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fareastwarriors
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What does the board think about Unity?

 

https://www.cnbc.com/2020/09/17/unity-prices-ipo-above-range-at-52-valuing-company-at-13point7-billion.html

 

Unity is selling shares at $52 a piece in its IPO, CNBC has confirmed.

 

 

https://thegeneralist.substack.com/p/the-s-1-club-unity-is-manifesting

The S-1 Club | Unity is Manifesting the Metaverse

 

 

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Knowing nothing about Unity before reading the S-1, I was pretty impressed by the business model and the very high market share. Epic Games is a threat and based on the bit I’ve read Epic’s Unreal engine is probably ascendant.

 

I really liked the alignment with game developers with the Operate solutions business in that they share in the revenues. It’s hard to understate the importance of a clean launch and Unity seems to provide a lot of scalability out of the gate to game devs, which Unity participated in with a rev share. Game devs can also take advantage of the global potential of their games without cobbling together their own infrastructure. Very AWS-like in that sense.

 

But I think the really interesting piece of this is the potential to extend this software beyond just video games. It’s immaterial today but they made a compelling case for its potential

 

Consider me very surprised if this doesn’t rocket higher tomorrow.

 

I think I may have to hope for a time when the business decelerates and people lose sight of the Non-game potential and sell off the shares.

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Knowing nothing about Unity before reading the S-1, I was pretty impressed by the business model and the very high market share. Epic Games is a threat and based on the bit I’ve read Epic’s Unreal engine is probably ascendant.

 

I really liked the alignment with game developers with the Operate solutions business in that they share in the revenues. It’s hard to understate the importance of a clean launch and Unity seems to provide a lot of scalability out of the gate to game devs, which Unity participated in with a rev share. Game devs can also take advantage of the global potential of their games without cobbling together their own infrastructure. Very AWS-like in that sense.

 

But I think the really interesting piece of this is the potential to extend this software beyond just video games. It’s immaterial today but they made a compelling case for its potential

 

Consider me very surprised if this doesn’t rocket higher tomorrow.

 

I think I may have to hope for a time when the business decelerates and people lose sight of the Non-game potential and sell off the shares.

 

This is another one that I really like from tech perspective. Epic is usually used in high-end games and Unity doesn't really compete there. Unity is very strong for mobile game development. Unity also made inroads into the realm outside of gaming and has been pushing into AI/Modeling.

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Is this really an interesting business? It’s already a duopoly with Epic, which also is going for land an expand strategy and may have the upper hand. Going into other industry verticals is a big question mark and I am not sure if it work, as there sure will run into other competitors.

 

At this valuation, I think you are paying already for the option they they will be successful beyond just gaming, imo.

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I mean, it’s not a bad industry structure which is more than I can say for most richly valued Saas businesses. What’s so bad about a duopolistic industry structure where both players are growing at 30% +, likely have latent pricing power, and have built technology that in all likelihood does have applications outside gaming?

 

You can argue about the valuation, but to imply it’s not an interesting business doesn’t make a whole lot of sense to me.

 

This is one of the few recent companies whose S-1 made sense to me, whose competitive advantage and value proposition to multiple stakeholders was easy to understand.

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I mean, it’s not a bad industry structure which is more than I can say for most richly valued Saas businesses. What’s so bad about a duopolistic industry structure where both players are growing at 30% +, likely have latent pricing power, and have built technology that in all likelihood does have applications outside gaming?

 

You can argue about the valuation, but to imply it’s not an interesting business doesn’t make a whole lot of sense to me.

 

This is one of the few recent companies whose S-1 made sense to me, whose competitive advantage and value proposition to multiple stakeholders was easy to understand.

 

Why do you think this industry is better than SaaS?

 

We'd have to talk about concrete examples, but a lot of SaaS companies would seem much harder to displace than Unity.

 

SaaS projects are large multi-year enterprise deployments. Ripping something out and putting something else in takes large effort, is costly and painful. There is huge moat in that.

 

Mobile games are complete opposite. There are probably 100 game companies started every day. Yeah, a lot of these would use existing engine. But a lot of them also won't. And there are game developers just passionate to develop their own engine because existing engine(s) does not provide X/Y/Z. How many enterprise developers want to develop their own NoSQL database (just as an example)? There is a constant risk that Unity will be replaced by someone who develops something lighter/more modular/more shiny/whatever. Edit: Unreal might be harder to displace because it's more complex and harder to replicate (I decided that it's a complicated topic to decide if Unreal is "more complex and harder to replicate).

 

Now, I'm not saying that Unity business is crap and that it's easy to replace. They have something that is attractive and competitive and possibly with a long runway. Especially if they keep their eyes on the ball and keep innovating and providing features/etc. that game developers want/need. I just disagree that somehow it's more moaty than a lot of SaaS.

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  • 7 months later...

Just watched an interview with John Riccitiello, President & CEO, Unity Technologies at Motley Fool event.

He's intelligent and well spoken.

I don't think he's a visionary. I don't think he's inspirational CEO.

That's not necessarily a critique.

Just expect more of economics focused and evolutionary business steps rather than revolutionary steps and breakthrough projects and products.

JMO

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