Unity Software Inc. (U) Business

Item 1. Business

General

Unity is the leading platform to develop, deploy, and grow games and interactive experiences. We offer a suite of tools across all major platforms from mobile, PC, and console, to extended reality (XR). Our comprehensive set of software, including AI solutions, supports developers through the entire development lifecycle – from prototyping to live service operation, user acquisition, and monetization. Our platform is used by creators of all types - such as developers, artists, and designers - to build content in gaming and non-gaming industries, including automotive, retail, manufacturing, healthcare, public sector, robotics, architecture, civil and mechanical engineering, design and construction.

Our platform consists of two complementary sets of solutions: Create Solutions and Grow Solutions.

Create Solutions

Our Create Solutions are a robust set of tools and services used to build, ship and run high-definition, real-time 2D and 3D content. Designed for developers, these tools and services are used across a range of industries from games to automotive, retail, manufacturing, healthcare, public sector and robotics. Create Solutions includes our custom real-time 3D engine and development environment with a high-definition render pipeline; AI-driven content creation and workflow enhancements, graphics, animation, and audio tools; navigation, networking, user interface tools and more. Enhanced by cloud services including asset management, DevOps tools and multiplayer game support, creators can leverage our products and extensibility to easily edit, run, and iterate interactive real-time 2D and 3D experiences that can be created once and deployed to a variety of platforms.

Grow Solutions

Our Grow Solutions primarily consist of our ads products, which offer customers the ability to grow and engage their user base and monetize their content—from 2D puzzle games to multiplayer, multi-platform games, or other 3D interactive content—irrespective of whether the content was created in Unity. Many of our customers create games and applications with the purpose of building a profitable business. This requires both the acquisition of end-users at a reasonable cost and the monetization of these end-users as they engage with the content over time. We help our customers grow their businesses in the mobile app ecosystem by offering a comprehensive suite of products designed to help customers successfully scale their businesses, including our mediation platform, ad networks (like the Unity Ad Network, powered by Unity Vector), and offerwall. In addition, Supersonic from Unity is our publishing solution, which allows small studios and independent developers who require expertise in publishing their mobile games to launch their apps and maximize their commercial success, through the use of a combination of tools, full transparency, and a team of industry experts. Finally, Aura from Unity enables app developers to connect with users through a unique channel that offers on-device app discovery, while allowing telecom operators to better engage and monetize their users throughout the device lifecycle.

Our Customers and Creator Community

Our globally diverse customers range from the largest enterprises to mid-market companies, to government and non-profit institutions, to mid-sized, small, and independent businesses and individual developers across a variety of industries.

We have a very large, active, and highly engaged global community of real-time 3D ("RT3D") creators. The scale of our creator community provides us with a significant competitive advantage, and by incentivizing third-party platforms to strategically partner and integrate with us, we are able to further expand our community. Numerous third-party platforms partner with Unity to make it easy for our creators to deploy content seamlessly onto their platforms. These partnerships help us to maximize audience-reach for our customers and retain our platform’s position as the leading hub for RT3D content creation.

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Competition

We primarily compete with other content development tools and monetization services. Most of these competitors offer point solutions that represent a subset of the offerings on our platform:

•Create Solutions: We primarily compete against proprietary game engines built in-house by large game studios, as well as Cocos2d-x (Chukong Technologies), Godot, and Unreal Engine (Epic Games), which offer game development tools primarily serving the PC games and mobile games sectors, and, in the case of Unreal Engine (Epic Games), industries beyond gaming, as well as with various social entertainment platforms. Outside of gaming, we also compete with other development platforms and software solutions that offer 2D and 3D design products.

•Grow Solutions: We operate in a fragmented ecosystem composed of both privately-held companies and large, well-established public companies or their relevant divisions. The large companies in our ecosystem may play multiple different roles given the breadth of their business. Examples of these large companies are Amazon, Meta, Google, Microsoft, and Tencent. Most of these companies are also our partners and customers. Examples of other companies we compete against include AppLovin, Voodoo, Moloco, and Digital Turbine.

We believe that the principal competitive factors in our market are:

•cross-platform deployability;

•the pace and quality of new product innovation, such as the rise of AI and machine learning and the increasing use of data and trained models;

•supply from publishers, who may also use channels beyond in-app advertising to grow revenue;

•product capabilities, including flexibility, scalability, performance, security, and reliability;

•integration with existing platforms;

•high-quality customer support, training, and services;

•brand recognition and reputation;

•return on investment of sales and marketing efforts;

•volume and leverage of user data and analytics;

•price and affordability of our solutions and customer economics;

•ease of use of products;

•ability to expand to existing and adjacent industries;

•the impact of evolving industry standards and changing regulations; and

•mergers, acquisitions and other strategic relationships amongst our competitors.

Refer to "Item 1A. Risk Factors" for a discussion of risks related to competition.

Privacy and Data Security

Creative assets, performance, and user and end-user data are critical to our customers’ businesses. We devote considerable resources to our security program, regularly testing the security of user assets utilized by our services, and developing easy-to-use features that content creators can leverage to enhance the security of their creative products. Our team of security practitioners, in partnership with information technology professionals and product engineers across our company, works to identify and mitigate risks, assess our security measures against industry standards and best practices, and continue to evaluate ways to improve.

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