Unity's game engine grew 2%. Its ad machine grew 69%

The two numbers that explain the week

Unity had what its chief executive Matthew Bromberg called arguably its best quarter ever [1]. Revenue for the three months to 30 June came in at $546 million, up 24% on the same period a year earlier [1]. The company still lost $23 million, but that is a long way back from the $108 million it lost in the same quarter of 2025 [1].

Look at where the growth came from and the week snaps into focus. Unity has two halves. “Create” is the game engine, the software studios use to build things. “Grow” is the advertising network that places ads inside mobile games. Create grew 2%. Grow grew 69%, driven by developer spending on Vector AI, Unity’s ad-placement system [1].

Bromberg described the business as a flywheel [1]. The more games ship on Unity and use its ad network, the more its systems learn about player habits. The better they get at putting the right game in front of the right person [1]. The engine is now the thing that feeds the ad network. Investors liked it - the stock is trading around $42, up from the $35 it sat at for most of 2026 [1].

That is the shape of the whole week. The money is moving out of making games people finish and into running systems people stay inside.

Everyone is building for what happens after the sale

Xsolla, which handles payments and storefronts for game studios, released a set of tools this week aimed squarely at that gap [2]. There is a community hub the studio owns, and a template for running seasonal events and limited-time offers. There is a shop layout built for skins and outfits, and a notification system inside its launcher [2]. “This release is about what happens after the first sale,” said Xsolla president Chris Hewish [2].

Sega, reporting for the three months to the end of June, saw net sales rise 17.3% to 95 billion yen, about $600 million [3]. Its games arm brought in 68.4 billion yen, roughly $432 million [3]. Operating income of 2.3 billion yen turned a $3.5 million loss a year earlier into a $14.5 million profit [3]. The one soft spot was free-to-play, which “fell slightly short of expectations” - so the company says it will strengthen operations of the games it already has [3].

Mattel formed Mattel Game Studios, nearly 300 staff across Los Angeles and Hangzhou [4]. It builds on the Mattel163 venture the toy company bought out from NetEase in February [4]. Its existing mobile titles - UNO!, UNO Wonder, Phase 10, Skip-Bo - have passed 550 million downloads and hold about 20 million monthly players [4]. That is a games business made of ongoing operations, not a shelf of products.

Who is paying for the shift

The same week, the people who make finite games kept losing their jobs.

Supermassive Games, the British studio behind Until Dawn and The Dark Pictures Anthology, opened a redundancy consultation that could cut up to 75 roles [7]. It is the third such round in three years - about 90 went the last time - and it comes three months after Directive 8020 reached shops in May [7].

Netflix shut Night School Studio in Los Angeles, the maker of Oxenfree, and Moonloot in Helsinki, which had not released a game [8]. Night School’s last game, the horror title Unhinged with Zoe Kravitz and Sadie Sink, arrived six weeks ago [9]. Netflix co-chief executive Gregory Peters had praised it on the company’s earnings call on 16 July [9]. “Despite directing Unhinged and shipping it 6 weeks ago to millions of excited, satisfied players, it looks like I’m back on the market,” one staff member wrote [10]. Netflix says it is narrowing to kids’ games, party games, story-driven titles and mainstream hits [11].

Amazon is handing back the two big always-online games it published. Throne and Liberty moves to NC by the end of the fourth quarter of 2026; Lost Ark goes to Smilegate in early 2027 [5]. Amazon’s own New World: Aeternum shuts on 31 January 2027, which takes the company out of the massively multiplayer business it entered in 2016 [6].

Epic sold the artist portfolio site ArtStation and the 3D model marketplace Sketchfab to KitBash, five years after buying both [13]. It says it wants to concentrate on Unreal Engine 6, Fortnite and its store [13]. Epic is also cutting more than 1,000 jobs after a fall in Fortnite play that began in 2025, saving over $500 million [13].

