Why Indie Devs Are Calling Epic's New Unreal Engine Policy a "Game Changer"

Why Indie Devs Are Calling Epic's New Unreal Engine Policy a "Game Changer"

By only taking royalties on titles that earn over $1 million, Unreal could expand its base of indies.

We've been hearing a lot of promises of what triple-A studios will be able to do with the Xbox Series X, PlayStation 5, and next-gen PC hardware, but indie developers are more worried about budget and revenue than triangle counts and storage speeds. For some developers, Epic Games' newly-revealed Unreal Engine 5 isn't as enticing as the revenue split change for using the engine, which goes into effect today.

Epic is waving all its royalties for commercially released games made using Unreal for the first $1 million in revenue per title. Previously, developers had to start paying 5% to Epic per quarter on revenue over and above $3,000. This change effectively means more small titles can use Unreal completely for free. The change is also retroactively being rolled back to January 1, 2020, with Epic promising to refund developers for the first quarter of the year accordingly.

Amid today's talk of bouncing lighting and level-of-detail tech, a handful of indie developers have been reacting to the royalties change with excitement. "I am so happy that we are already using [Unreal]," writes Lars Magnus Fylke of Bumblebee Mind. "This is a game changer for small indie developers!" While noting that Epic's cut of revenue above is still just 5% with this new change, Epistasis creator Lucas Govatos calls the move "absolutely insane for indie developers."

A boon to indies who choose Unreal is also a potential blow to competing game engine Unity. In early 2015, one day after Epic dropped the subscription price for Unreal in favor of the royalty model it just replaced today, Unity announced a fully free personal-use version of Unity 5. "There's no royalties, no fucking around," Unity CEO John Riccitello told GamesIndustry.biz at the time. "It's simple. That's really what we're announcing."

Judging by analysis conducted last year by games researcher Marcus Toftedahl, the difference in Unreal and Unity adoption for smaller developers is stark. Toftedahl found that about a quarter of all games on Steam used Unreal, with Unity coming in second place at just over 13% of titles. By contrast, self-reporting from the indie and hobbyist-friendly platform Itch.io showed Unity powering almost half of the games on the service, while Unreal was used for just 2.8% of titles.

For small independent teams, the choice of distribution platform also factors heavily into a game's financial feasibility and success. On Steam, Valve takes a 30% cut until a title earns over $10 million on the platform, a threshold few games will ever meet. The Epic Games Store, by contrast, offers an 88/12 revenue split for all titles. For an indie not banking on making a blockbuster success, having to pay both 30% to Valve and licensing fees to Unity may prevent them from just breaking even on development, versus paying Epic just 12% for the engine and distribution up to $1 million in revenue.

Of course, between the engine royalties change, Epic Games Store revenue split, and the announcement that Epic's online services honed with Fortnite are going free for developers, Epic's relative generosity toward small devs also stands to consolidate more development activity in Epic's ecosystem of tools and services. It's not just Steam and Unity that Epic's expansion challenges; Epic also has one of the world's most popular games to its name, and will soon be publishing games from developers like Remedy Entertainment. The more Epic grows, the harder it will be for some to see partnering with the company as a choice and not simply as one of few viable options.

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Mathew Olson

Reporter

Mathew Olson is a writer formerly of Digg, where he blogged and reported about all things under the umbrella of internet culture (including games, of course). He lives in New York, grew up under rain clouds and the influence of numerous games studios in the Pacific Northwest, and will talk your ear off about Half-Life mods, Talking Heads or Twin Peaks if you let him.

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