Epic's goal: Don't be Comcast

Unreal Engine maker Epic Games isn't the first company to try selling its professional tools as a subscription service instead of a one-time purchase. As a result, it has one advantage that its predecessors in the field didn't really have; real-world case studies to learn from. Speaking with GamesIndustry International at the Game Developers Conference, Epic Games CEO Tim Sweeney and Unreal Engine general manager Ray Davis, said they'd taken some lessons from previous offerings from the likes of Adobe and Unity.

"When you do that (sub model), people have a high expectation of you keeping your systems up and running, viable and delivering good customer service," Sweeney said. "That's been the big lesson of all the successful and unsuccessful launches of games or any sort of product that's offered in this way. We've been very respectful of what the best companies in the industry have done."

Sweeney pointed to the way Amazon handles its customer service.

"The subscription model made the most sense because the engine itself is a living product. We don't just ship a version and walk away, right?"

Ray Davis

"They do a great job there of taking care of their customers, and we've got to be that company. Otherwise, we're Comcast or Time-Warner."

As for why Epic decided to switch to a $19 monthly fee with 5 percent of royalties, Davis just said it better matches the way Epic handles the business.

"The subscription model made the most sense because the engine itself is a living product," Davis said. "We don't just ship a version and walk away, right? Even as we speak, there are programmers back in North Carolina and Seattle working away on it, improving and working on new features."

Sweeney added, "This is something many of us at Epic have wanted to do for more than a decade. We've been really inspired by John Carmack and how he opened up Doom and then the Quake source to the community, eventually. Our dream was to have live access to our actual code, the same way we give it to our high-end licensees who are potentially paying millions of dollars. We've simplified the engine and the codebase to the point we can finally do that."

The move has undeniably made Unreal Engine 4 a more viable choice for small development teams than its predecessors, but Davis dismissed the idea that it was prompted by a shrinking of the AAA customer base on which Epic built its earlier Unreal Engine business.

"The industry seems to be rapidly increasing pace in evolution, especially with VR this year," Davis acknowledged. "It seems like from my perspective there are more developers than ever. There are still plenty of large teams doing great now that the next-gen consoles are here, finally. And the number of platforms out there too that developers are able to get their games on is ever-growing, which is an interesting logistical challenge for us, how we support all these things."

And even though the industry has little transparency into digital distribution revenues, Sweeney seemed unconcerned about the potential for developers to short Epic on those royalty payments.

"[W]e've...designed it with a royalty model on the back end, so if developers succeed with their games, then Epic succeeds with our engine. It seems like the ultimate fair and honest model."

Tim Sweeney

"These are professional developers who are [building] businesses for themselves and shipping products," Sweeney said. "Everybody operating on that level is going to be taking their status as a company pretty seriously. I don't anticipate any sort of large-scale cheating at that level. It's a case of software. You're going to find it on BitTorrent, but people who pirate it aren't going to go off and develop a game with a budget, put a lot of resources into it and ship it on a pirate version. There's a lot of common sense out there, and I think people will do the right thing when they're going through the release cycle."

Sweeney also trusts that the subscription model won't limit the accessibility of games years and decades down the road.

"The nice thing in that area is with this royalty model, eventually the game is given away because the developer decides the sales have trailed off and now they're just going to open it up to the world to have for fun, as id Software and other companies have done in the past," Sweeney said. "And 5 percent of zero is zero. So there's no accounting required or royalties required. The same thing applies to hobby projects and charitable efforts, things of that sort."

Davis added that having the source code of the engine widely available should make it easier for communities to keep their games alive, or to create versions compatible with new operating systems.

And while the Unreal Engine will continue to evolve, Sweeney is satisfied that this new business model will endure for the foreseeable future.

"This works," Sweeney said. "We've put a lot of thought into how to make this very accessible, so if you can afford to play an MMO, you can afford to subscribe to an engine and get the complete tools and source. That's a very low barrier to entry. But we've also designed it with a royalty model on the back end, so if developers succeed with their games, then Epic succeeds with our engine. It seems like the ultimate fair and honest model. I'm very happy where we ended up."