How Epic is "doubling down" on its vision for the metaverse

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At GDC, Epic Games showcased a myriad of features, tools and tech that all tie into its vision for a metaverse.

Yes, Tim Sweeney assures us, the metaverse is finally happening, and Epic has a big part to play in it. While the firm's executives say they're not ready to talk about what they're doing with their kids-friendly metaverse project with Lego, a lot of milestones seem to have been reached on other fronts.

The idea that a metaverse would come from Epic's flagship, Fortnite, isn't new. But finally unveiling its long awaited Unreal Editor for Fortnite, its user-generated content monetisation plans, a unified marketplace, Metahuman Animator, and more, at State of Unreal last week felt like a significant, tangible step in that direction.

It's a lot of effort being put into the metaverse at a time when much of the big tech attention to the idea has moved on to AI.

"We're the last company to unironically use the term metaverse," smiles executive vice president Saxs Persson. "We don't have a better term for it. It truly is the best way to describe it. We don't see very many scaled ecosystems, but I bet each one of them internally have the same observation that we do, that having a critical mass of people engaging in some social way with creator-generated content, where you have a meaningful amount of choice and a meaningful amount of friends – that's unique."

"We're the last company to unironically use the term metaverse"Saxs Persson

Persson tells us that GDC's State of Unreal was about "doubling down" on that idea, as well as on the tools and economy around it.

"In order for us to take the next step, we have to recognise what the ecosystem we're building will be a part of," he says. "Are we helping the ecosystem? Are we standing in the way of building the system? The [goal] is for us to not be in the way anymore, for people to just build what they want to build and get the amount of engagement generated – they should be paid for that."

Creator Economy 2.0 – as it's officially called – will see Epic share 40% of Fortnite's net revenues with "publishers of all eligible islands, including independent creators' islands," but also Epic's "own islands like Battle Royale," as detailed in this blog post.

Our first question to the Epic Games team is about how it actually works. On stage, Persson said that the monthly payouts would be taking into account each creation's popularity, engagement, retention, and new players. But what's the criteria exactly?

"The philosophy behind it is pretty simple, it's that the value that each island brings is regardless of us and of any other creator," Persson tells us. "The second [principle] is there's value to people coming and playing an island, and there's value for new players joining the ecosystem. Those are the two big buckets. And broadly speaking, that's what we are rewarding.

"So that breaks down into some underlying things we measure, right? But we haven't done this before – we found models of what [it] means to do this, but [the] goal is to find the broadest possible variables that just incentivise good behaviour, and incentivise getting people into playing your island; not under false pretences. When they play your island, they want to stay there as part of Fortnite, and they want to come back and play your island again. If we can somehow quantify that, that's what we're working on [behind] the scenes.

"But the headline is: is this quality play? Any ecosystem derives from new players, no doubt. And part of the thesis and why we think we need to change the economy is because we want people to make things that are not shooter games. We want people to make genres that we don't have today, and that is particularly valuable for the ecosystem to bring in new groups of people who want to be there."

"We want people to make things that are not shooter games. We want people to make genres that we don't have today"Saxs Persson

Persson talking about promoting good behaviours brings up the question of moderation and the possible barriers to creation, including quality thresholds.

"Every island that goes out has been moderated," he says. "It's not arbitrary, it's not just one person sitting there playing. It's repeatable criteria for what is acceptable as communicated to players."

He continues: "We don't want advertising. We don't want people to sort of insert their own weird way of gating progression. We just want people to make fun islands that people can play. So moderation is focused both on being appropriate [and] enforcing good behaviour."

Roblox is an obvious comparison at this point – much like Epic with Fortnite, the company has been vocal in the past about its platform not being a game but being "experiences." But in its attempt to build a metaverse, Roblox has also faced accusations of exploiting its users. More than once.

