This month Epic Games hosted Unreal Fest 2023, featuring a wide variety of sessions and announcements surrounding Unreal Engine and the broader game dev community. In this article, we’ll be looking at one of the key highlights of the event: the changes to Epic Games' licensing model for those using Unreal Engine for projects outside of gaming.
Tim Sweeney, the CEO of Epic Games, opened the annual event with a vision for how Epic Games plans to develop Unreal Engine in the future. Sweeney mentioned that the use of Unreal Engine has expanded far past being just for game development and that a diverse set of industries now use Epic Games’ tools in their projects.
While the game industry is surely Epic Games' primary focus, Sweeney mentioned that he hopes that Unreal Engine will develop as a single platform for artists and developers from every industry to mutually use, rather than segmenting Unreal Engine into different tools or divisions for separate industries. This “open metaverse,” as Sweeney calls it, will allow everyone to develop and create with the real-time tools of Unreal Engine without limits.
In response to this vision and how different industries are using Unreal Engine, Sweeney also discussed how and why Epic Games will be charging users for the platform in the future.
The new licensing model Sweeny announced for Unreal Engine was perhaps the most important announcement made at Unreal Fest. In the past, Epic Games has only charged game developers for the use of Unreal Engine when a game’s revenue has surpassed 1 million USD, charging a 5% royalty fee for sales past that point. However, for non-games, Unreal has not charged users or studios for the basic use of the engine. During the opening session of Unreal Fest, Sweeny announced that this would change with the next release of Unreal Engine.
From here on, users of Unreal Engine creating commercial projects outside of games will have to pay a per-seat license fee for the use of the tool. Epic Games has yet to announce how much users will be charged, or any specific terms for the license, but Tim Sweeney did clarify on X that there will be minimum revenue thresholds for commercial use and that student/educator use will remain free.
This change could have a major impact on creators, specifically those using Unreal Engine outside of the gaming industry. Over the years, Unreal Engine has become a key tool for virtual production, VFX, and a host of other industries looking to use the advanced toolset of Unreal Engine 5 for their projects. While large studios will likely be willing to pay for the use of the engine to maintain their current workflows, the change may impact smaller studios and artists, depending on how much the per-seat license will cost.
Unreal Engine’s licensing changes mark an important moment in the industry for real-time rendering. Last month, Unity, one of Unreal Engine’s main competitors, announced a sweeping change to their licensing model for games, sparking major controversy within the game dev community, especially among indie game developers. All of these changes have been spurred on by the game engine industry’s push to maximize profits amidst a changing industry.
On the one hand, Epic Games’ actions could be seen as a way to capitalize on Unity’s poorly planned change to their licensing model, with Epic Games’ hoping their changes slip under the radar while Unity takes the heat. However, It seems more realistic that these kinds of changes were inevitable as real-time rendering takes off across the industry.
It seems as though traditional pricing and/or royalty models set by engine developers like Epic Games and Unity are no longer bringing in profits matching what these developers expect. Much of this is likely due to the multi-industry nature of the metaverse, as Tim Sweeney alluded to during Unreal Fest. Platforms like Unity, Unreal Engine, and even Godot Engine, are increasingly being used outside of game development for anything from research to VFX for film and television. Industries that game engines have never before targeted, or needed to consider on a large scale.
What all of this means for 3D animation is that artists and creators will need to stay nimble as tools refocus to target wider industries outside of traditional 3D animation or game development. While we may not see any more major changes to Unreal Engine’s licensing model for the next few years, other software vendors will likely also be reconsidering how to price and license their software. The recent growth of the 3D industry can be daunting for those already working in the industry, but it is also equally exciting, as new tools and creative workflows are coming to market almost every day.
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