Tech

Unity says it will turn away from Chinese unit in fuel expansion bid in biggest gaming market


Unity Software, a US developer best known for software used to design video games, is in talks to spin off its Chinese unit to help it expand in the world’s largest games market, four people with knowledge of the matter told Reuters. San Francisco-based Unity has been seeking strategic investors to participate in a business worth more than $1 billion (about Rs 7,800) in talks, the two said, declining to be identified. determined that they were not allowed to speak publicly about the matter.

Unity declined to comment.

The talks come as strained Sino-US relations become more sensitive to cross-border technology transfers and data processing, prompting tech companies to reassess their operations. they are in China. At the same time, there is growing interest in expanding game-making software to new technologies such as the so-called metaverse, an immersive three-dimensional internet.

Unite got into China in 2012 and its eponymous software, called the game engine, powers many of the country’s most popular games such as game leader Tencent’s Honor of Kings and miHoYo’s The Genshin effect.

Rivals include Tencent-backed Tencent Epic gameUS developers are increasingly popular Unreal Engine 5.

Unity’s spin-off plans are being driven by the desire to see their software more widely used in China in areas as diverse as smart city modeling to industrial design, as well as in reverse, two of the people said. They say potential Unity investors have bet big on the metaverse.

With China tightening data handling regulations, Unity believes a change will support this expansion as it will give the unit more local ownership and autonomy over how it operates. domestic activity, which can also increase its attractiveness to local governments and public partners. , the people said.

The event will be one of China’s larger tech deals this year as investment activity has slowed due to weak economic growth, COVID-19 outbreak and tightening regulation.

Unity China CEO Zhang Junbo has been working on the plan for at least a year, two of them said. Progress continues to slow, they said, as Unity’s share price is down 80% since its November 2021 peak amid weakness in US tech shares and due to a product that lacked performance expectations. rate, they said.

Zhang revealed Unity’s China expansion ambitions last month to local tech media outlet 36Kr without mentioning a return, saying that Unity is exploring ways to make its technology “safe”. secure and controllable” in China – referring to the government’s mandate for critical technology to be controlled at home.

He also said Unity will likely hire more than a thousand engineers in the coming years and expand offices in Beijing and Guangzhou in addition to its main Shanghai office.

Two of the people said Shanghai-based Unity employees have been asked to contract with the new organization and that discussions about operating budgets separate from the parent company are ongoing.

© Thomson Reuters 2022




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