An uncertain future for Epic Games
We break down the layoffs at Epic Games. Plus: Epic Games store incentive programs, and a new horror game that ends if you scream.
Nick Pfisterer •
Welcome to the second issue of our monthly digest. It has been about a month since we launched, and the response has been good. The newsletter recently passed 1,000 subscribers and is still growing daily. I have a few articles baking in the oven, including one about the Epic Games Store's new incentive programs, which will be out very soon.
In the mean time, get cozy, sip your hot drink of choice, and catch up on the latest happenings in the world of Unreal. Enjoy. ☕
📰 In this month's issue:
- Unreal Fest 2023 announcements & talks
- New incentive programs for the Epic Games Store
- A horror game that ends if you scream
This month in Unreal
- Unreal Fest 2023 has come and gone. The annual conference took place October 3-5 in New Orleans, and featured 200 new sessions, many of which were recorded and are slowly being uploaded to the Unreal Engine YouTube channel. Here's a playlist. If you want a recap of announcements from this year's opening session, I've got you covered. If you only watch one talk, make it this one on resources & licensing for indies. It answers many of the most common questions around Unreal Engine licensing and royalties.
- A new licensing model for non-game projects is coming in 2024. I covered this in my Unreal Fest 2023 recap, but it's worth highlighting here. Starting in 2024, Epic plans to introduce a per-seat enterprise licensing model for using Unreal Engine on non-game projects. They're not ready to announce a date or terms yet, but Tim Sweeney said it "won't be unusually expensive or unusually inexpensive", and that it will be similar to other subscription-based software such as Autodesk Maya. Sweeney later said in a post on X that "there will be minimum revenue thresholds for commercial projects, and student/educator use will remain free."
- Epic First Run & Now On Epic are live. Epic First Run – first announced in August – officially launched October 16. At the same time, Epic announced another, similar program – Now On Epic – that incentivizes developers to bring their back catalogs to the Epic Games Store. Both programs are opt-in and offer ways to temporarily boost your revenue share from 88% to 100%.
- The Unreal Engine roadmap got a new Forward Looking tab. The intention is to share tentative plans for features they are working on without committing to a specific version or ship date. There's a lot of interesting stuff here, like a next-generation terrain solution, UMG style sheets, and a design overhaul for the content browser. Take a look for yourself. Worth bookmarking!
- Get this month's free Marketplace content. It's still available, but only for a few more days! On November 7, Epic will cycle it out for November's free content. Remember: you're just "purchasing" an entitlement to use the content. You don't have to download any of it right away. I recommend grabbing everything, even if you don't need it — you might someday.
Layoffs at Epic
Just after we launched Unreal Source at the end of September, Epic Games announced they were laying off about 16% of their staff – at least 830 employees – in order to recover from an extended period of spending way more money than they earned. Thankfully, Tim Sweeney addressed this at Unreal Fest. It was quite the elephant in the room.
It seems many teams were affected by the layoffs. So far, I have been able to confirm the following teams were affected:
- Unreal Engine engineering
- Unreal Engine documentation
- Epic MegaGrants
- Online Learning
- Epic Dev Community
- Fortnite Creative
- Fortnite Save the World
- MediaTonic
- Psyonix
- Epic Games brand, marketing, business, and sales teams
Several of the affected employees are people I know. Some are people I have had the pleasure of collaborating with over the years. Many are people I have yet to meet, but have admired from afar. All of them are talented individuals who find themselves on the job market again. I am saddened by this turn of events, but I find solace in the knowledge that these people will do great work wherever their journey takes them.
At first, I was surprised to hear that Epic has been overspending to such an extent that would necessitate layoffs. Fortnite alone generates billions of dollars in revenue every year. Then there's Unreal Engine, Unreal Marketplace, and Epic Games Store. However, Epic has also been spending billions of dollars along the way. In the past 5 years, Epic has:
- Acquired at least 15 companies for undisclosed amounts
- Launched the $100 million Epic MegaGrants program in 2019
- Spent over $1 billion on exclusives and free game giveaways for the Epic Games Store
- Worked with Unreal Marketplace creators to give away at least 5 free assets every month since November 2018
- Paid billions in platform fees from their Fortnite earnings
- Invested significant resources in legal battles with Apple and Google
With all of that in mind – not to mention the fact that Epic does not collect any fees or royalties for linear content unless you opt for enterprise licensing – it's not outlandish to imagine Epic spending more than they're making.
