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Unreal Engine

The engine Epic sold alongside its games

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Tim Sweeney wrote most of the engine behind Epic's 1998 shooter Unreal, and other studios were building games on it before Unreal itself came out. Mark Rein sold the licences; Unreal Engine 2 and 3 followed in 2002 and 2006, and by 2007 Edge called version 3 the industry's leading middleware. Epic then changed how it sold the engine: $99 for the Unreal Development Kit in 2009, $19 a month for Unreal Engine 4 in 2014, free to download in 2015 with a royalty on success, and Unreal Engine 5 in 2022.

In January 1997 Edge previewed a first-person shooter from a shareware company in Maryland and reported two things about it. Its engine ran at 25 frames a second on a 133MHz Pentium without a 3D card, and it was “incredibly, mostly the work of one programmer, Epic’s Tim Sweeney”. Its editor was so easy to use, the magazine added, that Epic’s Mark Rein had built “a whole 3D town in less than ten minutes”.

That engine became Epic’s second business. MicroProse was building a game on it before Unreal itself was finished, and by 1999 about ten games from other publishers were on the way. Rein sold the licences; Sweeney kept rebuilding the technology. Today, five versions on, Epic gives the engine away and takes a share of a successful game’s revenue.

Fast facts

  • Developer: Epic Games, known until 1999 as Epic MegaGames. Tim Sweeney wrote most of the first engine.
  • First game: Unreal (1998), made with Digital Extremes and published by GT Interactive.
  • Licensing: led by Mark Rein, Epic’s vice president.
  • Versions: Unreal Engine 2 (first game 2002), Unreal Engine 3 (shown in 2004; Gears of War, 2006), Unreal Engine 4 (2014), Unreal Engine 5 (2022).
  • Terms today: free to download; games pay Epic 5 per cent of gross revenue above their first $1 million, or 3.5 per cent if they also launch on the Epic Games Store.
  • Source code: available on GitHub since March 2014 to anyone who accepts the licence. It is licensed source, not open source.

Unreal and its editor

Epic began Unreal in 1994, Sweeney later recalled, and finished it in 1998 after gathering the team in Waterloo, Canada, for a year. Edge gave it eight out of ten in July 1998. It thought the game’s artificial intelligence its “biggest single achievement”, and it singled out Epic’s “decision to give away complete level creation tools” with the game.

The editor mattered to licensees as much as the renderer. Sweeney told Edge in 2004 that Epic had “always had a big focus on tools”, and that its editor showed “a pixel-accurate rendering of what you see in the game. It’s a WYSIWYG editing environment, always has been.” The engine also had its own programming language, UnrealScript, which Sweeney designed and which, Edge wrote, “formed the basis of the vibrant modding culture that sprang up around Unreal Tournament”.

Selling the engine

Licensees were announcing games before Unreal reached the shops. Edge’s Christmas 1997 visit to MicroProse found Star Trek: The Next Generation — Klingon Honor Guard “using the Unreal engine to power its 3D romp around the Klingon empire”. In 1998 3D Realms moved Duke Nukem Forever from the Quake II engine to Unreal’s.

In October 1998 Maximum PC’s T. Liam McDonald saw the licence as a turning point: “Unreal changes everything.” Among the Unreal games he found “deep into development” were Klingon Honor Guard, X-COM Alliance, Werewolf: The Apocalypse, The Wheel of Time, Deus Ex, Daikatana II and Duke Nukem Forever, and he predicted that Unreal would make more money from licences than from its own sales. Industry “scuttlebutt”, he wrote, put the price at $1 million a game. For that a licensee got the source code of the game, engine and editor, visits from Epic’s level designers and answers from its programmers. That, McDonald wrote, was “largely happenstance”, as Sweeney explained:

“The big goal with the Unreal technology all along was to build up a base of code that could be extended and improved through many generations of games. Meeting that goal required keeping the technology quite general-purpose, writing clean code, and designing the engine to be very extensible. The early plans to design an extensible multigenerational engine happened to give us a great advantage in licensing the technology as it reached completion. After we did a couple of licensing deals, we realized it was a legitimate business. Since then, it has become a major component of our strategy.”

By June 1999 Edge counted around ten Unreal games coming from other publishers. Rein, who had worked at id Software and was by then Epic’s vice president, was “credited with the licensing out the Unreal engine”. He admitted that Epic often saw little of its licensees’ work until it appeared at a trade show, and he defended engine licensing against the charge that it made games look alike: “Engines are just a set of paints and game developers are painters. It’s what they do with the paint that determines the outcome.” Ion Storm’s Deus Ex (2000), built on the engine with improved lighting and physics, was one of the results.

