Unity lays off hundreds to prepare for ad weakness

Unity Technologies laid off hundreds of employees at its offices around the globe. The layoffs affected at least 150 employees and possibly more, according to posts on Blind.

Unity confirmed it had layoffs. The reports said some (unreported) layoffs at least a month ago. Another round of layoffs began on Tuesday and continued this week.

Part of the challenge at Unity is that it has a big team of engineers developing its game engine, but it unlike its rival Epic Games it does not make video games itself. Epic is highly profitable because of the success of Fortnite, which subsidizes expansions such as the Epic Games Store and metaverse work.

“As part of a continued planning process where we regularly assess our resourcing levels against our company priorities, we decided to realign some of our resources to better drive focus and support our long-term growth,” said the company in a statement. “This resulted in some hard decisions that impacted approximately 4% of all Unity workforce. We are grateful for the contributions of those leaving Unity and we are supporting them through this difficult transition.”

Unity has a lot more users than Epic Games does for the Unity game engine, but Unity depends on revenue from Unity Ads, which is heavily dependent on mobile. And the ability to target users with user acquisition campaigns has been hurt in the past year by Apple’s crackdown on privacy, where privacy is a higher priority than targeted advertising. Meta’s Facebook has also suffered from this change.

So far, the layoffs affected employees in the U.S., Canada and Denmark. The severance in the U.S. is reportedly one month to look for another job, two weeks of pay for every year worked, and three months of COBRA health coverage. Canada and Denmark employees received more.

Shares of Unity are down more than 70% year to date.