Unreal Engine: Exciting Announcement Shakes Up Pricing Plans

Highlights

Epic Games is planning to revamp the Unreal Engine licensing model, making it more expensive and comparable to tools like Photoshop.

Game developers, being Epic's core clientele, will be exempt from the price increase. The reason behind the decision to monetize the Unreal Engine more aggressively is the financial difficulties and the necessity to stabilize operations, which arose due to layoffs and an excessive dependence on the success of Fortnite.

Epic Games intends to enhance the licensing model for the Unreal Engine, raising the cost of the software and aligning it more closely with tools like Photoshop. However, game developers will not be affected by the resulting price increase. These changes were announced shortly after Unreal's competitor, Unity, faced controversy over its own plans to raise prices, which were subsequently abandoned due to backlash.

In late September, Epic Games announced significant layoffs, eliminating approximately 800 positions, or about 16% of its global workforce. The company cited financial difficulties as the reason for the cuts, with CEO Tim Sweeney explaining in a leaked letter to staff that expenses have consistently exceeded revenues at Fortnite, the company's flagship game.

In addition to the job cuts, the company's focus on stabilizing its operations has led to a new, more aggressive approach to monetizing the Unreal Engine. Although the specific fees have yet to be announced, Sweeney confirmed the company's intention to implement them for the sake of transparency during his recent appearance at the 2023 Unreal Fest. This change will take the form of a per-seat licensing fee that will apply to all Unreal Engine users, with the exception of game developers. Sweeney compared this new pricing model to Adobe's approach, which links app licenses to individual accounts.

According to the executive, the decision to exempt game developers from these changes was an obvious one, as Epic has always considered them to be its main customer base. To emphasize this point, Sweeney mentioned that internal discussions at Epic have only focused on whether the Unreal Engine's current 5% revenue sharing model could be further reduced. Recent conversations have confirmed that lowering the figure is not feasible. "We require the money," declared Sweeney, eliciting laughter from the audience.

The executive did not provide a specific timeframe for the implementation of the new Unreal Engine licensing structure. However, he did mention that the price increase, along with the recent staff reductions, will help stabilize Epic's operations and resolve the financial issues identified in mid-July. These challenges were mainly caused by the immense success of Fortnite, which significantly boosted the company's revenues on an annual basis, but also made it overly reliant on the game's performance.

As a result, the success of Fortnite ended up supporting various aspects of Epic's business. The recent layoffs aim to address this issue by reducing teams that are not financially sustainable. Despite Fortnite's achievements, the executive emphasized that Epic is dedicated to competing with platforms like Steam and Apple's App Store through its Epic Games Store.