Unity’s big u-turn on Wellington and Wētā FX deal

It was a massive deal and the end of an era for Sir Peter Jackson and Dame Fran Walsh in 2021 when they sold Weta Digital to US video game company Unity.

The deal saw hundreds of highly-skilled Weta Digital software developers and technical experts transfer to Unity as well as many of the animation and visual effects tools that Jackson’s team had pioneered and used in numerous Hollywood blockbusters.

But the deal, valued at US$1.6 billion in cash and Unity shares was more than just a juicy exit for majority owners Jackson and Walsh. It appeared to make good business sense. With the video games industry booming and the metaverse beckoning, it seemed logical to merge visual effects techniques and software from the film industry with the virtual world. Plus, Wētā FX was to work closely with Unity and retain access to the tools the original team had built. A win-win for Wellington, where Unity has maintained a sizeable team.

But Unity’s plan came to a screaming halt this week. Reuters has reported that Unity Software will eliminate 265 jobs, 3.8% of its global workforce, and unwind its professional services partnership with Wētā FX as it attempts to cut costs and get back to its core business.

That would have come as a major shock to Unity’s Wellington staff with Christmas looming. But all is not lost. According to a statement from Wētā FX (see below), “as many of the team as possible” will be offered jobs at Wētā FX. Unity will keep the intellectual property it paid handsomely for in 2021, but allow Wētā FX continued use of it.

Most importantly: “Wētā FX will have the right to build and extend the IP, and develop its own tools and techniques to continue its evolution as a leading innovator and creator in the visual effects industry.”

On the face of it, it seems like a huge stroke of good fortune for Wētā FX, which inherits a world-class team and is best placed to innovate based on the tools that were originally developed at Weta Digital. Oh the flip side, Unity's share price, hit by a series of issues the software company has faced, is now a fraction of the price it was as of the 2021 sale of Weta Digital.

Statement from Wētā FX

On November 25, 2023, Unity and Wētā FX mutually agreed to terminate Unity’s service agreement with Wētā FX effective December 10, 2023. This decision comes as Unity refocus their efforts on their core business. The termination of the agreement will see the reduction of 265 Unity roles.

Wētā FX will be extending offers to as many of the team as possible as it looks to expand its research, development and support functions. Unity will retain ownership of the technology it acquired from Wētā in December 2021 and will be evaluating the best way to enhance its offerings with it over time. The technology will also remain fully available to Wētā FX. Wētā FX will continue to build and extend the IP, and develop its own tools and techniques, to continue its evolution as a leader in visual effects.

What does this mean for Wētā Tools?

Unity will continue to own the technology it acquired and will evaluate the best way to enhance its offerings over time.

Wētā Tools will remain fully available to Wētā FX. Wētā FX will have the right to build and extend the IP, and develop its own tools and techniques to continue its evolution as a leading innovator and creator in the visual effects industry.

How will it work in terms of integrating the teams back into Wētā?

We are looking to extend offers to as many of the Wētā Digital crew as we can. Joe Letteri and Kimball Thurston will continue to lead Wētā’s technology vision and roadmap. The roadmap and planning we have asked the team to work on so far does not change with this decision. We will continue to evolve the studio to enable our artists to be more efficient, unlocking their creative potential, and preparing us to continue to provide the best visual and studio experience.

Is Wētā FX hiring back everyone?

Unity’s need to refocus its efforts on its core business, and change in its relationship with Wētā FX was not something we had planned for. We are endeavoring to hire back as many crew as we can, however, there may be a few roles that we may not be able to accommodate within our new structure. Both Unity and Wētā FX will be offering support to those affected.

When was this decision made?

Unity initially approached Wētā FX on 26 October, 2023. Unity and Wētā FX reached agreement on 25 November, 2023.

Why was this decision made?

Unity believes the Wētā Digital team are remarkable, but Unity needs to become leaner as it focuses its expertise on its core business. It also believes it makes more sense for Wētā FX to own full end-to-end production activities directly. Unity will be focusing its expertise and people on other matters, and Wētā FX will be getting support for its use of the Wētā Tools directly from its own crew – a shorter path which makes sense for both companies.

What’s happening to the Wētā Digital name?

The Wētā Digital name and trademark will be coming back to Wētā FX however there is no plan to change Wētā FX’s name.