Short-term growth may be slowing for Unity (U 2.51%), but over the long term, it looks more promising. In this video clip from "The Gaming Show" on Motley Fool Live, recorded on Feb. 7, Fool contributors Jon Quast and Jose Najarro discuss what the future may look like for the video game software company.
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Jon Quast: The thing that really stood out to me and I don't remember reading this from management before, but saying 30% topline growth over the long term, like you just pointed out. You see that growth rate fall off from 43% this past year over the past 12 months and then projecting 34% possibly this year. It looks like a big dropoff. The growth is slowing.
But they're saying that we don't expect it to fall much below that over the next, however many years. Who knows exactly what they mean by long term? But do you know how much growth? [laughs] You have if you grow by 30% over 10 years. You go up by 13 times, so $1.1 billion, if you grow that 30% over 10 years, it is now $15 billion in 10 years.
I just wanted to put a little bit of numbers to that. This is a huge thing. Now, who knows when they say long term if they're meaning 10 years? But certainly, you pointed out that they have 2% of the market. They're also the market share leader though when it comes to the 3D stuff. Basically what is baked into that assumption is that anything that is made in 2D today, we are making in 3D tomorrow and as that shift happens, Unity is the primary beneficiary. Would you say that's what is driving this train?
Jose Najarro: Definitely Jon. Another thing, right now, the overall 2D or 3D market, that market itself is still growing. The growth of that market plus some grabbing more market share. The market of non-interactive to interactive and from non-real-time to real-time. All those markets are still very early. I'm guessing they're pricing that, hey, are expecting those markets to continue to grow or those addressable markets to continue to grow among the quarters, among the years.
Very good point Jon, they didn't mention long term during the earnings call, but one doesn't know, they didn't really give a hindsight, five years, three years, 10 years, seven quarters. What's the actual number for that 30% growth?