In brief: Unity Software closed its Austin, Texas, and San Francisco offices on Thursday after receiving what it called a "credible death threat." The closure comes amid controversy surrounding its recent announcement that it would start charging a fee on games made with the Unity game engine and suspicions of insider trading going on just before it released the news.
Bloomberg notes that the company had scheduled a town hall meeting for today to address the concerns regarding the new fee, but it canceled the talk along with the office closures. The company is cooperating with law enforcement and presumably, the offices will only be closed for the day out of safety concerns. However, it did not indicate if or when the town hall would be rescheduled.
The controversy started on Tuesday when Unity told developers they would have to start paying $0.20 per installation once their game hits 200,000 downloads and earns $200,000. Optionally, developers could pay $2,000 per year for the Unity Pro plan, which gives them a higher threshold equating to lower fee percentages. The so-called "runtime fee policy" goes into effect in January 2024.
We want to acknowledge the confusion and frustration we heard after we announced our new runtime fee policy. We'd like to clarify some of your top questions and concerns:– Unity (@unity) September 13, 2023
Who is impacted by this price increase: The price increase is very targeted. In fact, more than 90% of our…
The announcement immediately fired up developers who took to X (formerly Twitter) en masse to voice complaints. Unity tried to quell the backlash with a lengthy tweet saying that the developers were just "confused and frustrated" about the new policy and that 90 percent of Unity customers would not even be affected. It reiterated that the fee only kicks in once a game reaches 200,000 installs and $200,000.
Massive Monster advised players to pick up its title, Cult of the Lamb, before the end of the year, as it will be pulling the game from stores on January 1 because of the new fee.
Buy Cult of the Lamb now, cause we're deleting it on Jan 1st. ðÂÂÂ https://t.co/nSWg9DP0sh– Cult of the Lamb ï¿½'... ðÂÂÂ (@cultofthelamb) September 12, 2023
Many other developers have urged Unity to roll back or modify the policy so the usage tax does not pummel smaller developers. Many operate on very slim margins and losing two percent or more of their sales stings.
While the new policy is enough to keep the community reeling for weeks, insinuations of insider trading fanned the flames. On Wednesday, news broke that Unity CEO John Riccitiello was among several executives and board members who dumped Unity shares in the weeks leading up to the runtime fee announcement.
According to Guru Focus, Riccitiello sold 2,000 Unity shares on September 6. That amount is not a lot for typical trades, but it caused further scrutiny over his stock activities that revealed he has sold over 50,610 company shares, totaling about $2 million in the last year.
Furthermore, several other executives and board members allegedly dumped large portions of their shares just before the announcement. Over the last year, 49 insider sales and zero insider buys have occurred. Unity President of Growth Tomer Bar-Zeev sold 37,500 shares for $1.4 million on September 1, and board director Shlomo Dovrat dumped 68,454 shares on August 30 for about $2.6 million.
The SEC has not filed charges or opened investigations at this time since legitimate insider trading goes on all the time for various reasons. For instance, executives and employees often exercise options once they mature. While common and perfectly legal, it can look fishy if the shares mature before a company experiences an event affecting its stock price. The news of the new policy is just such a case since it caused an 8-percent dip in share valuation that has yet to rebound fully.
Image credit: Lori Butcher