Unreal Engine 2 and 3

The second engine arrived in 2002. Mike Capps, later Epic’s president, designed the US Army’s recruiting game America’s Army, which he described to Edge as “the first Unreal Engine 2 game”. Epic’s own Unreal Tournament 2003 followed that year.

Sweeney, Rein and the level designer Alan Willard showed Edge Unreal Engine 3 in 2004. Its showcase was Gears of War, made by Epic and published by Microsoft for the Xbox 360 in 2006; Edge wrote that the game existed “as a showcase for the potential of Unreal Engine 3” and to show what the 360 could do. The timing suited Epic. Capps explained later that Unreal Engine 3 was ready for the new consoles just as other studios were finishing their last Xbox and PlayStation 2 games: “They needed us, which was perfect. And of course RenderWare dropped out of the equation, so thanks very much to EA.” (Electronic Arts had bought Criterion, the maker of the rival RenderWare middleware, in 2004.)

By June 2007 Edge called Unreal Engine 3 “the industry’s number one middleware”. Dozens of developers used it, among them Gearbox, Silicon Knights and Realtime Worlds, and EA, Sony, Microsoft, NCsoft, Midway, Capcom, Square Enix, Activision, Ubisoft and THQ had site-wide licences. Epic had about 80 staff, and the people making its games also answered licensees’ questions. “I don’t think we could survive as a middleware-only company,” Rein said. Designers could wire up game events without programming in Kismet, a visual scripting tool, and eleven other companies’ products, from physics to facial animation, were built into the engine through Epic’s Integrated Partners Program. Capps put Epic’s position more bluntly in 2010: “We’re arms dealers.”

Opening it up

The first step towards hobbyists came in November 2009. The Unreal Development Kit, a version of Unreal Engine 3 without its source code, was free to use; anyone selling a game made with it paid $99 and 25 per cent of revenue above the first $5,000, a threshold Epic raised to $50,000 in 2011. Epic reported more than 800,000 installations by May 2011.

Unreal Engine 4 changed more than the pictures. When Edge put it on the cover in March 2013, Epic had dropped UnrealScript for C++, and Sweeney gave three reasons: a list of everything a next-generation UnrealScript would need had “basically defined C++”; linking a scripting language to C++ cost a great deal of work; and “C++ won as the language for game development”. For designers, Kismet grew into a flowchart system whose templates were called Blueprints. “One artist working for six months can build a game with Unreal Engine 4 without actually programming anything and ship it, something on the scale of Angry Birds,” Sweeney said. Epic’s own Fortnite was the first game shown on it.

The pricing followed. In March 2014 Epic offered Unreal Engine 4 to anyone for $19 a month plus 5 per cent of a game’s gross revenue, with the full C++ source on GitHub. In March 2015 it dropped the subscription: the engine became free to download, with the 5 per cent due after the first $3,000 per product each quarter.

Unreal Engine 5

Epic revealed Unreal Engine 5 in May 2020 with a demo called Lumen in the Land of Nanite, running live on a PlayStation 5. Nanite handles very detailed geometry, and Lumen computes lighting that changes in real time. On the same day Epic waived its royalty on each game’s first $1 million of gross revenue, backdated to the start of 2020. The engine was released on 5 April 2022, after a year in early access; Fortnite had already moved to it. Epic’s MetaHuman Creator, launched in April 2021 and built on technology from the Serbian company 3Lateral, which Epic bought in 2019, makes realistic digital people for it.

The engine now reaches beyond games. Film and television studios use it for virtual sets: Wireframe noted in 2022 that the Star Wars series The Mandalorian “uses LED projection screens and Unreal Engine” to create its alien planets. In April 2024 Epic began charging companies outside games with more than $1 million in annual revenue $1,850 a year for each user, while game developers stayed on the royalty. From January 2025 a game that launches on the Epic Games Store at the same time as elsewhere pays 3.5 per cent instead of 5; sales through Epic’s own store carry no engine royalty.

Released source code

Epic has published the source of the current engine on GitHub since March 2014, but only to people who accept the Unreal Engine licence, and commercial use carries the royalty. The 1998 engine’s source went to its licensees; public sources record no general release of it.

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See also

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