In the last three days, three major game engine developers have announced they are giving their technology away. Why would they do that? What do they hope to achieve?
Epic Games kicked off the announcements on Monday, declaring that Unreal Engine 4 would now be free to develop with, the only cost being a 5% royalty on all revenue above $3,000. For the past year or so using Unreal required a monthly paid subscription. Prior to that Unreal was even more expensive, priced to be accessible only to major developers and publishers, with up-front fees in the hundreds of thousands along with potential royalties. (Exact licensing terms were negotiated on a per-developer basis.) The rapid journey from ~$500K per license to ~$0 tells us that there are significant changes afoot in the game technology business.
Unity followed suit on Tuesday with their announcement of Unity 5. Although a paid Professional version still offers a few development niceties, a full-featured Personal version is free for developers with under $100,000 in revenue or funding. Unity has generally been much cheaper than other major engines (including Unreal), and consequently the darling of indie developers. Although Unreal’s licensing change undercuts this advantage—both engines are now essentially free for indies until or unless they make serious money—Unity has a vast community and remains a powerful and attractive engine.
Within a few hours of the Unity announcement, Valve Software said their Source engine will soon be made available free to content developers. This news is more difficult to interpret. Although Source has been around in one form or another since the late 90s, it has largely been Valve’s own internal engine and seldom licensed by external developers. Originally adapted from id Software’s original Quake engine, Source’s architecture was encumbered by haphazard design and its tools were clumsier than Unreal’s or Unity’s. Despite being overhauled for games like Portal 2, Source’s graphical power has lagged behind the most cutting-edge engines. Primarily a desktop engine, we’ve never seen it work on mobile devices. And since yesterday’s announcement gave few details on licensing terms, we don’t yet know whether Source 2’s power or cost will compete with Unreal or Unity. Yet despite these disadvantages, Valve is certainly a powerful player in desktop gaming, with control over the ubiquitous Steam platform. Although Source has not had the third-party use of engines like Unreal or Unity it has been used in many internal games that are well-loved and robust. An indie-friendly Source 2 release cannot be ignored.
Three of the most prominent game engines in the world, each with millions of dollars of development investment and years of effort having been poured into them, all given away in the same week. What is going on?
To those who’ve been watching the field of game engine licensing for a while the answer isn’t hard to see. Here, as so often in technology development, freedom is a bid for monopoly.
By giving their technology away, engine developers are staking a claim on becoming the de facto standard for game production. Each wants to gain a critical mass of users and to edge out the other engines as much as possible. If you can become the engine that—say—80% of all games are developed with, you will gain a lasting control over game development for the next 10, 20, even 50 years.
A large mass of developers all using your engine creates several virtuous cycles that benefit both them and you. More developers means more support as members of the community educate and assist each other. It means more bug reporting and better feature requests as more users give feedback on your product.
And there’s a deeper, longer-term benefit: an educated workforce. The more developers use your engine, the more they will hire other people who know how to use it and the more they will seek jobs with companies that use it. The more prominent you are, the more university programs in game education will teach your engine to their students, producing yearly crops of developers seeking work with your engine and themselves hiring others who know it.
A large community around your engine will tend to grow even larger. And nothing else can substitute for this benefit. If you demand $1 million a piece from five AAA licensees, you’ll earn $5 million. But if you build a community of 100 million people—if you can become the standard—then five years from now you will have endless opportunity. You can tap into the revenue of a thousand games a year.
If you need a model for this, look no farther than Panavision. In the early years of the film industry, every film was made on cameras that were cobbled together, modified, even invented, by the filmmakers themselves. Directors like Georges Méliès were as much engineers as artists, creating the technology even as they created the film. But by the 1950s movie technology was stabilizing. Although new technology for specific films was needed by way of special effects, most of the technology used in filmmaking was familiar and stable. At that point, companies like Panavision made their fortunes by offering high-quality, reliable technology to filmmakers who didn’t want to worry about technology that much. Film technology development went from being a per-film, small-shop, bespoke business to an industry wide, standards-based, commoditized business.
That is where games have now arrived.
It is now increasingly rare for game developers—whether indie or AAA—to build their own engines from scratch. It is cheaper and faster to license technology from a company like Epic, Unity, or Valve. The question is no longer whether you should use someone else’s engine, but which engine to use. And the answer to that question is all about the power of the engine, the quality of the tools, the size of the community, and the cost.
Unreal and Unity (and presumably Source 2) both have incredible power and fine tools. Unity has a massive community and Unreal’s is growing. Valve’s Steam gaming community is large and adoring; whether they can convert this to a developer community remains to be seen.
With power, tools, and communities pretty well established, the place where the competition is decisive, therefore, is cost. Given that, for engine developers to drop the cost of their engines to as close to free as possible is a no-brainer. By making at least the up-front cost of the engines free, they invite hobbyists, indies, universities, high schools, and even AAA developers to at least dabble in their technology. The more they dabble, the more they talk. The more they talk, the better the community. The better the community, the better the engine. The better the engine, the more control. The more control, the more revenue becomes available down the road.
And if the film industry is any guide, it is a long road indeed. Panavision offered its first cameras in the early 1950s and is still profitable today. If Unreal, or Unity, or Source wins this fight, you could see one of their logos at the start of every game you play for the next sixty years or more.