1/ Few thoughts on the #SaaS business #Unity $U for those interested in the company

The case for Unity is interesting. The company was founded in 2004 but didn't initially launch with a multi-platform game engine. That came in 2005. Up until 2016 the business persisted of ...

2/ basically just Unity Engine. The saying, 'Sell shovels in a gold rush' goes well with what #Unity has been doing. In the booming industry that gaming is, Unity has been providing the engine that enables the developers. They have had massive success with this; …

3/
- 50%+ mobile games, PC games and Console games combined, is made with Unity
- 3B+ App downloads per month
- 2B monthly active end-users
- 93 of the top 100 game dev studios are Unity Customers
- They're finding good use in a other industries

But Unity isn't ...

4/ really selling the shovel. They're giving it away for free, and this is reflected in dull revenue numbers that the Create Solution provides (2019);
$168M, or 27% of the company revenue but with a 34% YoY growth.

The important thing is what the Create Solution enables ...

5/ which is data collection. Unity claims they collect data from 50 billion in-app events per day, across 20 different platforms. Thats an extensive amount of data that they can run analytics on to get better insight in end-user behavior, to better help the ...

6/ customer grow and engage their user base, and run and monetize their content through ads and IAP.

This is part of what the Operate Solution does, and this is where most of the company revenue and growth comes from. Game devs are fighting for user attention and ...

7/ the trend for games has moved from a Pay-To-Play to a Free-To-Play model, where ads and IAP is the source of revenue for games. This trend puts Unity in a good position. They have the data to understand the end-user better than anyone and this allows them to help ...

8/ customers keep user attention and engagement while monetizing their games through ads and IAP.

As of 2019 the Operate Solution generated $293M, or 54% of the company revenue. A 59% increase from the year before.

9/ To get the timeline down;
Unity acquired their first analytics tool company in 2014. This lead to the launch of Unity Ads, that since then have seen improvements. The Operate Solution wasn't launched until 2016! And most of what it offers today has been introduced ...

10/ in recent years, giving the customer an integrated experience where everything can be done under one roof.

Most of the Operate Solution products are still very new, and are sold and marketed in predominantly North America and major European markets. I generally think ...

11/ there is still massive upside and growth to be had for the Operate Solution.

The first metric that is important to keep an eye on is number of customers with more than $100,000 in annual revenue. This number has increased from 506 to 716 in 1 year, a ...

12/ roughly 40% increase. 70%+ of Unitys revenue comes from these customers and a continuing growth here is important for the Unity business model.

Second metric to keep an eye on is Net Dollar Retention rate. Unity is doing well here, ranging from 122% to 142% in recent ...

13/ quarter meaning that their customers are increasing how much they spent on the Unity platform Unity has laid the foundation for an incredible Land and Expand business here.
Unity Reflect was released in 2019 in an attempt to expand into other industries as well. As of ...

14/ June 2020, 8% of the customers contributing more than $100,000 in revenue, were industries beyond gaming. Unity can potentially help streamline a lot of industries with their solutions, but I do have concerns on how they'll monetize this part of their business.

15/ Recently added to the Create Solution was Unity MARS, allowing creators to build, prototype and visualize data-oriented applications in real time without leaving Unity. This is an expanding into VR & AR applications and this is a large opportunity for the Unity in the future.

I properly forgot to get half of my points across during this rant. Might add a few points later

@MadsC007 few notes on data collected
1/ They track some basic data such as personal information and device data. Then they track ad interaction, like whether you watch the ad, click it, download the promoted game etc. Bit more extensive than that but thats the gist of it. ...

2/ If you log into a social network account, these social networks may also have agreed to share data with Unity. Then there is GPS tracking if the end-user permits it. Cookies are used; cookies, web beacons, tracking pixels and flash cookies. Basic boring stuff, but ...

3/ what is interesting is the data they collect from games where the developers makes use of the analytics tools. Its hard to pin down exactly what data we're talking but if you take a look at deltaDNA and their analytics tools it seems like pretty much every …

4/ in-game action by the end-user can be tracked and analyzed for whatever purpose, which is pretty extensive.

The way Unity puts it is; They collect events completed as well as actions taken within the game.

This is data that developers can track, live to basically ...

5/ visualize game events in real time to measure the impact of a change or a promotion. I think an interesting example is their Heatmaps. Here you can tell where players die, where they score kills, which roads they travel, how they travel and so much more. ...

6/ Most data can be de-identified so that it can be shared with any third party without restriction and use it for any purpose.