Unity highlights AR and VR potential as IPO launches

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Unity is launching an IPO and, in doing so, has highlighted AR and VR, particularly in the enterprise market, to investors as key opportunities for the future, “as innovations in hardware and connectivity increase capability and drive adoption”

Quick read

➨ The US gaming and simulation company filed its IPO paperwork with the US Securities and Exchange Commission yesterday, ahead of a roadshow to attract investors over the coming weeks
➨ In total, Unity estimates its current addressable market to be worth $29 billion across gaming, entertainment, architecture, construction, engineering, automotive, transportation and manufacturing. It currently boasts two billion monthly active end users and 1.5 million creators
➨ The company highlighted AR and VR to investors as key opportunities for the future, “as innovations in hardware and connectivity increase capability and drive adoption”

The story

Unity Technologies has filed to float on the New York Stock Exchange and identified AR and VR applications as “large opportunities” for its business in the future.

The US gaming and simulation company filed its initial public offering (IPO) paperwork with the US Securities and Exchange Commission yesterday, ahead of a roadshow to attract investors over the coming weeks.

In total, Unity estimates its current addressable market to be worth $29 billion across gaming, entertainment, architecture, construction, engineering, automotive, transportation and manufacturing. It currently boasts two billion monthly active end users and 1.5 million creators.

Mortenson used Unity to simulate new building designs (and main image)

Unity believes that gaming could be worth $16 billion to the company by 2025. In 2019, that figure was approximately $12 billion across more than 15 million potential creators.

But beyond gaming, where its AR and VR capabilities are widely utilised, Unity estimates its potential market to be worth approximately $17 billion today, based on the number of software developers, architects and designers its computer-generated content creation solutions could potentially serve.

The company highlighted AR and VR to investors as key opportunities for the future, “as innovations in hardware and connectivity increase capability and drive adoption”.

Unity also revealed its financial performance to date. The gaming and simulation company reported year-on-year revenue growth, earning $252.8 million and $351.3 million for the six months ending 30 June 2019 and 2020, respectively.

But Unity also generated net losses of $67.1 million and $54.1 million in the same periods. In total, Unity has lost $569.3 million to date.

Those losses stem in part from significant investment in research and development, totalling more than $450 million over the last two fiscal years. Unity has also completed several small acquisitions identified as beneficial for their specific product expertise.

These include Applifier, deltaDNA, Finger Food, Multiplay, and Vivox, which brought greater functionality to Unity’s platform, added key innovation talent and furthered the company’s goal of becoming a one-stop-shop for content creation.

The acquisition of Finger Food in May bolstered Unity’s immersive technology capabilities for enterprise.

Finger Food uses AR and VR, as well as artificial intelligence and robotics, to build custom solutions for enterprise clients such as Lowe’s, Enbridge and Softbank Robotics.

At the time, Unity said Finger Food will enhance its real-time 3D game engine with design, development and deployment services such as interactive digital twins of real-world assets.

Its investment in research and development has yielded Unity MARS—or Mixed and Augmented Reality Studio—the new AR authoring studio that serves entertainment developers, but also those working in sales, marketing and training.

Unity’s closest rival, Epic Games, was recently valued at $17.3 billion. As its own most recent valuation was put at $6 billion, this IPO could be viewed as an attempt to move Unity up a level so that it can compete across consumer and enterprise markets, where Epic is also strong.

Whatever the motivation, Unity’s emphasis on AR and VR as future opportunities for its business, and as such, reasons for investors to come onboard once it goes public, send a strong signal that immersive technology will become a lucrative fixture for the gaming and simulation company.

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