Unity CEO John Riccitiello is out as CEO after the game engine licensing fiasco, and he’s been ejected from the board as well. He’s not just gone. He’s gone gone.
The game software CEO spotted a golden opportunity to squeeze more money from his paying customers. Now he’s out after the idea blew up in his face. Riccitiello, who had been CEO of Unity for about ten years. It was his idea to charge a 20¢ installation surcharge for the Unity runtime engine for every future installation of that engine. This would have affected all games moving forward, even those published previously that had not been subject to the surcharge before now. Naturally, the entire game industry was up in arms, and game studios and independents alike ditched the engine almost overnight. Not everybody could, but those who could, did.
A huge part of what went wrong was Unity’s failure to issue any sort of statement on the matter waited for almost ten days, echoing the Wizards of the Coast disaster over the OGL license for Dungeons and Dragons and all the games that had been based on their rule set for the past 20 years. The silence from Riccitiello was deafening, so when he finally did speak, it was far too late.
The runtime engine for any game development platform is the part in common that makes all games developed with that engine work. It’s the part of the game engine that never changes, against which the games are coded and upon which they are built. Traditionally, runtime engines for everything from games to industrial programming languages have been free, as they can’t be used for anything except running finished software. Riccitiello’s groundbreaking idea was to be the first company in the history of the consumer software product industry to charge for this critical bit of technology.
Developers had already turned off the Unity 3D IronSource and advertising features, which Unity had been relying upon for most of their cash flow, and major projects were already being pulled from the engine and retargeted to the Unreal Engine, or the Godot Engine, or one of a number of other engines, none of which featured this ridiculous new idea of charging for installations of their runtime engines. The reaction was so profound that the stock price of Unity dropped from about $40 on September 13, the day of the announcement, to its current price of about $30 today. In other words, thanks to this action, Unity lost 25% of its market cap over about two weeks.
Considering that the company was worth about $11.4B just four weeks ago, Riccitiello has cost Unity $2.85B. It’s no surprise that he isn’t CEO anymore.
What is surprising is that he’s not a board member on the Unity board of directors anymore either. He apparently got voted off that. So he’s not just out of the big chair, he’s out of the company entirely.
This would probably be more shocking if he hadn’t had similar luck with Electronic Arts, his previous gig. As CEO of that, he presided over Electronic Arts’ descent to an apparently well earned reputation of being the most hated company in America for two years running. Electronic Arts had become well known for its anti-competitive and anti-consumer practices, to the point where Riccitiello had actually floated the idea that players should pay by the box for the ammo for their in-game weapons.
In 2011 EA shareholders meeting, Riccitiello notoriously suggested players be charged for bullets while playing Battlefield: “When you are six hours into playing Battlefield and you run out of ammo in your clip and we ask you for a dollar to reload, you’re really not that price sensitive at that point in time.”
You can guess how well that idea was received.
To make the optics even worse for the Unity situation, Riccitiello apparently sold thousands of shares before the announcement, apparently having some idea of how poorly the news would be received. He owned a lot of shares of the company, and frankly a few thousand shares doesn’t amount to much in the grand scheme of things, but it does give the appearance that he was hedging his bets in case it all went sideways.
From this latest debacle with Unity 3D, effectively torching a company’s entire reputation and customer base over a money grab, it’s safe to assume that he had not learned his lesson from the last time. Unity is now in damage control mode, doing their best to undo Riccitiello’s handiwork, but it may be too late to fix it.