"We're taking a different approach," Persson says when asked about how Fortnite's economy will avoid similar issues. "One is: our creators can't directly monetise. They are paid based on the quality of engagement that they made. So there's no incentive to sell golden swords that gate progression. So you kind of rule out a whole category of things that we don't think is good for the ecosystem at any stage, and in particular now at this stage.

"The second thing is that we pay creators in real money – they're not paid in Robux, they're not paid in V-bucks. It's real money paid to real bank accounts. There's no transaction fee on that money. There's no exchange rate, there's no sort of pseudo economy underneath. What you're owed is what we're paying. And I think that's a really important part of it. We don't want to artificially keep people in the ecosystem. We want people to invest and want to be part of the ecosystem.

"The more we pay our creators, the more they're going to invest in their next island, the more they're going to raise the quality of the next creation. It's in our interests to give as much back as we can because you're going to make much better content. That's our basic philosophy."

When asked how the 40% was settled on, Persson says that it was simply the highest they could afford while still being able to operate. If the costs to operate were to be lower, he says that Epic "would consider passing that on" to creators.

"The goal is to cleanly cover operational costs and [have a] percentage that people can count on," he adds.

Unreal has traditionally had an image of being a high end tool. So releasing Unreal Editor for Fortnite does raise the question of its accessibility for a player base that has historically been pretty young.

"The player base of Fortnite today is young, but they're certainly capable of using an editor," Persson says. "Unreal is used in schools too. I think we have a long way to go to make it a very accessible editor, yes. But is it usable by a very young audience? It absolutely is.

"We don't want to overthink giving the editor that has been very successful for Epic to more people. Meaning that's a righteous cause to just say: here, we'll just give it to everybody else, extend that to our Fortnite creators, and let them figure it out."

He adds that the asset marketplace is one part of solving that equation.

"By allowing people to just sort of slide into Unreal through the Fortnite path, you don't have to know everything in order for it to be incredibly powerful," he continues. "So let's not dumb it down, let's give people full functionality and allow [them] to go as deep as they want."

Supporting that vision is the introduction of Verse, a new programming language unveiled late last year as the "programming language for the metaverse."

"We don't want everybody to become a programmer but we do want a programming language that's powerful enough that you can make the games you actually want to make, that extends to all the platforms we run on, that abstracts some of the more difficult things that you have to do when you program," Persson says, before smiling and saying that Verse really is "Tim's baby."

So we naturally turn to CEO Tim Sweeney to understand how the introduction of Verse plays into the firm's vision.

"It's designed to be really accessible to everybody," Sweeney says. "People in their first programming class learn JavaScript or Python. This is very much in that family in terms of complexity. It's very much designed to be a scripting language that anticipates and solves the problems you see coming from the metaverse. It's going to be platforms for potentially billions of consumers to use in the future. You want to catch problems in your code before you ship it, rather than after.

"The idea is the metaverse isn't going to be like apps… You know, a developer makes an app, and when they ship it it doesn't change again until they release a new version. Whereas the metaverse is going to be this composition of millions of things built by different users. Somebody might build a car, somebody else might build a glider, and you'd expect those to coexist together in a level even though the two programmers have never talked to each other, never met each other, never made stuff together. You need a language that's really designed to scale that.

"The language is designed for real-time simulations and a gameplay simulation where time passes. Time-based programming is a key part of Verse that separates it from some of its peers, and it's a language that we'll have to scale with massive simulations in the future. A billion users in a single environment together is the ultimate aim."

Epic's vision for the Unreal Editor for Fortnite directly plays into its vision for the metaverse then, which Sweeney has underlined needs to be open and steer away from "walled gardens."

"That's how the metaverse has to be built. The state of the games industry is such that it's really a perfect place for an open system because there's not one predominant company that can dictate terms. Each one of them will be better off connecting their services than just limiting themselves to their own user base. This is about real-world experiences with real-world friends. And interconnection is the way to do it."

He adds that Epic's business strategy is to compete to be the leading service provider in every area, including the engine space, server hosting, asset marketplace, and first-party experiences, "with the hope that in some of these areas we might actually be number one," Sweeney continues.

