The landscape doesn't seem to be very Indy friendly

Yep, and this is why Unity3d has managed to carve out a huge percentage of the indie developer marketplace -- it's only a few thousand.

And before that Torque was doing ok in the indie scene for only $100.

After all if only a few can afford to use their engine, they will make a lot less money

* The first rule of capitalism is, if a business continues to exist, the it's probably making money.

* The second rule is that if it could be making more money, then a competitor will likely force it out of business.

...so there's usually a method behind any kind of business madness, otherwise they'd cease to exist.

In the case of companies that sell an SDK for $1,000,000... yeah, maybe they only get 10 customers, or $10M per year. They could choose to sell it for $1,000 instead, but then they'd need to find 10,000 customers, and set up the infrastructure to deal with all of them. Their brand would also be less prestigious because the market would be flooded with 10,000 low quality indie games associated with that engine.

Half the companies I've worked for have used licensed engines. One of them in particular cost over $1M, with full source and support included.

The other half have used their own game engines developed internally, usually by a quite large, dedicated engine team, made up of expensive programmers.

In my case, I've recently started a company to make a game, so we had to face the buy vs build dilemma. As you've covered, the big, quality commercial engines are very expensive. Alternatively, you could hire a team to build a custom one for you. if we say that the average games salary is $80,000, and that one average programmer can build an adequate engine in a year, then a custom engine will cost you $80,000. In practice, you probably want multiple programmers, and you want them to be well above average, so a game engine is worth quite a bit...

In our case, I'm a professional engine programmer, and because it's my company, I'm willing to work for free... so we chose to build one simply because with those factors it became a lot cheaper... but if you don't happen to have a professional engine programmer willing to work for free, then the ridiculous prices offered by the vendors aren't always that bad.

Actually the very rise of engines like unity make it illogical in context, as those engines are part of the context now and cost between 0 to 1500 per dev, royalty free.

I am coming from a long time programming background

me as the ignorant noob who just wants to make a great game

Anyways, to answer your question, the prices are high because on top of the fact that they are streamlined pieces of software, they also come with many, many tools for artists and designers that become extremely helpful. For example, UE3's Kismet visual shading language. If you are a seasoned programmer like you initially claimed, than I think that you could in time make your own software (albeit much less flashy) to run a 3D game. Its mostly the content you should be worried about, however. Torque3D is now MIT'd open source software, so that is a great open source C++ engine, and you can modify it any which way you please or not at all if you so choose. If I didn't prefer C over C++, I'd have already been using Torque to make something I have been working on.

Hell no, unity 3D is NOT restrictive at all, and it comes with the asset store allowing for VERY VERY cheap VERY VERY good add ons, so basically toss in an additional 1000$ toward the asset store and you get a ton of AAA features back (nice networking, GPGPU particles, Real weather simulation, Real Time radiosity, virtual texturing supporting up to 256000X256000 textures! etc, some of those soon released, most already on the store).

Unity is really nice for artists too so tell her to download it & try it!

As someone who's spent around 10k$ on the unity asset store i can tell you that it's absolutely amazing and IMHO, above and beyond most of the triple A engines IF you include the asset store (and at 10K, i own most everything on there, which is quite far from a 300K licence for some engines . . .)

Also download this if you have a DX11 card and want to see what some add ons can do for unity, all the particles in this demo are done with TC particles, which is going to be sold on the asset store probably as soon as next week, with a price estimate of 85$ for indies :

http://forum.unity3d.com/threads/166715-Museum-of-the-Microstar-A-DX11-contest-entry-by-RUST-LTD-and-co

T3D (Torque 3D, in case there was confusion) would be your best choice, IMHO, if you are using C++. Tell you wife, girlfriend, or trans-friend (or whoever you were referencing) that the choice is either to start from scratch or take T3D. I really don't see how that isn't an easy decision as you can add whatever features you want given some time. Not to be unkind, but tell your "other" that until she learns how to program modern 3D game software she really can't make good decisions on the platform as she really isn't basing her decision off of anything but ease of pipeline, which can be easily changed, and for free. I mean, although she might be experienced, this is a project on a completely different magnitude. You probably aren't trying to make a AAA game, so you won't have a AAA pipeline, nor should you.