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Alongside unveiling Unreal Engine 5, with a jaw-dropping demo running on PS5, Epic today announced that it is raising the royalty-free limit for Unreal developers to the first $1 million in gross revenue.
Speaking to MCV/DEVELOP as part of our wide-ranging interview about the new engine (more here and here), Epic Games CEO Tim Sweeney explained the motivation behind the decision:
“The Unreal Engine business model is a royalty based model where we succeed when you succeed. With this generation, retroactive to January of this year, we’re exempting every game’s first million dollars in revenue from the royalty, so it’s a little bit easier for indie developers to get started and not have to worry about the cost of the engine until they’re really successful.”
Unreal Engine is available to use for free initially. Previously five per cent of all gross revenue was charged as a royalty fee beyond the first $3,000 per game per calendar quarter. This has now been changed to 5% of all gross revenue after the first $1 million lifetime – which is a retroactive change effective from January 1st, 2020.
The change is not only a welcome one for indie developers, but also a sensible move on Epic’s part. While no data is available, it’s clear that Epic must earn the vast majority of its revenue from just the very largest titles, but predicting what those will be has become increasingly difficult in recent years. So the sensible move is to remove as many potential barriers as possible for small indies, in order to improve Epic’s odds of hitting the jackpot, as it did with say the Unreal-powered Rocket League, from Psyonix.
This drive to get more developers under the Unreal banner was also pushed today in Epic launching Epic Online Services for free to all developers.
