Epic radically changes licensing model for Unreal Engine

At Epic's GDC press conference, founder Tim Sweeney opened by teling a ballroom full of journalists, "this is the start of something new for Epic."
He jokingly acknowledged that most of the news out of the company of late had been negative: "A lot of the news at Epic has been about what games we won't be developing and what key Epic folks won't be developing games with us."
But then he turned to the future, not the past.

The Future of Epic"A key part of the future of Epic is this Unreal Engine," intoned Sweeney. Development started in 1995, he reminded the crowd, and "since then it's grown into a team of 100 developers around the world."

Sweeney recognizes that the landscape for games has changed dramatically since UE3 launched and triple-A seemed to be the only thing developers might concentrate on.

The industry has been and continues to be changed by forces such as Apple's 2008 iPhone App Store launch, Oculus' strides forward with VR, the popular and accessible PC download service Steam and other PC downloadable games, and console download services enabling developers of different sizes to attain audiences on those devices.

Years ago, said Sweeney, "you might think the future is going to be a simple arms race to building bigger games... But a lot of things have happened to change that."

"The Unreal Engine remains an awesome venue for building high-quality games, but we've realized we haven't covered the depth of what the engine is capable of," he said. "The future of the engine is really inspired by a lot of the changes in the game industry."

For last GDC, the company showed off its Infiltrator demo-- super high-quality. "Last year we built... a high-end demo running in realtime on high-end Nvidia graphics hardware," said Sweeney. "You're probably thinking it's really cool but really complicated to create content like that."

But there's an emphasis in UE4, said Sweeney, on "building tools for developers of all sizes."

By way of introducing the demo that followed -- not space marines versus bugs, but focused on easy, realtime content creation -- Sweeney said, "Unreal Editor is a really polished and fun tool now. You'd be surprised what you can build with a few days of training."

One of Epic's developers, Zak Parrish, took over to showcase in particular the new Blueprint visual scripting system -- allowing non-programmers to script Unreal content. You can "see how the data is flowing through in realtime... Blueprints don't just have to be for things that are moving and doing things in your game... With Blueprint we can make a powerful level design tool we can do to make our game more quickly," Parrish said.

He demoed simple arcade games, and even a Flappy Bird clone, built entirely using Blueprint logic.

With technology like this, said Sweeney, Unreal Engine is more accessible, but it still "scales all the way up, to larger indie developers, mid sized teams, to triple-A teams" -- he even envisioned a "high-end Minecraft player" stepping up to Unreal Engine.
The New Biz Model"This growth in UE has lead us to really rethink our entire business," said Sweeney.

With UE3, pro developers could license the engine -- "it's typically cost millions of dollars... negotiating has involved teams of lawyers," Sweeney said. That is changing.

"Looking at the shape of the industry now we realize it's an outdated model," he said. "looking at the possibilities for the engine, we started out from scratch. We came up with an entirely new business model for the Unreal Engine which we are announcing today."

Now, "absolutely anybody can gain access to Unreal Engine 4 by subscribing to the engine for 19 dollars a month -- and you get access to everything," said Sweeney. By paying that fee, developers can "deploy to PC, Mac, iOS, and Android -- all those platforms today, and more coming in the future."

But there's a cost to shipping a commercial game under the new terms: "5 percent of the game's gross revenue from product sales to users," said Sweeney.

Of note, he clarified that the "5 percent royalty terms apply to gross revenue to users from all aspects of the game, that would include the sale price of the game if it has one, in-game item revenue, and ad revenue."

"With that model, if our product sucks, nobody is ever going to pay for it," Sweeney said -- meaning that adopting this model forces the company to make sure Unreal stays a competitive toolset. "We're driven by the economics of the world ... to determine that the terms are fair," he also added.

Notably, he said, "everyone who subscribes to the engine gets access to the engine's C++ source code," which will be distributed to subscribers via GitHub. Anyone who pays $19 a month gets "access to everything we have at Epic when we develop our games internally."

"It's a bold step for Epic but we think it's an appropriate one given the changes to the game industry," Sweeney said. "It's grown into an open and democratic" place, he noted, and Epic has been forced to change to adapt to that.

This also means that the free, binary-only UDK version of Unreal, popular with students in particular, is being discontinued for UE4.

Epic also will support the enlarged developer community directly: "To support Unreal Engine 4 we are making available a new set of Epic forums," said Sweeney, and "besides releasing the engine we're releasing a lot of samples of what you can build with Unreal Engine." Parrish showcased a shooter demo that all developers will not receive -- not a new game, but a console-quality demo of shooter mechanics and gameplay to experiment with.

"You're limited only by your imagination and your ability to go out and build cool things with it," said Sweeney.

And hobbyists do not have to pay to ship their free, experimental games, he noted: "if you're doing it for fun, then there's no royalty forever."

However, there is one wrinkle if you make console games: Due to the NDAs involved in Xbox One and PlayStation 4 development, he said, "We can't provide the console source to the general public under these terms... it is available on a negotiated license." That aspect of its business will not change. "For any team who is building a console game... talk to us and we can get you access."

"We would like to make this console support to everyone... It's going to take a few months to figure that out," he said. For now, "the console terms are custom-negotiated, it would depend on the scale."

Also notably, since some developers do not want to pay a royalty, ever -- "we will still work with any game developer that wants it to negotiate license terms," Sweeney said.

Epic has also posted an official blog from Sweeney that details these changes concurrent with this announcement.

Interested? You can sign up to download Unreal Engine 4 under these terms right now.