Over the past two years, Unity Technologies, renowned for its widely-used game development engine, has faced a series of challenges leading to significant organizational changes. The company has implemented multiple rounds of layoffs, with the most recent resulting in further workforce reductions. CEO Matthew Bromberg attributes these measures to Unity being “stretched across too many products,” necessitating a strategic refocus.
In a recent internal communication, Bromberg emphasized that Unity’s extensive product range has introduced complexity and diluted the company’s impact. He noted that prolonged internal debates over strategic focus have hindered decisive action and slowed product releases. Additionally, efforts to accelerate growth by expanding teams and operational structures inadvertently led to inefficiencies. Bromberg stated, “We also added people and created operating structures that were meant to speed us up, only to find they were slowing us down.”
This perspective mirrors sentiments expressed by former interim CEO James Whitehurst in late 2023. Whitehurst acknowledged that Unity was undertaking too many initiatives simultaneously, failing to achieve potential synergies, and not executing optimally. He advocated for a leaner and more agile organizational structure to enhance performance.
The recent layoffs have affected various teams within Unity, including the entire Unity Behavior team, responsible for tools used in developing and controlling non-player character behaviors in video games. Some employees expressed surprise at the suddenness of these layoffs, with notifications delivered unexpectedly.
These developments are part of a broader pattern of restructuring at Unity. In early 2023, the company laid off approximately 600 employees and announced plans to reduce its global offices from 58 to 30. CEO John Riccitiello described these actions as efforts to streamline operations and improve profitability, stating, “It’s all about setting ourselves up for higher growth.”
Despite these challenges, Unity reported its first profitable quarter since going public in 2022, with revenues of $451 million for the fourth quarter and a record $1.39 billion for the full year. However, the company acknowledged a slowdown in growth and provided lower-than-expected revenue forecasts for subsequent quarters. This financial outlook has impacted Unity’s share price, which has declined by 11% this year, contrasting with a 15% increase in the NASDAQ stock exchange.
The restructuring at Unity reflects a broader trend in the tech industry, where companies are reevaluating their strategies and operations in response to market dynamics. Unity’s leadership is focusing on optimizing product offerings and organizational structure to navigate these challenges and position the company for sustainable growth.
