How Unity CEO views Epic’s Fortnite success | Industry

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Years ago, Epic Games pitched a little game called to then-Electronic Arts John Riccitiello. Not so prophetically, he turned it down. went on to be the world’s most popular battle royale game, and Riccitiello went on to lead game engine maker Technologies, the arch rival of Epic, which also makes the rival Unreal Engine.

Of course, you can’t fault Riccitiello, as the old Fortnite wasn’t a battle royale game and it honestly did not look so good early on. But fate has a funny way of working things out. Tim Sweeney, CEO of Epic Game, recently said that Fortnite is an example of how Epic Games’ has a model that works. The company makes its own games, and how it uses the learnings to help improve its game engine.

Unity, by contrast, focuses on building a better game engine for broader markets. Unity has big penetration in mobile games, low-end PC games, and augmented reality and virtual reality.

Riccitiello spoke at the recent Techcrunch Disrupt event in San Francisco, and then he held a Q&A session with former Techcrunch co-editor and current venture capitalist Alexia Bonatsos of Dream Machine Venture Capital. I sat in the audience and asked a question about Fortnite, and then other people also asked Riccitiello questions.

Rather than sounding regretful about Fortnite, Riccitiello said that both Epic and Unity are better for the competition, and game developers are coming out the winners. Indeed, both companies appear to be in good shape. Riccitiello recently said its chief financial officer, Mike Foley, resigned after helping the company raise $145 million at a $3 billion valuation.

Here’s an edited transcript of the Q&A session.

Above: John Riccitiello answers questions from Alexia Bonatsos and the audience at Techcrunch Disrupt.

Image Credit: Dean Takahashi

Q: Epic makes its own games and Unity doesn’t. Given the of Fortnite, with Epic saying Fortnite’s development helped make their game engine better, I wonder if you’re rethinking whether Unity should make its own games.
A: I love the competition. Epic has a very successful game. We have 50 times more customers in the engine business. We work very closely, by way of example, on Pokemon Go. We work with developers like that, and we have 50 times more customers to choose from.

We really have a different model. We generate all of our business, all of our revenue, and all of our interaction is with developers to help them do better work. They compete with developers. I used to run Electronic Arts, and we very much didn’t want to use Unreal, because we felt they were a competitor in some of the genres that our products were best set up for. But let me clear. Tim is fantastic. I’m glad Epic is successful in the market and I’m glad they’re successful with Fortnite. I wish them more and more success. They make some of the world’s best games. There’s nothing wrong with that.

There’s a lot of ways you can—Steven Spielberg doesn’t make cameras. My favorite bands don’t make musical instruments. Architects generally don’t make software for AutoCAD and those types of things. Race car drivers for the most part don’t make cars. Pilots don’t make planes. There are people who are great at tools, and we think we have some of the world’s best tool-makers. I now believe that while Epic is a great tool-maker too, what they really excel at is making awesome games.


Q: Do you think that’s a key differentiator? Why developers would stick with you versus going to your competitors? Or is there some other real utility?
A: In terms of modern multiplatform engines, we’re untouched in terms of the number of platforms we reach, our effectiveness on those platforms, the ease of use, the extensibility of our platform to cover cloud backend and modernization. We don’t charge a royalty. We’re way more responsive to our customers because we have a much larger development organization whose job is to be responsive.

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I could go on for a while. I know why most people choose Unity. We’re leaning into making our product better and better. But I will make this clear point. Epic occasionally does something beautiful and amazing. We see that. We’re learning from each other. Absent great competition, most of these great companies and great teams would not realize their full potential, because there is something about the extra effort that goes into something great when there is a legitimate competitor.

I love Epic being in the market. I think they’re great. I don’t try to criticize them because they’re not worthy of that kind of criticism. What they do is fine. They’ve made a game that changed the world. I tip my hat to them.

Baymax shorts were made with Unity.

Above: Baymax shorts were made with Unity.

Image Credit: Unity

Q: A rising tide floats all boats, do you think?
A: I’d make a different point there. I’m not sure it’s a rising tide. In this particular case, two great companies are both stronger for the strength of our opposition and what it causes us to do, day in and day out. I think that competition breeds companies. I think we’re a better game engine company. I’m sure if Tim were sitting here he could make the same or similar argument. I think mine’s better. I don’t think there’s ever really an answer, although the market share speaks for itself.

Q: Someone this morning told me that, anecdotally, you’re responsible for 70 percent of games. Does that sound about accurate?
A: That’s an anecdote that’s not quite a fact, but I like anecdotes like that. It’s more than half, but it’s probably not quite 70 percent.

Q: More than half is still pretty good.
A: It’s still pretty good. It’s millions. It’s a lot.

Q: There’s something unique about this session. I’m just here as a vessel for your questions. We’re using a platform called Slideo. It’s not for me to talk. It’s for you to ask John whatever you need. AI is replacing jobs. I’m sitting here and just reading what comes in. How do you think the competitive landscape in gaming is changing?
A: Compared to most industries, the competitive landscape in gaming has been largely consistent for several years. The big publishers, the multiplatform publishers, are still Activision and EA and Take-Two and Square and Ubisoft. Bethesda, a private company. It hasn’t changed dramatically. Those are the top few and they’ve been the top few for the better part of 15 years.