Then there was Bethesda’s office in Rockville, Maryland, on the day Xbox chief executive Asha Sharma visited. Union members from the Communications Workers of America put up a giant inflatable rat outside [12]. They planted one red flag for every developer laid off under her leadership [12]. “Each flag was a public reminder of how many people management cut from our teams,” said union member Nathan Hahn [12]. It is the fifth round of mass layoffs at Xbox in three years [12]. More rallies are planned for 18 August [12].

Money is still going into new teams, but note what kind. 2K opened Small Axe Studios in Vancouver under Aaron McHardy, who spent nearly 18 years at EA as executive producer on Madden and College Football [14]. Its brief is 2K’s next blockbuster sports franchise [14] - the genre that sells a new edition every year and a card-collecting mode all year round.

The buyers have not left

Private equity firm Trustar is close to buying Alibaba’s video game business, Bloomberg reported, citing people with knowledge of the talks [15]. The deal would value the arm at more than $1.5 billion, and Trustar is said to have outbid other suitors including game makers themselves [15]. Treat it as reported, not signed.

Tencent reported second-quarter revenue of 204.8 billion yuan, about $30.36 billion [16]. That is up 11%, roughly in line with what analysts expected [16]. Profit was the miss: net income rose just 0.7% to 56 billion yuan, against expectations of 61.8 billion, as the company raises its AI spending [16].

A new fighting game where the content is other people

Arc System Works and Sony released Marvel Tokon: Fighting Souls on PlayStation 5 and PC. It is a four-against-four tag fighter with a cast of 20, one shared health bar per team, and teammates you unlock during the match by filling a gauge [18].

What is striking is the design decision underneath it. Simplified inputs let a beginner throw a finisher with one button [18]. Eurogamer notes that Street Fighter 6 and 2XKO put players on simple controls into a separate pool [17]. Tokon gives everyone one control scheme, so a new player and a veteran meet in the same queue [17]. There is very little single-player content - five short episodes, a party mode, some arcade ladders. Almost all your time is spent in casual matches, ranked matches and open lobbies [18].

That is the design end of the same trade. A game whose content is other players never runs out of content, and never needs a sequel to keep earning.

Two smaller stories cut the other way. Ahead of its September early-access release, Bulkhead published a 15-minute video called “10 Reasons NOT to Buy” its $39.99 shooter Wardogs [19]. One reason was that players should not expect regular content drops. The game then shot up Steam’s best-seller list [19]. And Soul’s Remnant, a 2D multiplayer role-playing game built largely by one person over eight years, came out free on Steam with no pay-to-win selling inside it [20].

Also this week

Twitch told users their streams, clips and chat will be used to train Amazon’s AI models unless they opt out [21]. Opting out does not stop your words being used if you chat on someone else’s stream [21]. Asked why it is not opt-in, chief product officer Mike Minton was blunt: “if it was opt-in nobody would opt-in” [21].

Apple proposed the fees it wants on purchases made through links out of the App Store [23]. The rates are 15% on standard apps, 10% on some partner programmes and subscription renewals, and 5% for small businesses [23]. In the same filing Apple concedes its own necessary costs for allowing those links “would be essentially zero” [23]. Epic called the request far outside the bounds of the court’s guidance [23].

Saber Interactive will add an AI disclosure to the Steam page for Rideshare “Stimulator” [24]. A former lead writer said she had been replaced by ChatGPT partway through development [24]. Saber denies it and says its writing staff has tripled since 2023 [24]. It says AI is used for an experimental mode because the number of passengers in the game is endless [24].

The far end of engineered play

Finish in Pennsylvania, where for 12 years machines called “skill games” have spread through gas stations and laundromats [22]. They look and behave like slot machines. They escape gambling law on a technicality: lose a spin, and you can win your money back by playing a memory game [22]. Games of skill for prizes are not gambling [22].

The New York Times sat down at one in Allentown and played the memory game through. It took 9 minutes and 50 seconds and earned 3 cents [22]. A court ruled against the machines in June, and lawmakers are now trying to save them [22]. The skill is real, technically. It is just priced so that nobody uses it.