Unity is laying off hundreds of employees

San Francisco-based game development tools provider Unity is laying off hundreds of employees, according to a report from Kotaku.

Word of the layoffs appears to have begun surfacing earlier this week on the anonymous workplace platform Blind, with numerous users claiming to work for Unity saying management was pulling employees into Zoom meetings on Tuesday to announce they were being let go. Kotaku, citing multiple sources, now says the layoffs number in the hundreds.

According to Kotaku, Unity CEO John Riccitiello told employees two weeks ago that the company was on solid financial footing and would not be resorting to layoffs. The cuts are affecting employees all around the globe, the report says.

Unity confirmed the layoffs in a statement to Protocol and said slightly more than 200 people were affected. "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. 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 employed 5,245 people as of December 31, 2021, indicating the company had nearly doubled its workforce since it went public in 2020. It's also made a number of high-profile acquisitions since then, including its largest ever when it purchased New Zealand-based digital effects studio Weta Digital for more than $1.6 billion last November.

However, the company's stock price has fallen more than 40% since its 2020 debut, and more than 70% this year alone. The company also reported a loss of eight cents a share in its most recent quarterly earnings report and lowered its fiscal year guidance. Some employees have said the firm enacted a hiring freeze earlier this year, though it has not publicly said so.

Unity mainly competes with open source or free game development tools, in-house game engines used by major developers and with Fortnite creator Epic Games, which distributes its Unreal Engine platform for making high-fidelity 3D games. While a number of high-profile developers, including Electronic Arts subsidiary BioWare and The Witcher developer CD Projekt Red, have signed up to use Epic's new Unreal Engine 5, Unity mostly caters to the mobile and indie game market, where it makes money through licensing and also through providing in-game advertising tools to free-to-play developers.

Unity also been trying to break into the Hollywood VFX industry, where it competes with both established digital effects studios and Epic, which has been making efforts to do the same with Unreal Engine. Despite its strong foothold in the mobile game segment, however, Unity does not develop games of its own and as a result does not have additional revenue streams outside its engine licensing business, ad unit and other related software products.

Update June 30, 9AM ET: Added statement of confirmation from Unity.