When we last looked at Unity in March 2025, the company was losing ground to AppLovin in ad tech and struggling to convince the market it had a coherent plan. A year later, that story has changed: Unity is back to growth.
That turnaround is driven by real momentum in Unity’s rebuilt ad platform, Vector. While AppLovin still retains a clear lead, Unity is now firmly in catch-up mode rather than free fall, and its recovery is increasingly credible.
Much of this shift traces back to CEO Matthew Bromberg, who took over in May 2024. He quickly killed the runtime fee, shipped Unity 6, and rebuilt the executive team, bringing in former King CTO and Havok co-founder Steve Collins as CTO, along with CFO Jarrod Yahes in January 2025.
Unity has two segments: Create (the engine) and Grow (ads and user acquisition). The recovery is almost entirely a Grow story — specifically, Vector. The Create side, including its AI push, hasn’t translated into results yet.
The Year of Subtraction
Real focus shows up in what a company is willing to cut.
In March 2026, Unity announced it would sunset the ironSource Ads Network and explore a sale of Supersonic, the game publishing business it acquired in 2022. At the same time, it introduced a new reporting lens: “Strategic Grow,” which strips out legacy and non-core assets to isolate the performance of its rebuilt ad platform.
With that, management is effectively telling investors which numbers now matter. Strategic Grow is expected to grow ~48% year-over-year in Q1 2026, which is roughly double the reported Grow segment at ~24%. The metric does isolate the core business and centers attention on the only part of Unity that is actually growing.
The 2026 moves are less a pivot than the culmination of a multi-year effort to narrow the company back to two things it can realistically operate: the engine and the ad platform. Unity exited Weta FX services in 2023, handed off Digital Twin services in 2024, canceled the runtime fee in September 2024, and shipped Unity 6 shortly after.
The financials are starting to reflect that focus. After shrinking through early 2025, Unity returned to growth in Q3, accelerated to ~10% in Q4, and is tracking toward ~17% in Q1 2026. Adjusted EBITDA has followed a similar trajectory, rising from $84 million in Q1 2025 to a guided $130–135 million in Q1 2026.
The Vector Factor
Most of Grow’s recovery is driven by Vector, Unity’s rebuilt successor to Audience Pinpointer and its core engine for Return on Ad Spend (ROAS) campaigns. The product was released in the first half of 2025.
Once live, performance scaled quickly. Vector delivered mid-teen growth rates for three quarters in a row through 2025, increasing its share of Grow revenue from 49% in Q2 to 56% in Q4. January 2026 was Vector's best month ever, up 72% year-over-year. The Q1 2026 preliminary release attributes another ~15% sequential growth to Vector, and the main reason Unity beat its own guidance by about $20 million.
Unity also closed a meaningful product gap in March by launching day-28 in-app purchase ROAS campaigns. AppLovin's Axon had spent roughly two years bidding against a 28-day value window while most of the industry, Unity included, was stuck on day-7. The longer the window, the better the network can distinguish users who hit a short-term target and mature well from users who hit it and churn.
Vector is now competitive; whether that edge is defensible is another matter. Unity emphasizes access to engine-level data across its ecosystem, implying a true data advantage over SDK-based competitors. However, public disclosures point to fairly standard inputs: post-install sessions, purchases, ad revenue, and progression events. These are signals that any well-instrumented SDK can capture.
If Vector’s inputs are largely indistinguishable from SDK-level data, then its current advantage likely comes from model quality and execution rather than a unique dataset. Vector clearly works, and it is driving growth. The jury’s out on whether it has a durable data moat.
Unity Engine’s AI Bet
On the Create side, Unity has consolidated its AI efforts into a single in-editor product: Unity AI. It combines an Assistant for code and Q&A, a set of Generators for sprites, textures, and sounds, and a local Inference Engine for running models at runtime. The bet is that the engine itself becomes the user interface for AI tools, with usage-based billing via “Unity Points.”
Unreal Engine is taking a different approach. Epic's AI tools are separate plugins for separate problems: Learning Agents for gameplay, Neural Network Engine for runtime inference, MetaHuman for digital humans, and the Epic Developer Assistant for code. There's no unified “Unreal AI” product.
Unity is betting on integration and monetization through a unified interface, while Unreal is betting on modularity and developer choice.
Unity’s one-stop AI shop seems compelling, but it also raises a question: who is it actually for? Professional game developers are already using tools outside the engine. The serious tools in 2026 — Cursor, Claude Code, Codex — live outside the editor. Hobbyists, meanwhile, are finding Godot surprisingly compatible with agentic workflows, because its simpler architecture maps better onto what a coding agent can reason about from the outside. Unity’s architecture is harder for an external agent to navigate, which is precisely why Unity is trying to own the AI layer inside its own editor.
This leaves Unity AI awkwardly stuck in the middle between advanced users already committed to external tools and hobbyists who may prefer simpler, more flexible environments. Notably, third-party tools like Bezi, a Unity-specific AI assistant backed by Benchmark, are already trying to capture the same middle ground. Unity now has to decide whether to outbuild, acquire, or coexist with them.
This doesn’t mean Unity AI will fail. Small and mid-size studios that want generative assets without leaving the editor may be a real audience. But Unity hasn't finalized pricing, hasn't left beta, and hasn't shared usage metrics. For now, this remains unproven.
Ultimately, the success of Unity AI may not matter much: Unity Engine’s real advantage is lock-in. The engine itself is replicable; the tooling and the ecosystem around it are not. These include things like the Unity Asset Store and the ubiquitous Unity SDKs for analytics, ads, and payment services that are the real moat. Specifically for mobile live-service studios, which is Unity Engine’s bread-and-butter customer, switching engines is a huge undertaking.