In mobile, King is part of Activision now. Supercell. Right here in San Francisco, Glu Mobile. A fair number of others. But it’s been reasonably stable in terms of who’s succeeding and who’s not. Niantic seemingly came out of nowhere, but they were backed by a company worth nearly a trillion dollars in Google. To say they came out of nowhere is not exactly correct. When they showed up with Pokemon Go, which is built in Unity, they ascended to the top of the charts and they have some more stuff coming.

Q: What is coming up?
A: I usually let the creators talk about what’s coming up. One, because we’re under NDA, and two, it’s just reasonably polite to let the person with the surprise share it, as opposed to me doing it for them.

Q: What do you think the potential is for content creators? Where are the biggest opportunities?
A: The game today—here are some things worth noting. There are no billion-dollar movies anymore. There are no billion-dollar books or TV series or radio stations. There are no billion-dollar billboard companies. The top 10 games are all over a billion dollars. To start with, if you want to be in any form of content, by far the largest business you could fantasize, that you could ever achieve something in, is games. It’s the world’s biggest revenue source for IP today.

Whether it’s Call of Duty or Battlefield or FIFA or Clash of Clans or Fortnite or Pokemon, these are all massive businesses. And this is still a secret. Why? Three billion people play games on this planet. We reach nearly all of them, more than 3 billion users.

The simple reality is that—let’s just give you some dimensions. Unity has development teams in every country in the world except the Vatican, South Sudan, and North Korea. We probably have them in North Korea and we just don’t know about it. But it’s as global as anything can get. If someone tries to reach an audience through Unity’s user base, it’s more than all the TV networks in the world combined. One company reaches as many people as all the TV networks in the world combined. That’s nuts. Games are more pervasive than anything.

The opportunity is there. The question is how to tap into that opportunity, because it’s so broad, and there’s such massive competition. When prizes are that large, people want to win in a huge way. Right now I think the mobile industry represents a huge opportunity. I believe the free-to-play model is wonderful, but there hasn’t been enough innovation around premium models.

Today there are nearly a billion devices with AR-Kit and ARcore on them. As I was walking here I saw a really interesting AR application on Google, AstroReality. We’re going to see a lot of new innovation. Somebody is going to use AR to create a Pokemon Go-scale or Fortnite-scale win in the next 12 months.

Above: Made with Unity

Image Credit: Dean Takahashi/Unity

Q: I’ve been pitched a couple of them as an investor. People really want to get you out of your living room and engage you in the real world.
A: The problem people have when they imagine these things is they bring too many of their old mindsets with them. I saw a VR chat experience where part of it was reaching out to shake hands. The controller would mimic the feeling of shaking hands. My response was, I don’t want to be a person in AR. I want to be a god! Why would I want to be limited by what’s right there in front of me, that’s been limiting me for 50 years? Why can’t I do more? Why can’t I be one thing to one person and one thing to another? There’s going to be paradigm-shattering experiences. We just haven’t seen them yet.

Q: You think something like Ready Player One will be a reality?
A: First off, I liked the book and the movie a great deal. I liked the book because it reminded me more of the games I grew up playing. I liked the movie because a big chunk of it was done with pre-visualization in Unity, so what’s not to like about Ready Player One?

But the other point of that is, no, I don’t think it’s going to be—writers can easily describe an AR world that is so seamless between you and the environment you’re in and the interaction, and it always posits you in human form. It posits you constrained by the same issues as being in human form. They describe you getting in car accidents in AR and VR worlds as if they’re going to be painful. I just think that’s an example of too little imagination for what we can actually do.

Q: We should not be mortal in games. We’re too mortal in the physical world.
A: I’m not going to walk to a classroom across this landscape. I’m going to teleport. I’m not going to waste my time hoofing it when I don’t have to.

Q: Outside of games, what’s your vision of how the kids and adults of tomorrow can use Unity?
A: Today, a whole list of things is happening. The movie industry has fully embraced Unity. Disney’s produced a three-episode series of shorts in Unity. Most every major motion picture company is experimenting with the benefits of instant real time 3D as opposed to waiting two weeks to see a daily when there’s a special effect involved. The movie industry is clearly going to be disrupted by Unity.

The auto industry, from design to car manufacturing—it might surprise you, if you ever configured a car, but some guy or gal is stuck taking photos of every possible color and tire and interior combination to show you what these cars look like, and then they download one photo at a time. It’s mind-boggling why they don’t just render, in real time, whatever configuration people want, and you can get all the options up there, the stuff you can’t see. That’s going to change dramatically. The auto industry uses tools that are, by comparison to using Unity, very primitive and slow, for everything from design to marketing.

People at the Jet Propulsion Labs use Unity and AR through HoloLens to design and configure the Mars rovers. People working on the Large Hadron Collider at CERN use Unity to understand data in a different way. They have 10^38 particles moving at 99.999 percent of the speed of light colliding at each other, and they used to look at histograms. Now they look at full 3D slowed down a billion-fold, where they can expand it in size so they can see it. They can look at the data and discern different patterns that they previously couldn’t.

