Unity game engine attracts big cash from China's tech titans

Game engine vendor Unity has announced it will commence operations in China, and has attracted a who's who of local tech giants as investors.

The company's announcement states that Alibaba, mega-carrier China Mobile, smartphone-maker OPPO, and Douyin Group – a subsidiary of TikTok developer ByteDance, thought to have been created as an IPO vehicle – have all taken stakes in Unity China.

Unity will retain majority ownership of the resulting joint venture, which will be valued at over $1 billion on day one thanks to the local investments.

The company stated the JV will "unlock new opportunities for us to partner with local companies and increase our R&D investment to better serve the needs of the Chinese creator community."

Those efforts will see Unity create "customized local versions of its core products for game developers, including a China-specific version of Unity's flagship Unity Editor."

But Unity is silent on why a Chinese entity is necessary.

Which is interesting, because while China has a large population of games developers, they're having a very hard time of it at home. Beijing has slowed approvals for new game publications to a trickle, in line with its general disapproval for games. However, the likes of Chinese tech giant Tencent are responsible for some of the world’s most popular and lucrative mobile games and already use Unity – so helping Chinese developers will have some benefits.

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Whether the move can win more Chinese developers remains to be seen. If it does, their Unity-fuelled efforts will more likely be consumed outside China than inside the Middle Kingdom.

That could in fact be another reason for the JV's formation. China's recently introduced data export laws makes it harder for businesses to send data describing Chinese citizens offshore. Having a local operation means Unity will find it easier to stay on the right side of that law.

China's offer-you-can't-refuse policy of requiring foreign tech firms to work with locals, and share their source code, is also in play here. If Chinese developers are using Unity a lot, Beijing could easily have demanded the formation of a local limb to ensure the company's platform remains available.

Unity will surely be wary of the fate suffered by Chinese outposts of other foreign companies – such as chip designer Arm, which went rogue and decided rival companies' IP was worthy of its attention. At least Arm China wasn't accused of stealing Arm's IP – and people – and making a run for it, as has allegedly been the case with other efforts conducted by Chinese companies after they invest in foreign companies.

Unity will therefore be hoping its affairs in China don't make a lie of its name. ®