Highlights
- Epic Games is planning to revamp the Unreal Engine licensing model, making it more expensive and comparable to tools like Photoshop.
- Game developers will be exempt from the price increase, as they are considered to be Epic's core clientele.
- The decision to monetize the Unreal Engine more aggressively is a result of financial difficulties and the need to stabilize operations, following layoffs and an over-reliance on Fortnite's success.
Epic Games plans to revamp the Unreal Engine licensing model, making the software more expensive and bringing it closer in line with tools like Photoshop, although game developers will be exempt from the resulting price increase. The incoming changes were confirmed mere weeks after Unreal rival Unity sparked controversy with its own price hike plans, many of which were promptly scrapped in response to the backlash.
Epic Games announced major layoffs in late September, eliminating over 800 roles, or approximately 16% of its global workforce. The company attributed the cuts to financial difficulties, with CEO Tim Sweeney explaining that the Fortnite maker's expenditures have been surpassing its revenues "for a while now" in a leaked letter to staff.
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Apart from the layoffs, the company's need to stabilize its operations has now also yielded the plan to monetize the Unreal Engine more aggressively. While the new licensing fees are yet to be announced, the intent to implement them was confirmed by Sweeney "in the interest of transparency" during the executive's recent appearance at the 2023 Unreal Fest. The change will take the form of a per-seat licensing fee that will be imposed on all Unreal Engine users, except for game developers. Sweeney likened the new pricing model to that of Adobe's portfolio of tools, which ties app licenses to individual accounts.
The decision to exempt game developers from the changes was an easy one because Epic has always considered them to be its core clientele, the executive said. Looking to illustrate that point, Sweeney claimed that the only internal conversations Epic ever had about the Unreal Engine's current 5% revenue sharing model were about whether that figure could go even lower. A similar question was reportedly brought up in recent weeks, leading Epic to conclude that's not possible. "We need the money," Sweeney proclaimed, eliciting laughs from the audience.
The executive did not mention a specific time frame for when the new Unreal Engine licensing structure is planned to go into effect. He did say that the price hike, coupled with the recent layoffs, will allow Epic to stabilize its operations and address the financial problems that it first identified circa mid-July. That predicament was largely a result of Fortnite becoming a worldwide phenomenon, adding billions to the company's revenues on an annual basis and consequently making it overly reliant on its success.
The battle royale hit hence ended up subsidizing many aspects of Epic's business, which is something that the recent layoffs are looking to address, cutting back some of the teams that aren't close to sustainability. And while the success of Fortnite also fueled the company's massive Epic Games Store push, Sweeney reiterated that the Unreal Engine maker remains committed to rivaling the likes of Steam and Apple's App Store moving forward.
