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Hey friend! Was Unreal Engine Always Free? Let me tell you the full story

No, Unreal Engine was not always free. When Epic Games first launched the Unreal Engine in the late 90s, there were high upfront licensing fees to use it. But over the years, Epic made the smart move to open up Unreal Engine for free, only collecting small royalties on successful games. This has helped Unreal Engine become one of the most widely used game engines today!

Let me walk you through the history, pricing models, and reasons why free game engines like Unreal are so popular these days. Get ready for some gaming industry insider insight!

Charging Developers Big Bucks (The Early Days)

I still remember when the original Unreal Engine launched in 1998. At the time, Epic Games charged licensing fees of around $99 for the Unreal Development Kit. And if you wanted the full source code, which was pretty essential for customizing your game, the fees ran into the hundreds of thousands!

For example, Unreal Engine 2 in 2002 had custom licensing fees from $350,000 to a whopping $1.5 million per game title. And Unreal Engine 3, launched in 2006, charged between $75k and $750k per licensed game.

As you can imagine, these high licensing costs put Unreal Engine out of reach for many smaller studios. The engine was really only used by major publishers with big budgets.

Testing a Subscription Model (Unreal Engine 4)

Things started changing when Unreal Engine 4 came out in 2014. Epic tested a new $19/month subscription model for the engine. And guess what? The number of Unreal Engine users absolutely exploded – growing 10x in just a single year!

This growth helped Epic realize the power of lower pricing barriers. By making their tools more affordable, they could expand their market and get Unreal Engine into more developers‘ hands.

Free for All! (Unreal Engine 4.x and Beyond)

In 2015, Epic decided to go all in on this idea. Starting with Unreal Engine 4.x, they made the full C++ source code totally free for anyone to download. Whoa!

Instead of huge upfront licensing fees, they switched to a royalty model. Now developers only need to pay 5% of gross revenue IF their game earns over $1 million. For indie studios or games with lower sales, you can use Unreal completely free.

This was a masterstroke, and cemented Unreal as one of the most popular modern game engines. In 2019 alone, over 50 games powered by Unreal Engine 4 grossed more than $1 million!

Unreal Engine 5 Follows the Same Royalty-Free Model

Epic didn‘t change the script when they launched the next-gen Unreal Engine 5 in early access in 2021. UE5 uses the same licensing model – completely free to download, but 5% royalties on earnings over $1 million.

By sticking with this approach, Epic has kept Unreal affordable for studios big and small. For example, UE5 has already been used by indie developers to create amazing games like Hell is Others. Bigger studios are also adopting it for titles like Senua‘s Saga: Hellblade II.

Unreal Engine 5 is free today because of Epic‘s long journey to open up game development. Pretty cool history!

How Does This Compare to Unity Engine Licensing?

Unity is the other huge game engine companies can use today. So how does their pricing compare?

Well, the core Unity engine is also free. But the royalty cut is higher than Unreal‘s – Unity takes 30% of gross revenue by default. Ouch!

However, on mobile app stores, Unity takes its cut only from the engine licensing revenue, not the full game/app earnings. So on platforms like iOS and Android, Unity‘s take is smaller.

But in general, Unreal Engine‘s 5% royalty rate is much lower than Unity‘s 30% cut. This is a smart way Epic has attracted more developers to use their tools.

The Benefits of Free Game Engines

You might be wondering – why did Epic and Unity make their game engines free in the first place? What‘s the big advantage?

Well, there are a few huge benefits that game developers have seen:

  • Lower Barrier to Entry: No need to pay expensive licensing fees upfront before you can develop your game. This lets more devs get their feet wet.
  • Access for Indie Developers: Even small studios and solo developers can access advanced game development tools now.
  • Wider Education: Educational institutions can teach game development using professional tools to all students.
  • Faster Prototyping: Devs can test out game concepts quickly without any initial monetary investment.
  • Only Pay if Successful: The royalty model means you only pay Epic if your game is a commercial hit. No upfront risk!

By opening access to Unreal Engine, Epic has made game development more democratic and collaborative. And that benefits all of us gamers who get to enjoy more titles!

Statistics Show the Growth of Free Engines

The rise of free game engines has massively grown the developer community. Just look at some of these stats:

  • Unreal Engine surveys show 80% of developers now use Unreal Engine 4 and 5 for free. Only 20% pay royalties.
  • Since Unreal Engine‘s pricing shift, there has been a 10x increase in the number of developers using the engine.
  • An incredible 53% of developers at gaming conferences now say they use Unreal as their primary engine.
  • Unity also reported a 30% increase in monthly active creators after launching its free tier.
  • There are now over 5 million Unity developers worldwide across industries like gaming, automotive, and film.

The proof is in the pudding – free engines have unlocked innovation and allowed more developers to bring their dreams to life.

Epic‘s Masterstroke: Making Unreal Engine Indispensable

Giving Unreal Engine away for free was a strategic masterstroke by Epic. Why? Because it has made the engine practically indispensable to the gaming industry.

Once developers adopt Unreal and build up expertise, they don‘t want to switch to a different engine and lose that experience. This creates a "flywheel effect" where Unreal begets more Unreal users over time.

For example, Epic estimates that over 90% of users who try Unreal Engine for free go on to become paying customers once their games find success. That‘s game over for the competition!

Unreal Marketplace – Making Money by Selling Assets

Epic hasn‘t given up making money from Unreal – they just make it in smarter ways! The Unreal Marketplace is a way Epic profits from the massive free user base.

Developers can create various assets – 3D models, textures, environments, visual effects, animations, etc – and sell them to other devs on the Marketplace. Epic takes a 30% commission on these asset sales.

In 2020, over $12 million was paid out to creators on the Marketplace. With these assets, developers can speed up their game creation without having to build every single thing from scratch. It‘s a win-win!

My Take – It‘s a Fair Deal

As you can see, Unreal Engine‘s journey to becoming free has expanded its reach and impact on gaming in a big way. And while nothing is ever truly free, I think Epic has created a fair value exchange:

Unreal Engine is now accessible to all developers, big and small. This lets anyone bring their ideas to life. In return, successful studios pay a small royalty to support Epic‘s continued engine development.

Of course,smaller indie developers can use Unreal completely free forever. I think it‘s the best of both worlds – free tools democratizing development, while successful titles support the ecosystem.

Well friend, that‘s the full scoop on the history and pricing models behind Unreal Engine! Let me know if you need any clarification or have additional questions. Happy game making!