The European Game Developers Federation Objects to Unity’s New Tax System
The European Game Developers Federation (EGDF)
The European Game Developers Federation (EGDF), which represents 22 national associations and over 2,500 game development studios, has voiced its concerns about the new tax system implemented by Unity. They have referred to this move as “anti-competitive market behavior” and believe it may lead to bankruptcies in the game engine market. EGDF is urging European competition authorities to monitor and intervene if necessary.
Implications of Unity’s New Tax System
EGDF argues that the introduction of install taxes by Unity will restrict the business freedom of game developers by pressuring them into adopting Unity’s ad-based system, even for games that do not typically monetize through ads. This will also create a disadvantage for game distribution platforms that do not use ad-based monetization methods like subscription or pay-per-download services. Unity’s tax system would force these platforms to increase the charges for their customers, which enable the use of Unity’s ad-based monetization tools.
Negative Effects on Game Developers
According to EGDF, this new tax system will lead developers to limit game downloads, especially impacting independent developers who may have enough installs to be considered successful but not enough to make a profit. It will also affect games targeting large audiences with the goal of generating small revenues from a high number of installs.
Call for European Union Intervention
Due to these concerns, EGDF is calling for the European Union to establish a new regulatory framework to address “unfair and non-negotiable terms of B2B contracts” and provide greater support to the research and development sector of the European games industry. EGDF suggests that regulations should allow markets enough time to adapt to significant changes in non-negotiable agreements and terms communicated by service providers in a clear and understandable manner. They also urge the Commission to prohibit retroactive changes to contracts and costs in order to bring certainty to the market.
Impact on the Education Sector and Unity’s Response
In addition to small and medium-sized industries, EGDF highlights the impact on the education sector linked to video games. Many educational organizations have built their programs around Unity’s game engine, and abrupt changes may disrupt the education plans of aspiring professionals. Unity has faced backlash from the gaming industry as a result of this policy announcement. While Unity has promised to reassess its policies based on global feedback, the specific changes are yet to be determined.