Buy vs Build dilema

Have you ever wondered what would happen if the platform or service, that you rely on for your business suddenly changed its terms or shut down? Building your business on someone else’s IP and/or platform, can be risky, a risk that all businesses face these days. Looking at the recent events surrounding the announcement of the changes to Unity’s licensing, we can see that what may seem like a low-likelihood event, can have devastating effects on your business. In this post, we discuss, What are these risks? and what are your options?

This week, I recorded the first episode of “The Beer Driven Devs” podcast, with my good friend Matt Goldman. In this podcast, we will be talking all things, software, tech and beer.

This first episode was very interesting as we focused on the current controversy surrounding Unity’s announcement about their upcoming licensing changes.

Summary

For those who are not aware, Unity is a game engine (a tool used to create and run games). On 12 Sept 2023, Unity announced a change to their licensing terms, and as Matt explains in the episode, this change can end up costing game development companies a lot of money, potentially even bankrupting some. Whether or not you are developing games, consuming games, or watching from the sidelines, this has presented an interesting case study for many businesses. Unity have since acknowledged the impact this can have, and have made changes.

A Case Study

Game development companies (both large and small independents) have built their businesses around the intellectual property (IP) of another company, Unity. Their current business model is based on the licensing agreement and their relationship with Unity. Now, arguably Unity is within their rights to adjust their licensing as they see fit. However, as we have seen in this instance, when done too aggressively this can have a detrimental impact on their customer base, and any goodwill they have built up. We have seen similar (but as Matt points out, with obvious differences) stories in the past relating to building businesses around third-party platforms, particularly in the social media space. What we have seen time and again is that these companies are at the whim of: The platform owners; Their licensing; and Their algorithms.

Something like a game engine is a complex piece of software, with plenty of IP, and building a game around a specific game engine is like building a car around a specific engine. If you choose to change engine suppliers, there is a lot of engineering work that will be required to swap it out and maximise the potential of the new engine. These developers, who have designed their games around this engine, have little choice but to continue with it, regardless of what the engine supplier is charging. Now, will they create their new game based on another engine? Possibly. Will they create their own engine? Unlikely, but some might. Will they reconsider alternatives before their next game? Absolutely. It is this short-sighted grab for cash from Unity, that has left a sour taste in their customer’s mouths.

What is the answer?

In this episode, I joke, that the answer is always “Build” rather than “Buy”. This is said tongue-in-cheek, because, we developers love to build new products and tools, just look at the expansive eco-system of open-source tooling and frameworks. But, Do I expect every game development company to build their own game engine? Should they re-invent the wheel? what about the indie developers, surely that is too much of an ask. No, I don’t, but as with any organisation, I would hope they’ve done their risk assessment and have contingencies in place should the playing field shift under their feet. The barrier to entry for building, is rather steep: Putting together a dev team; planning; developing; testing; maintaining etc. It is no wonder, that there is such a thriving ecosystem of platforms/SaaS businesses out there. Ultimately it is up to the individual organisation to weigh up the risks and ROI on the build v’s buy debate.

What does this mean for you?

Consider all the subscription services your business runs on: Azure, AWS, Salesforce, Dynamics365, Xero, MYOB, Quickbooks, Shopify, Wix etc. Have you done a risk assessment? What would happen if they increased prices? What if you got kicked off the platform? Have you looked at alternatives? What are your options?

Have you considered if any of these services may be bought in-house? Don’t get me wrong here, some of these services are so large and complex that the build option is completely off the table. However, what I do want to highlight is:

Whether addressing your risk profile or searching for a competitive advantage, it can pay to think outside the box and break from the status quo.

David Heinemeier Hansson from 37 Signals highlights how a move away from Cloud computing has saved their organisation $1M per year in Cloud fees. Again, I’m not arguing this is for everyone, likely you are not at the scale of 37 Signals spending $180,000USD/month on cloud infrastructure, however, it is this level of tangential thinking, to go against the grain, to challenge the norm, that highlighted the opportunity for them, and you may benefit from the same.

Does your IP live on someone else platform? Are you held to ransom by a third-party platform? Are you looking for a partner to work with you to identify your missed opportunities? If you want to learn more about how you can address your risk profile and take charge of your IP, contact Encubed Solutions today. We are a team of experts in enterprise application development, and we can help you design, build, and maintain a solution that meets your needs.