What to Watch
The turnaround is real, but fragile. Whether it holds comes down to two issues.
The first, and by far the most important, is whether Strategic Grow keeps compounding. If Vector's growth slows, the Strategic Grow framing starts to look more like presentation than reality. For now, the continued acceleration into Q1 2026 is a strong sign.
The second is how Unity AI lands, both as a product and as a pricing model. Unity has been unusually transparent about its AI architecture, model providers, and data policies. It has been much quieter about who's actually using the product, and for what. The bigger question is ROI: usage-based AI pricing is now standard across the industry, but developers will only pay if Unity Points deliver real productivity gains over the external tools they already use.
Unity is a more disciplined company today. It knows what it does well and what it needs to cut. The ad business has a real story, and the engine still has the industry lock-in it always did. But the financial repair isn't done: while adjusted EBITDA looks good, Unity is still GAAP unprofitable, with its stock-based comp (at 21% of revenue) still big enough to keep net income negative. Whether Vector keeps compounding, the AI bet pays off, and the financials follow into real profitability is what the next year will decide.
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In Other News
💸 Funding & Acquisitions:
- Sanrio launches in-house publishing label Sanrio Games with $62.9M investment.
- Firstpoint VC launches $58M fund to back AI-driven gaming startups in emerging markets.
- Malta-based gaming holding Reforged Studios has secured an initial $30M growth investment.
- US-based AI marketing platform Uplane has raised $4.5M in a Seed round led by gaming VC Play Ventures.
- Smash Games secures $2M UA financing to scale Animal Suika.
- MENA publisher Tamatem has acquired Istanbul-based Playable Factory in a move that sees the company step into the ad tech space.
📊 Business & Products:
- Apple CEO Tim Cook to step down.
- Pirate adventure Windrose tops 1M copies sold in 6 days.
- Forza Horizon 6 has reportedly pre-sold 500K copies on Steam a month before launch.
- SayGames expands into Vietnam with BagMaster Isekai.
- Koei Tecmo revises FY26 results following success of Pokémon Pokopia and Nioh 3.
👾 Miscellaneous:
- Microsoft cuts Game Pass pricing and removes Call of Duty as day-one launch title in response to "a lot of feedback".
- VGW launches Monopoly Match as it enters match-3 puzzle market.
- Clair Obscur and Dispatch take top accolades at BAFTA Games Awards 2026.
- The Elden Ring movie hits theaters in March 2028.
- Sega and Rovio expand Angry Birds licensing with WildBrain.
Content Worth Consuming
Global Gaming Report Q1 2026 (drakestar.com): “The Drake Star Global Gaming Report Q1 2026 analyzes Gaming and Esports dealmaking in the first quarter of 2026 and outlines what to expect for 2026 and beyond. Q1’26 was a strong quarter for gaming M&A with landmark deals like Paramount’s $110B acquisition of Warner Bros. Discovery, which included Warner Bros. Games, and Savvy Games’ $6B acquisition of Moonton. XR hardware was a dominant force in private financings with 3 deals that raised $100M or more. 2026 is also set to be a historic year for game releases with the highly anticipated release of GTA 6 expected to be the biggest launch of all time.”
The Attention Drain (Gamecraft): “Blake and Mitch discuss the thesis that the games business is losing share of attention to non-game interactive applications… They warn that the games business needs to react to this current attention drain as an on-going competitive threat, and learn back some of the lessons these new competitors learned from games.”
"This Is not a Sustainable Business Model" — Why Google Cloud's Jack Buser Thinks AI Can Save the Games Industry (gamesindustry.biz): “The economics of the games industry haven't made sense for some time now. That's not necessarily new information; people have been discussing this for almost a decade, but it's becoming increasingly common to see this coming not from social media commentary or smaller studios, but some of the titans of the tech space. ‘You've got an industry that's finally returning to revenue growth, but at the same time, operating profits have decreased 7% every year on average since 2021,’ points out Jack Buser, Google Cloud's global director for games, who formerly served as games lead for the company's Stadia platform. ‘How can revenue be growing and yet these companies are still struggling?’”
Why Game Designers Fail(And How to Help Them) (Building Better Games): “Everyone has a ‘great idea’ for a game, but having an idea is a far cry from the professional discipline of game design. In this episode, Ben sits down with veteran designer Alexander Brazie (World of Warcraft, League of Legends) to explore why being a designer is less about having all the answers and more about the rigorous process of turning ambiguity into action. We dive into how leaders can diagnose a struggling design process and some helpful analogies that help teams find the deepest fun without drowning in limited resources.”
UK Minister: It’s not a Problem that Grand Theft Auto Isn’t UK-Owned (The Game Business): “This week, our guest is UK government minister Ian Murray, who talks about supporting video game studios with new funds, and the impact of Grand Theft Auto on the British industry. We also dive into the future of Xbox Game Pass following reports that Microsoft is set to cut the price, having only raised it six months ago. Plus, we reveal our speakers for The Game Business Live in Los Angeles.”
Deluxe Creation Studios’ Shola Edu on Monetisation in Africa, Global Audiences and What Actually Drives Revenue (pocketgamer.biz): “The challenge facing mobile game monetisation in Africa is not player demand but revenue reality. Studios operate in a market where visibility, global reach, and player purchasing power matter far more than local scale alone. We speak with Deluxe Creation Studios founder Edu Shola about why business models are breaking down, how global audiences drive real revenue and what it actually takes to build a sustainable games business from Africa.”
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