Epic Games' Unreal Engine 3 was the most widely used game engine during the X360/PS3 era. Almost every big budget AAA title, from Mass Effect to Bioshock Infinite, used it. Things have taken a turn during the current XOne/PS4 era. Almost every big studio now has their own engine, eg EA has Frostbite, Ubisoft has Anvil.

About the only big AAA title released of late using Unreal Engine 4 (UE4) was Gears of War 4 and the upcoming Borderlands 3. Batman Arkham Knight while technically uses Unreal Engine, uses a highly customized build of UE3 (not UE4).

Current state of game engines looks like this:

  1. Custom in-house game engine for large AAA titles
  2. Unity for indie titles or smaller (mobile only) titles from larger studios

AAA game royalties used to be the bread and butter of Epic Games. With that revenue source dying, the current actions of Epic Games can be easily explained.

  • Independent for 20 years, in 2012 Epic Games sold off almost half of its equity (48.4%) to Tencent Holdings to raise capital.

  • Unreal Engine made open source with a flat 5% royalty to attract Indie developers. This royalty was closer to 25% during the PS3 era.

  • Trying to expand use into other industries like Movies and VR.

  • Develop Paragon, the MOBA game, to get a piece of revenues enjoyed by LOL and DOTA.

Neither Indie games nor VR is big enough at this point to provide the kind of revenues AAA titles used to provide in the previous era. Paragon is still not complete and seems to have already lost to OverWatch.


Unreal Engine is the classic case of running a business which relies on a handful of big customers. If its critical enough and given enough time those customers may decide to build their own copy of your product. Then you are out of business. This is what happened to CryEngine last year. Epic Games seems to be clasping in all directions right now but it has yet to find a moat to replace its AAA royalty business.

Unreal Engine is a marvel of technology. It is a shame that market forces have forced it in the situation it is currently.