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Here's What Could Drive Growth for Unity Software in the Future

By Jon Quast and Jose Najarro – Oct 25, 2021 at 8:20AM

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The company has plenty of room to grow outside of video games and there's one reason to believe developers are going to prefer Unity's software over competitors' over the long term.

Unity Software (U 6.25%) is known for its software that makes it easy to make mobile games. It also helps developers effectively monetize their mobile apps. However that's not all it can be used for.

In this video from Motley Fool Backstage Pass, recorded on Oct. 11, Fool contributor Jose Najarro talks about the other industries that can use Unity, including robotics, automotive, and animation. Moreover, Jose shares an impressive stat that could propel Unity to become the default software choice for developers for years to come.

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Jose Najarro: Let me take a quick look at why I'm excited about Unity. Unity, like I mentioned right now, it's mainly known for the games, this is where most of the revenue is coming in, but their optionality of expanding into other markets is where I believe the strong growth can come from Unity.

One of my favorite things this year, they're focusing in what they called "accelerating solutions." For example, if you want to do some form of training, here they do some form of medical training, you can create some form of virtual world within Unity and help these training in the medical field.

Another thing that I think is super impressive is the simulation and robotics. If you are in the simulation and the robotics market, for, let's say, an autonomous robot, you need to have numerous and numerous data points. I don't know if you guys can see this walking robot back here. For this robot to really learn to walk, it has to keep practicing over and over again until it finally learns the proper way to do it, and that takes time. If you want to get a lot of data points, you need to have 100, maybe 200 real robots each trying new steps, each collecting new data points, but with Unity, you can create the simulation of having a million robots, each of these million robots create a new step and now you're collecting a lot cheaper data points. I believe this is a market that is still in early stages right now, Unity is mainly known for gaming, but the simulation and the robotics I believe is where one of the future growth is going to come from.

Here is another one, human machine interface. Here, you can see a person is using some form of heavy machinery. Here you can see a screen of, hey, maybe it's overheating, maybe you have plenty of gas. This human machine interface, I believe is becoming a lot more used in the automobile industry. We have those dashboards which are more digital. We have, I believe we're working with the front mirror, which now you can see things in the front mirror opposed to the dashboard, so there's human machine interface. Again, these are optionalities where Unity can continue to get into.

Another one is the automotive transportation and manufacturing. Let's say you are a car company and you want to show off your car, but you don't have that car in the lot, maybe you can have some of your engineer's design this virtual 3D car. Now if a customer comes into your store, you're able to put on this VR glasses, let's take a virtual dive into this car and you can see it pretty much like you're seeing it in real life.

Numerous other solutions in the animation, in the cinematics. There's this animation studio that was making an episode every week because Unity was reducing their costs and reducing their time by about 40%.

The architecture, engineering, and construction, let's say you're some architecture, you wanted to sign some real life images of the product or the project you're working in, you can use Unity for those solutions. So optionality, plenty.

We can also see the augmented reality and virtual reality are pretty big. I do believe the CEO mentioned it. I believe he mentioned two-thirds of augmented reality and virtual reality applications are made through Unity right now. This optionality that Unity creates is amazing.

Then I wanted to show, how popular is Unity and how popular are some of the other game engines. This is Udemy.com. This is a place if you want to learn new skills. I ended up going to Udemy and purchased game development. I wanted to see what were some of the big players out in the game development. We can see right now, most popular people learning is this one right here. This is a Unity game developing class. No. 2 is Unreal Engine. This is true. Its second competitor. No. 3 is another Unity class. No. 4 is another Unity class, and No. 5 is another Unity class. Within the top five most popular game developer engines, the top five most popular courses, four are based on Unity, one is based on Unreal Engine. I think this is a great way to see, hey, where are game developers focusing on? Because if game developers are focusing on learning about Unity, that means that the gaming studios out there are focusing on game developers that know how to use Unity. It's kind of that cycle, the more game developers you have, the more careers you have, the more careers within Unity is going to drive more people to study Unity, and then the circle just continues and most gaming studios will move into the Unity platform.

Jose Najarro owns shares of Unity Software Inc. The Motley Fool owns shares of and recommends Unity Software Inc. The Motley Fool has a disclosure policy.

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