Unity CEO talks Google’s Project Genie, Q4 earnings beat, & more

00:00 Speaker A

Google’s new AI tool Project Genie is sparking a sharp selloff in gaming stocks as investors now weigh how disruptive this really could be for the industry.

00:10 Speaker A

And Unity, one of the video game developers swept up in the pullback, also reporting fourth quarter earnings on Wednesday. For more now, let’s bring in Unity’s CEO, that would be Matt Bromberg. Matt, always great to see you.

00:20 Speaker A

Let let let’s talk, Matt. start with with what I was just talking at my colleague Dan Howley about, uh Project Genie here from Google. I think investors with this AI tool, Matt, they’re they’re trying to figure out, all right, how disruptive is this really going to be for the video game industry? What is the impact? How are you thinking through it, Matt? What is it going to mean for Unity?

00:40 Matt Bromberg

Hi, thanks, thanks so much for having me. Um, we believe Unity is going to be a massive accelerant for the video game business for several reasons. The first one is at a super high level, um people are going to have more free time and they’re going to spend that time playing video games.

00:54 Matt Bromberg

The second reason is that AI is going to help game makers make games faster and more efficiently.

01:03 Matt Bromberg

And uh, and when I say that, what I mean is they will be able to lavish more time and attention on creating true creativity and true differentiation, and less on sort of the rote work of building the systems that are often common between games. Uh, those two things are going to be massive for the industry. As it relates to Unity, because we’re the leading game engine in the world, it’s our belief that when um, games are easier to make and you make better games, people make more games, that’s going to be great for us.

01:25 Matt Bromberg

And I think our um, our results on the fourth quarter uh really showed that where we beat handily on the top and bottom line and we guided above consensus on the top and the bottom as well. Um, our business is doing great.

01:35 Speaker A

Matt, just to push on that point though, when you when you see Google come out with an AI tool like this, and you know Matt, they got a lot of money, they got a lot of smart engineers, and those tools, you know they’re going to keep getting better and better. They’ll refine them. I mean, what is sort of the the risk, Matt, that you think, okay, that Google goes from sort of complementary, as you’re saying now to something more of like a a competitive risk.

01:54 Matt Bromberg

Yeah, I I don’t, I don’t think it makes a ton of sense to be a, you know, an AI hater or suggest there the the the art will not, um, advance. It will. That’s not my point. My point is that game engines and world models like Genie are two very, very different things.

02:08 Matt Bromberg

Um, a world model is imagining pixels and creating a video-like environment you can walk around in. A game engine is what you use to build physics, determinism, rules, and all of the infrastructure to build an actual interactive application that can be a multi-billion dollar business.

02:27 Matt Bromberg

The two things are very different. They’re good at very different things. And so, when Genie continues to develop and those assets get better and better, which no doubt it will, that’s going to be great because those assets are going to be transformed into Uni’s uh tool and platform, and we’re going to help people turn them into enormous interactive applications. It’s what we’ve always done. It’s why we have a partnership with Google, uh, and um, I just I I think there’s a lot of misunderstanding in the market.

02:49 Speaker A

Matt, I do want to switch gears. I want to talk about the earnings print and you know, what you’re seeing in the business there. I saw create revenue, so software that helps developers create games. I saw that was the best growth, I think you said Matt, in over two years. What what what’s driving that? What do you see ahead?

03:03 Matt Bromberg

Yeah, we so our our uh, our gro uh create business to your point, yes, best growth we’ve seen in two years. Um, we’re seeing amazing growth in Asia. Uh we’re seeing a sharp increase in the quality and stability of our software, which our customers are rewarding us uh for. Um, and that part of the business really is really vibrant and growing. And in our advertising business, the the main component of that advertising business which is our Vector AI product was up 70% in January from the prior year. So again, both businesses really hitting on all cylinders.

03:35 Speaker A

Uh I want to talk about the the outlook too, Matt. That Q1 forecast. I did see analysts who cover the name say it was weaker than what they were looking for. What are the puts and takes there, Matt? You know, that that maybe the street didn’t fully appreciate.

03:48 Matt Bromberg

Yeah, I don’t it’s hard to say what people appreciated and what they didn’t. Um, the the outlook was a very strong outlook. We indicated that uh Vector was continuing to meet its expectations. It’s been growing 15% quarter on quarter, uh historically, and uh if you subtract out a little bit of seasonality and a couple of fewer days in the quarter, it was effectively at that level going forward. So it’s um, you know the market is is is a little skittish right now, uh for reasons that aren’t fully clear to me, but you know, we’re not stock pickers, we’re business builders. So, we keep building our business and ultimately the market will follow.

04:20 Speaker A

I’m always curious, Matt, to get your take on on the broader video game industry. GTA 6 coming out in November. How big a deal is that going to be for the industry?

04:30 Matt Bromberg

I think it’s an enormous deal. Uh it’s it’s going to be a an amazing game, I’m sure. Uh it will be the the largest entertainment property probably of any kind uh to maybe ever be released. So, it’s a it’s a big deal and I and I do think it’s it’s it’s worth uh it’s worth reflecting on just the the genius and creativity that goes into a production like that and and the sophistication of the tools and technologies. I think people are going to be blown away.

04:54 Speaker A

Final question, Matt, just for the gamers listening right now. I’m sure they’re always curious. What games are you playing, Matt? What’s exciting you?

05:01 Matt Bromberg

The thing that’s super exciting for me this this year is 46% of the best top games on Steam are now built in Unity. So I would point you to any of those top games on Steam that are built in Unity. They’re all spectacular. Independent game developers are having a moment right now, especially on PC, and they’re having it on Unity.

05:18 Speaker A

Matt, as always, it’s great to have you on the show. Appreciate it.

05:21 Matt Bromberg

Great to see you again. My pleasure.