Above: Manifold Garden, a Unity game.

Image Credit: William Chyr Studio

Instead of drawing blueprints for architecture, people are letting clients walk through a space and experience that space in the light of the moment they want to ask about. It’s 10AM on a spring morning and that’s the light streaming through the windows. Maybe you want it to be a little cloudy? They can put an audience or their family or their furniture and see it, literally walk from room to room. They’re doing that for retail design today.

If we look at companies like Baidu and Volkswagen and Toyota, they’re using Unity for their autonomous driving models. It’s way safer, because they can do billions of millions in simulation and learn a lot without representing the same risk of being on the street. It saves them an enormous amount of money. It scales infinitely, because we have 6 million developers on our platform who can add content to their maps and their spaces.

Those are a few examples. Whether it’s education, the medical world, auto, architecture, engineering, aerospace–I suspect we’ll all be cruising around in drones 10 years from now, for short hops, because there’s too much traffic in Los Angeles, San Francisco, and New York. Those systems that allow things to pass above and below, people will not be controlling them. I’d rather have a computer keeping us in our lanes. That spatial mapping for semi-autonomous flying, that’s another application for Unity. Any application that wants to run in real time, in 3D, and look cool, rendering in Unity can take you as far as your imagination can go.

Q: How do you compare developing AR and VR apps with Unity versus using something like AR-Kit or some of the newer upstarts.
A: It’s a little bit like comparing a general contractor with a bunch of subcontractors and all their tools to a screwdriver and a wrench. You need a screwdriver and a wrench, and there’s a lot of tools and capability that come with AR-kit and ARcore. Some of the advancement they’ve had in their most recent releases in terms of recognizing planes and walls, and some of the innovation they’re going to make with computer vision, those are all essential components. You don’t build a house without a saw or a hammer. But you need a lot more than that.

For content creation, an environment to make rich 3D stuff, you need something like Unity or you need to make it on your own. Or you’re going to make something really simple that doesn’t meet the standard of what most people have the ambition to create. We don’t compete with AR-kit and ARcore. They’re our customers. We build our technology to take what they’ve given developers – which is amazing, a billion-unit installed base of AR-ready devices – and we help them take it to the level that we all fantasize about. They’re great partners of ours. To describe it as competition would be the wrong way to put it.

Above: Adam demo, built with Unity engine.

Image Credit: Unity

Q: What are the ways people can experience VR without having to pay for a $1,000 headset or some other type of rig?
A: With VR I would say you should find a friend with a $1,000 headset. [laughs] You have Oculus Go now, though. There are cheaper solutions today.

Q: Have you tried Magic Leap?
A: I have. I think it’s wonderful. I won’t get this exact, but there’s a Teddy Roosevelt quote about people who talk about the achievements of others and the people who are in the ring. His point was, it’s easy to be critical, but there’s something to be said for the person, man or woman, who’s in the arena, sweating and at times bleeding, committing everything they have to create something great, and they have.

Is it the end of the rainbow? Absolutely not. They would tell you that. Rony Abovitz would tell you that himself. It’s a first step in a journey. It’s a journey toward something great. They’ve demonstrated big chunks of what that greatness can be. Is it the price they want it to be? No. Is it the form factor they ultimately want to achieve? No. Do they have all the content they ultimately want? No. But neither was the first electric car, or the first time we put a piece of metal in space. This is a process. AR and VR are getting there.

Having said that, in terms of capability, there are actually two great ecosystems today that work. AR-kit and ARcore, we have the reachability and the devices. Now we’re just waiting for the content to catch up. On the HMD side of things, we’ve seen nothing short of absolute brilliance in the work of several great companies, from Valve to Oculus to Magic Leap and others. Microsoft’s HoloLens is a brilliant piece of kit.

It’s early. It’s expensive. It lacks content. It’s not really consumer-ready yet in terms of mass production. But it will happen.

Above: Unity headquarters in San Francisco.

Image Credit: Dean Takahashi

Q: I’m involved in a study that’s using Oculus to research spatial navigation. Are you involved in programs that are getting more into the area of medical research, brain development research, anti-aging programs, that sort of thing? Medical uses of your technology.
A: Unity and VR have many applications, but it’s all anecdotal right now, and it’s not at scale. I read a story the other day, a very sad case about a gunshot wound to the face, and the facial reconstruction was all modeled in Unity using VR. It’s a brilliant outcome to a very sad situation.

Another study was done around children with cancer and pain mediation. Patients can leave their beds in VR and believe they’re somewhere different. Brendan Iribe at Oculus I think is the one who coined the term “presence.” What he meant with that term of art was that when VR works, you feel like you’ve been transported to another place. These children are being transported successfully to another place that allows them to forget about their pain and feel better for a time.

I’m aware of people building in Unity full 3D models of the human body, and being able to take data from DNA research and show you your body. Doctors can use it as a diagnostic tool and show you whatever intervention they might take, whether it’s chemical or radiological or surgical. They can show you exactly how it’s going to work. You understand what they’re going to do before they perform a procedure. I could go through a long list of these things. We feel really good about being able to be part of something where we’re giving back.

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