5% royalties for using a AAA engine is a huge game-changer in the licencing business. If you sell 100k copies at $10 store price, that's $50k royalties to Epic.

In the past, they would've either asked for way more royalties (e.g. 20%) or several hundred thousand dollars up-front.

Now, being able to pay $20 up-front per team member, and then pay off a modest licensing cost only when you're making money... is worlds apart. The only time that this is a worse deal is if you're selling millions of copies of a $50 game... In that case, you're probably a big AAA studio, and you can afford to just deal with Epic the traditional way and pay them half a million dollars up-front.

CryTek has made a similar move today as well:

http://www.cryengine.com/news/crytek-announces-its-cryengine-as-a-service-program

For $10 a month per-person, you get access to CryEngine, including the C++ game code (but no C++ engine code) and no royalties.

Both Epic and CryTek here are moving over to making PC games extremely cheap to develop, and must be just sticking to their old business model for customers who want to make PS4/Xbone games, or customers who want to pay a huge sum up-front instead of royalties.

This is going to put pressure on Unity. I'd expect to see a change in their prices quite soon too.

I imagine that yeah, this is going to put an even larger amount of pressure on guys like C4, LeadWerks, Unigine, etc... I'd like to license my own engine product (beyond the one client I have so far), but competing against CryTek and Epic just got a lot harder!

At first I thought naively that it was freely distributed across the github, until it came right to my face that I've got to pay that small fee. And to be completely honest, I'm almost considering to apply for a month, just to stare at the code behind it.

I don't think that is really the case. The c++ source is just an added benefit. You can work with UE4 without touching any c++, as it has a noob friendly visual scripting system. By contrast, Unity requires C# or JavaScript knowledge. Also, Unity Pro costs $1500 or $75/mo (the free version lacks basic features) and with UE4 you get the whole shabang for $19/mo, which makes UE4 the clear winner in my eyes.

You do have a point there. I am not experienced with the visual scripting system, but from what I have heard it's not that great to work with in terms of getting something more advanced to work, not in contrast to Unity anyway, but I can only guess on that part.

For people/studios with programming experience, UE4 (and now also CryEngine it seems) might be the better option in terms of price and features. I haven't worked with the UE4 like I said, but I can imagine that such a huge and feature rich engine might not be the best option for smaller indie developers where the time to learn the engine, how to use it effectively and perhaps also make proper use of C++ will outweigh it's actual usefulness.

I might be completely wrong though, but that's how I see it. Fact remains, Unity will lose a portion of its user base as there are always people who want something else, but it will likely be more spread out when the dust has settled. We can only wait and see! :)

with the UE4 setup however if you stop paying you can keep using what you already have up until that moment and only have to re-sub if you want to get updates.

Aren't there strings attached to this? I mean.. In that case I could pay for a month, get the engine, cancel subscription and work with what I have. At the start, updates might be vital for some stuff, but there comes a point where updates aren't of such a big relevance that I must need them in order to make a game.

I think it's incredible value and smaller engines will have to promptly react to the price changes mostly because they will have to be defended in terms of an economical, non-technical comparison.

Aren't there strings attached to this? I mean.. In that case I could pay for a month, get the engine, cancel subscription and work with what I have. At the start, updates might be vital for some stuff, but there comes a point where updates aren't of such a big relevance that I must need them in order to make a game.

The strings are that you still have to pay them 5% royalties

Haha yeah of course :D, but let's assume it takes you a year to make your game, that would be 228 dollars, which is 209 dollars you would save for your noodles supply!

I imagine the percentage of people who had downloaded the previous UDK just to play with it without selling anything made with it it is very high! I know I'm guilty of that. I guess it'a a way to make money out of those.

The strings are that you still have to pay them 5% royalties

Haha yeah of course , but let's assume it takes you a year to make your game, that would be 228 dollars, which is 209 dollars you would save for your noodles supply!

you might still want to pay those $19/month to get all the updates (features+fixes), being outdated for a year might make you miss quite some important changes.

yet it makes me wonder, if one license per company is enough. if you can legally subscribe for one month and keep the source after that and work with it, you could just as good create a local git repository with it and the company works with it. or do they require that every new hire should subscribe for a month?

bit confusing.