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If an indie game developer makes more than $100,000 using the free version of Unity, what happens to the money that goes over $100k? How will Unity people come to know how much money they are making?
What precautions should I take just in case a game is a great success?
Update: In June 2016, Unity revised their business model. They no longer offer permanent licenses, only subscriptions. However, they now offer a cheaper plus-version without the unprofessionally-looking Unity splash screen but with a revenue limit of $200,000. They also made some changes to the license agreement which required an update to this answer.
The Unity software terms regarding the differences between the personal, plus and pro version are pretty clear: When your company makes a gross revenue (not profit!) of more than $100,000 per year, you need to subscribe to the plus-version ($200,000 limit), pro version (no limit) or enterprise version (no limit):
Unity Personal may not be used by:
- a Commercial Entity that has either: (a) reached annual gross revenues in excess of US$100,000, or (b) raised funds (including but not limited to crowdfunding) in excess of US$100,000, in each case during the most recently completed fiscal year;
- a Non-Commercial Entity (this means academic and governmental entities as defined below) with a total annual budget in excess of US$100,000 (for the entire Non-Commercial Entity (not just a department)) for the most recently completed fiscal year; or
- an individual (not acting on behalf of a Legal Entity) or a Sole Proprietor that has reached annual gross revenues in excess of US$100,000 from its use of the Unity Software during the most recently completed fiscal year, which does not include any income earned by that individual which is unrelated to its use of the Unity Software.
The upgrade becomes required at the end of the fiscal year, because that's the way revenue is calculated according to the license conditions. As long as you don't subscribe to licenses for all your Unity users, you are obligated to stop using Unity. You are still allowed to sell your games, but you are no longer allowed to update them, even when you don't need the Unity editor to make updates:
During the term of this Agreement, you expressly acknowledge and agree that if you are a Unity Personal or Unity Plus user and the above thresholds are exceeded, then you may no longer use that tier of the Unity Software, and you must either: (a) purchase Unity Plus (if eligible) or Unity Pro; or (b) destroy all copies of the Unity Software in your possession or control, and cease updating Your Project Content. Unity will monitor your compliance with and enforce these restrictions and requirements including but not limited to monitoring the number of downloads of Your Project Content and any available revenue estimate data.
What happens when you don't? When your games are that successful, you will likely not stay under the radar. When Unity Technologies suspects that you make more than $100,000 with the free version of their product they might sue you. During that lawsuit you might be forced to show your books to prove how much revenue you made and how many people you had working.
The court will decide what happens with any of the money above $100,000 you received from sales. Depending on the jurisdiction in which you are sued and their interpretation of the applicable laws and the EULA they might rule that you are entitled to it, that Unity Technologies is entitled to it, or that the sales are void and you need to refund it to your customers. Ask your lawyer what they consider the most likely outcome (don't tell us you can't afford one when you make over $100,000 a year).
What precautions should I take just in case a game is a great success?
Document all of your income so you can show your revenue and when you earned it if a lawyer asks for it. Not just a spreadsheet you made up, but also statements from Steam or whoever is selling your game for you, or bank account transactions if you're selling it yourself. Save copies of these documents on your machine (don't just rely on the bank/vendor/etc. making them accessible), and print them out too if reasonable.
If you're a small company or lone developer, keep a separate bank account for your business. Using the same account for both business and personal finances leads to nightmares when financial records are necessary (e.g. if Unity sues, or if you're audited for taxes, etc.). Separate bank accounts are easier to show how money moves around.
If your game is an overnight success and you wake up in the morning with $100k+ revenue from its sales, get a version built in Pro and released as an update immediately. Even if you own Pro licenses for all of your developers, if Unity sees a version of your game built with the Free edition of their engine has thousands of sales, they'll likely audit or sue you for your records and you'll have a lot more hassle to go through even though you're legit.
Otherwise, upgrade all of your developers to Pro well before hitting the $100k mark if possible. If your game makes $50k or more, it's probably a good idea to upgrade. Upgrade as early as you can. If you make a nice game and can expect to make even nearly $100k off of it, upgrade to pro before you ever start selling. The less time a Free-built version of your game is on the market, the less likely there will be speculation and concern from Unity.
if you are 100% confident you are going to exceed 100k dollars, then take out a small business loan and purchase the Unity license required before launching the game... If you are 99% confident, then launch the game, make 100k overnight, go to the bank and get a small business loan...
There is zero reason for you to have to wait any length of time to get the proper license.
