Gaming Spat Deals Blow to SoftBank-Funded Simulation Startup

(Bloomberg) -- Unity Technologies ApS, one of the largest game development platforms, has pulled the licenses that allow a fast-growing company backed by SoftBank Group Corp. to operate on its platform, causing one developer to shut down its game.

Improbable, which received $502 million in funding led by SoftBank in 2017 and is currently valued at about $2 billion, said it was told Wednesday that Unity would no longer allow games built using its SpatialOS cloud platform to access its game engine -- a platform for developers to build video games.
 
The ban highlights the unexpected risks facing gaming developers. China recently ended a nine-month freeze on approving new gaming titles. China’s gaming industry generates more than $30 billion of revenue.

Unity’s ban meant that games developed and running on Improbable’s SpatialOS have shut down or are set to do so. Independent U.K. game developer Spilt Milk said it was having to temporarily shutter its game Lazarus, a multi-player shooter game, "for an undetermined amount of time." Bossa Studios, another independent game developer, said it may have to close its "Worlds Adrift" game that uses Improbable software.

Unity, backed by private equity firm Silver Lake, claims that about half of the world’s games -- including Niantic Inc.’s Pokemon Go and Tencent’s Honor of Kings -- are created using its engine.

Herman Narula, Improbable co-founder and chief executive officer, said in an interview that Unity had not given his company any explanation for the change in service terms and had not warned it that games built using its SpatialOS software would lose access to the Unity engine. "They just told us last night that our licenses were canceled," he said.

He said he would not speculate on why Unity had taken this action, but in a blog post Thursday Improbable said that it had been in commercial negotiations with Unity at the time the terms were changed. The move comes one month after Unity changed its terms of service to bar games from using its software on a third-party cloud service without a specific license to do so.

Unity said it told Improbable “more than a year ago” that it was violating Unity’s terms of service.

“Improbable chose an approach which doesn’t involve partnering with Unity, but instead involves making unauthorized and improper use of Unity’s technology and name in connection with the development, sale and marketing of its own products,” Unity said, responding in a blog post later Thursday. “Games currently in production and/or games that are live are unaffected.”

Narula said Improbable had explicitly been told by Unity last year that it was not in breach of its former terms of service.

SpatialOS allows developers to host vast multi-player games in complex simulated environments over the internet, and to do so in such a way that all players are experiencing the same game at the same time. Previously, most large multi-player games ran individual instances of the game on a particular server. Actions on one server would not affect what was happening for players on a different instance of the game.

Narula said losing access to Unity was "not catastrophic" for the British startup. "It is a big deal, but there are four other games engines," he said. He noted that Improbable has free access to Epic Games’ Unreal game engine, on which many popular games such as Fortnite and Unreal Tournament run, as well as Crytek Gmbh’s Cryengine platform.

To contact the reporter on this story: Jeremy Kahn in London at jkahn21@bloomberg.net

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Andrew Pollack, Jillian Ward

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