series of layoffs to hit the company and comes at a time of significant challenges for the industry. Despite the news, Unity shares jumped nearly 5% in after-hours trading.
According to what is reported in a regulatory document, these cuts are part of a company restructuring plan. Already in November, Unity had communicated to investors that it wanted to implement a “comprehensive evaluation” of its product portfolio and a financial review that “may include the discontinuation of certain product offerings, la reduction in the workforce and the decrease in the physical presence of offices
In the document, Unity admitted that it was unable to “establish a reasonable estimate of the costs and expenses associated with this reduction“, which it expects to be substantially sustained in the first quarter of 2024. The company’s recent path has been difficult. In May, Unity announced a round of layoffs affecting 600 employees, about 8% of the staff, a move once to generate “long-term and profitable growth“.
In September, Unity announced a change in pricing that sparked a lot of backlash among developers who rely on its technology to create video games. A consortium of game developers protested the change, stating in a public letter that this “it puts small and large game developers alike at risk“and that was”decided without any consultation with the industry“.
The following month, John Riccitiello retired as CEO of Unity, also leaving the position of president and member of the board of directors. James Whitehurst, former CEO of Red Hat, was named interim CEO, while Roelof Botha, lead independent director of Unity’s board and partner at Sequoia Capital, became president.
While shares are up more than 40% for the year, they lost nearly half their value between July and the end of October. In its third-quarter earnings report, Unity fell short of analysts’ expectations and did not provide quarterly forecasts.
“Mixed results in the third quarter“Unity said in a letter to shareholders.”Even though the turnover was within forecasts, we believe we can do better“.