Why Unity Software stock suddenly popped today

Actions of Unity software (U 9.79%) were slightly lower in early trading on Thursday. But just before noon ET, the action suddenly came up because of a big price structure announcement. As of 2:30 PM ET, Unity shares were up about 12%.

Unity waves the white flag about running fees

Many of Unity’s customers use its software to create and monetize mobile games. And the company has long sold its software as a subscription, charging different prices based on hitting certain thresholds. But last year, then-CEO John Riccitiello introduced a “running fee” that would charge its customers every time a game was downloaded.

It was a disastrous move that ultimately led to Unity looking for a new CEO.

Today, Unity’s new CEO Matt Bromberg announced that they are doing away with the rollover fee entirely. Bromberg acknowledged that prices must rise, but “the increases must not come in a new and controversial form.” With the operating fee so widely criticized, investors are celebrating the move to get rid of it.

Is this a good thing?

Unity wasn’t kidding when it mentioned the price hike. There are too many details to go into here. But the bottom line is that subscription prices go up by 8% to 25%, depending on the package. Everything goes into effect on January 1st.

Logically, investors can expect Unity’s revenue to increase as a result of the change. And its profit margins will hopefully improve. But there is a cloud of uncertainty. The company could lose customers as a result of making so many price changes in a short period of time. And if he loses customers, then he may not see the full financial benefit he hoped for.

A lot could depend on the latest version of Unity software: Unity 6. The company expects to release it before the end of the year. And if it stands out enough from the competition, developers can subscribe despite any lingering frustrations with the rolling fee fiasco.