Unity CEO John Riccitiello on ironSource,  multiplayer games, and the metaverse

It isn’t every day that you decide to acquire a massive ad network and its competitor puts its hand up and says: “Hey, you should have picked us.”

But of course that’s exactly what happened when Unity announced its intention to acquire ironSource in July. AppLovin submitted a proposal to combine with Unity in a deal ultimately worth $20 billion where Unity shareholders would ultimately own more of the combined entity, but represent 49% of the voting rights.

Riccitiello’s response?

“Well, you know, it’s wonderful to be loved by everyone.”

That said, in a space full of mergers and even more full of the knowledge of the massive value of first-party data in an App Tracking Transparency world, there’s huge potential value in pairing advanced ad network capabilities with massive platforms. And since Unity’s software is the superstructure underneath 70% of the world’s top 1,000 mobile games and literally half of all games made for mobile, PC, and console, Unity is a massive platform. Even if it’s not exactly constructed in the same way Google, Snap, Twitter — or even Apple with the App Store — are.

But advertising capability is not all Unity sees in ironSource, which it told AppLovin it was sticking with.

A big chunk of the value is in Supersonic.

“There’s a technology that they have there around their Supersonic publishing platform that enables a developer or a publishing organization to get better, detailed, nuanced feedback around player engagement before they release the game, and more so than you’d get from typical A/B testing,” Riccitiello says. “A key part of the thesis is making those technologies available more broadly to Unity developers. And remember, in mobile … that’s 74% of them.”

In other words, monetization is important.

And user acquisition is important.

But building a better product — a game that both captures player attention in the short term and keeps players engaged over the long term — is critical. Without that, nothing else matters. No amount of UA fills a bucket that doesn’t hold anything. And without engagement, there’s no monetization. Which might be OK for an indie developer, but doesn’t pay many salaries at a typical studio.

The ironSource acquisition, Riccitiello suggests, helps on the monetization front from all angles.

“A combination of analytics and advertising is one way to get paid,” he says. “More engagement means more hours of play, which means more revenue for a game developer. And, better targeted ads means getting paid more. And then the ability to use our network to find users that would play their game, meaning they could target their ads better. Those are all good things. And so, part of the ironSource deal is it enables us to do that bigger and better on behalf of our customers.”

One of the places in which Unity plans to do that is multiplayer games, which have seen a post-Covid boom. 

A recent Unity reports says that while during Covid, multiplayer game development was down — perhaps due to challenges in making sophisticated games while geographically separated — in 2022 there’s been a 40% jump in multiplayer mobile games and a massive 150% jump in console-based multiplayer games.

And that drives monetization, according to Unity: core gamers that play multiplayer games are 58% more likely to spend money — $ or more — on extra downloadable content than others.

That might be due to a long pent-up craving for socialization, Riccitiello says.

“It should be no surprise to us that the world’s first truly global pandemic in a century had an impact on us … it was a big deal and it’s affected everything.”

But also, it’s just simply more satisfying to play against real human opponents (or with real human team members). Which is why, across the board, around 55-70% of gamers played single-player PvP games, especially in Battle Royale, Fighting, Racing, and Sports genres. And around the same percentage played team-based player versus player games. Team based PvE (player versus environment) is the least popular game mode, Unity found.

“You can play against the computer and that’s satisfying to a degree, but there’s something … it’s hard to explain, but there’s an essence that is fundamentally different when you’re playing with another live opponent,” Riccitiello says. “[Software] got smarter and the AI definitely got smarter … but that ultimately gave way to the reality that playing against another human was infinitely more unpredictable.”

It doesn’t hurt monetization either.

“Once you’re playing against another human, putting up a buck to get a little bit of an advantage … if the advantage is nothing but livery so my dance is cooler, right? My avatar is cooler. That’s worth the buck. And so, multiplayer gaming is definitely an aspect of this [that increases what] people are going to spend on in-app purchases, I think.”

Engaging with real people is also what Riccitiello sees as a core component of the emerging metaverse, which he says is the next version of the internet: real-time, 3D, persistent, and interactive.

Gaming is a good glimpse of what that metaverse will actually look like, he says.

“We have a glimpse of that already in … Roblox and Fortnite … they’re 3D, they’re real-time, they’re persistent, and they’re massively enjoyed by audiences around the world.”

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