Speaking frankly: these events have shaken my confidence in Epic Games and Unreal Engine a bit. Not enough to change anything I am doing right now, but enough to make me worry a little more about the future. Will Epic be able to recover from this and find solid ground again? I sincerely hope so, and I am still rooting for them.
In other news:
- How Inflexion Games upgraded from UE4 to UE5 mid-development. It's great to see such a detailed case study of what it's like to upgrade from UE4 to UE5 when you're still actively developing a game. Jacques Lebrun and Noel Lukasewich, two of several developers working at Inflexion on their upcoming title Nightingale, talk about their motivations for upgrading, planning and preparation, the process of upgrading a code project with engine modifications, their source control setup, and how they're benefiting from UE5.
- Inside Croteam's transition from in-house tech to UE5 for The Talos Principle 2. Upgrading from UE4 to UE5 is one thing, but switching from a different engine – let alone an in-house engine – is quite the undertaking. Croteam’s Chief Creative Officer Davor Hunski and lead programmer Goran Adrinek discuss why they decided to make such a significant change, as well as the inspiration behind their new sequel.
- Steam Visibility: How Games Get Surfaced to Players [video]. The Steamworks team have published a great video about how game visibility works on Steam, narrated by Erik Peterson from the Steam business team. Erik walks through all the different ways Steam chooses what games to show to players, including a break down of which sections of the store are curated vs. algorithmic. Highly recommended for anyone who has published or wants to publish a game on Steam; especially independent developers who are working on publishing their first game.
- Deconstructing the underwhelming launch of an automation builder game. There are a lot of great stories and resources out there for successful game launches, but the ones that aren't so successful rarely get the same treatment. BiteMe Games, developers of city builder Forge Industry, recently published a postmortem of their game's underwhelming launch on Steam. Game marketing consultant Chris Zukowski reached out to the team for additional information and permission to deconstruct the launch even further on his own website. The result is a comprehensive look at what went right, what went wrong, and what developers can do to improve their odds.
Community highlights
- DON'T SCREAM is a short horror game made in Unreal Engine 5 that has been making the rounds lately. It's a fun concept: explore the forest without screaming for 18 minutes. Time only passes when you move. If you scream, you lose. The game is in its early stages now, and the two developers, Joure & Joe, have plans to significantly improve and expand on it. Available now on Steam Early Access.
- The Witch's Hut is a beautiful, spooky cinematic created by Pasquale Scionti using Unreal Engine 5.2 and Quixel Megascans. The scene really showcases what Lumen and Nanite can do for moody horror scenarios. You can watch the cinematic in 4K here, or check out his ArtStation post for plenty of stills, as well as a video series he did for NVIDIA where he breaks down the process of building the scene.
- Level artist Drashti Shah recently shared her latest environment, an abandoned swimming pool made with Unreal Engine 5.1 with Quixel Megascans. The atmosphere is great, and there's some good environmental storytelling at play. Why was this swimming pool abandoned? Why there are chairs and woooden palettes in the pool? Who is responsible for the graffiti? Check out Drashti's ArtStation post for plenty of shots, a video showcase, and even a GIF showing the progress from start to finish.
- @tapesclub, who is always doing interesting things with audio, shared a really fun tape machine setup made with MetaSounds. It emulates the sound of playing music on an old cassette tape player, including stylized rewind and fast-forward effects. It even emulates the clicks from pushing the buttons! Oddly satisfying.
- @ChrisZuko, creator of Mix Universe, recently shared a great Blueprint debugging tip. It turns out you can use the Blueprint Debugger tool to easily search for and watch Blueprint values in real-time while your game is running. Very handy, and I wish I knew about this sooner!
Until next time
That's all for October. I'm a little sad that my favorite time of year has come to an end. If you celebrated Halloween, Dia de los Muertos, or Samhain, you probably know what I mean.
I hope you enjoyed this issue. I've got a few new articles on the way in November, so stay tuned for that. If you can't wait until the next newsletter, I will be sharing breaking news, updates, and community finds over in our Notes feed.
Keep in touch, and send us anything you think is worth sharing. Until next time.
Thank you,
Nick aka pfist