A little over a year ago, Epic Games laid off around 16 percent of its employees. The problem, Epic said, is its own big ideas for the future and how expensive they are to build. “For some time now, we have been spending far more money than we make,” Epic CEO Tim Sweeney wrote in an email to employees.
On Tuesday, Sweeney said on stage at the Unreal Fest conference in Seattle that the company is now “financially sound.” The announcement kicked off a packed two-hour keynote with updates to Unreal Engine, the Unreal editor for Fortnitethe Epic Games Store and more.
In an interview with The edgeSweeney says that limiting Epic's spending was one of the reasons that got the company to this point. “Last year, before Unreal Fest, we were spending about a billion dollars more a year than we were making,” Sweeney says. “Now we’re spending a little more than we earn.”
“The real power will come when we bring these two worlds together”
Sweeney says the company is well-positioned for the future and has the ability to make the kind of long-term bets he described at the conference. “We have a very, very long way to go when we compare our savings in the bank to our spending,” Sweeney says. “We have very solid funding compared to pretty much every other company in the industry and we make forward investments very prudently so that we can increase or decrease them as our fortunes change. We believe we are perfectly positioned for the rest of this decade and can achieve all of our plans at our size.”
Epic has ambitious plans. Currently, Epic offers both Unreal Engine, its high-end game development tools, and Unreal Editor for Fortnitewhich is easier to use. The goal is a new version of the Unreal Engine that can combine both.
“The real power will come when we bring these two worlds together, combining all the power of our high-end game engine with the usability we have stitched together.” [Unreal Editor for Fortnite]says Sweeney. “That will take several years. And when that process is complete, that will be Unreal Engine 6.”
Unreal Engine 6 will allow developers to “build an app once and then deploy it as a standalone game for any platform,” says Sweeney. Developers will be able to leverage the work they do Fortnite or other games that “leverage this technology base,” which would enable interoperable content.
The upcoming “persistent universe” that Epic is building with Disney is an example of this vision. “We announced that we are working with Disney to build a Disney ecosystem that is owned by them but fully interoperable with them Fortnite ecosystem,” says Sweeney. “And what we're talking about with Unreal Engine 6 is the technology base that makes this possible for everyone. From triple-A game developers to indie game developers Fortnite Creators who achieve the same thing.”
If you read my colleague Andrew Webster's March 2023 interview with Sweeney, the idea of interoperability to make the metaverse work will sound familiar. At Unreal Fest this week, I got a better idea of how the mechanics of this might work with things like Unreal Engine 6 and the company's soon-to-launch Fab Marketplace for purchasing digital assets.
Fab will be able to host assets that can work Minecraft or Robloxsays Sweeney. But the larger goal is to give fab creators the ability to “offer a logical asset with different file formats that work in different contexts.” He gave an example of how a user could purchase a Forest Mesh set that includes various content optimized for Unreal Engine, Unity. RobloxAnd Minecraft. “Seamlessly transferring content from place to place will be one of the critical things for the metaverse to function without duplication.”
But for an interoperable metaverse to be truly possible, companies like Epic, Roblox and Microsoft will need to find ways for players to move between these worlds rather than keeping them isolated – and that's mostly not in the cards.
Sweeney says that Epic has not had “discussions of this nature” with anyone other than Disney. “But we will do that over time,” he says. He described an ideal in which companies working together as colleagues would use revenue sharing to incentivize item shops where people want to buy digital goods and “sources of engagement” (such as: Fortnite experiences) in which people want to spend time.
“The whole thesis here is that gamers are drawn to games that they can play with all of their friends, and that gamers will spend more on digital items in games that they trust they will play for a long time,” says Sweeney. “If you're just playing a game, why spend money buying an item you'll never use again? If we have an interoperable economy, that will increase gamers' confidence that spending today on buying digital goods will result in things they will own for a long time and that it will work everywhere they go.”
“People are not dogmatic about where they play”
“There's no reason we can't have a common way to move between them Roblox, MinecraftAnd Fortnitesays Epic EVP Saxs Persson. “From our perspective, that would be great because it keeps people together and lets the best ecosystem win.” Epic sees in its surveys that “people aren't dogmatic about where they play,” says Persson.
Of course, there are plenty of opportunities for Epic, which is already developing and building a widely popular game and game engine Fortnite into a game creation tool. (And I haven't even mentioned how Unreal Engine is increasingly being used in film and other industries.) The end state sounds great for Epic, but Epic also needs to make the math make sense for everyone else.
And that's what it has to do without large presence on mobile devices. The company has been in legal disputes with Apple and Google for years over their practices in the mobile app store and is also currently suing Samsung. The Epic Games Store recently launched globally on Android and in the EU on iOS, but due to restrictions on third-party app stores, explains the company's game store boss Steve Allison The edge that achieving the year-end installation target is “probably impossible”. Any major change could take quite a while, according to Sweeney. “It will be a long fight, and it will likely lead to a long series of battles, each advancing a set of freedoms rather than a single global moment of victory,” Sweeney says.
There's another battle Epic is fighting: Fortnite is still very popular, but interest – or at least hype – in the metaverse is waning. However, Sweeney and Persson disagree that the term appears to be losing popularity.
“It’s like there’s metaverse weather,” Sweeney says. “Some days it’s good, some days it’s bad. Depends on who’s talking about it.”