Epic's announcement of a unified 3D marketplace, Fab, talks directly to that notion of open environment Sweeney describes. When it launches later this year, Fab will include assets from Unreal Engine Marketplace, Sketchfab, Quixel Bridge, and the ArtStation Marketplace, targeting use for multiple engines, including Unreal's competitors. Content creators selling on the platform will get a 88% cut on their sales.

"One big part of democratising game development is making it as easy as possible for even a small team to build a great game," Sweeney says. "And it's just not going to happen if every team has to build all their assets, right?"

He continues: "Right now, this is aimed at indie to AAA game developers but, in the future, outside of the commercial space and what we're doing in tech, hundreds of millions of people will just want to build their own living room in the metaverse. And they might want to buy some paintings or some other cool statues for their space, and this may be a consumer asset marketplace in the future too."

Unifying the marketplaces of companies that Epic acquired over the last few years (Quixel in 2019, ArtStation and Sketchfab in 2021) is a good barometer of its strategy for acquisitions more generally.

"We're just looking to solve a bunch of problems and along the way we meet other companies that are trying to solve the same problems, and we found we could do a better job solving them together than apart – it's where every one of these companies coming into Epic has come from," Sweeney tells us.

"This is not a conglomerate formation. We don't want to build a whole bunch of P&Ls like Adobe or Autodesk might do. We look at Epic as a single business that's growing and building a content ecosystem. And these companies joining Epic are not weird venture capital businesses... They're all very much founder-led companies with a vision – that's pretty much the same vision as ours but more specialised in their area of expertise."

As our conversation draws to an end, we ask Persson and Sweeney about what might be standing in Epic's way now that it's laid out the foundations for its metaverse. The answer is unequivocal: Apple.

"They want a monopoly," says Sweeney. "They'll either try to crush the metaverse, or extract all the profit from it. They could just amend all the platform's rules tomorrow to kill everything everybody is doing, and that's why we need really robust antitrust enforcement. And that's why we're fighting this so hard. We see them as utterly dominating this business if they're allowed to use their market power and hardware to do so. The other challenges I think can all be overcome.

"Every company has a fear of connecting its services to others because maybe they start losing customers. But the truth is when Sony opened up PlayStation [to] cross platform play, and Microsoft supported Fortnite cross platform play, both platforms grew. And the situation didn't change, they both just increased their growth rate, reached new players because more people were able to play together with their friends and the result was great for everybody. So I think the world will see that as it goes."

Persson argues that cross-play isn't even really a thing anymore, that it's just what you'd expect naturally.

"We're about as far as we can do now without connecting any ecosystem"Saxs Persson

"Logically we reached some conclusion there that the next level of 'open' has to connect the ecosystems," he says. "We're about as far as we can do now without connecting any ecosystem."

Sweeney points to the market's evolution: from Second Life to Fortnite, to the boom of cross-platform play, the rise of online hangouts with real friends, Roblox taking off…

"Seven years ago, you really couldn't look at any game and say, 'That's an early version of the metaverse,'" he says."Now you have 600 million users engaging with this thing every month, at least. And it appears to be growing exponentially to the point of reaching several billions by the end of the decade. And so that's a real trend that's happening that we very much care about."

NFTs, virtual reality, AI… We touch upon the various trends that the industry has been going through.

"We had NFT pitches, true ownership and metaverse... You don't need that for the metaverse. It works. Robux, V-Bucks are just fine. You know, people attaching VR goggles and other things to it… Maybe future hardware will make the metaverse better, but you just totally don't need to do that either.

"Any smartphone, any console, any PC, you can [get together]. And, you know, we very much at Epic build real things. We've tried very hard to keep ourselves out of all this hype culture."

Stay tuned for a second part to this conversation featuring Epic Games CTO Kim Libreri, VP of engineering Nick Penwarden, and VP for digital humans technology Vlad Mastilovic.