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Comment by tapoxi | Hacker News Reader

Unreal gets a 5% royalty on every game. Unity is a subscription model, they don't get more money out of wildly successful games like Hearthstone or Pokemon Go. Their solution to this is adding more over-the-top services like analytics and advertising.

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Oof. In 2017, Hearthstone was bringing in $40M per MONTH[0]. Imagine Unity getting 5% of that. Huge missed revenue.

0. https://venturebeat.com/2017/08/10/pc-gaming-weekly-watch-ou...

The thing about game tools is that it's always a balancing act because for all the money that flows through the space, there isn't a lot of money to go around.

A game engine company cannot ask for much money at all without the people holding the purse strings turning around and asking "Why don't we just use an open source engine or build our own?" So Unity is stuck with a huge foot-in-the-door problem regarding their game engine business: their direct competition is their customers.

To their credit, I have been consistently impressed with their approach to addressing that challenge, but that challenge makes the whole space of game development support tooling hard to persevere in.

Very few new games use their own engine. Excluding legacy titles and AAA publishers who have their own tech developed across decades, I believe proprietary engines are less than 10% of the market today. The only exception is the Japanese market but even that has changed in recent years with Unity and Epic making inroads.

It’s very difficult to justify the expense of developing your own engine, especially if you intend to release for multiple platforms.

It’s very difficult to justify the expense of developing your own engine now. Those numbers are distorted by Unity having been on the market for seventeen years. In 2005 (the year Unity hit the market), there were thirty-nine new games on Steam. In 2021, there were over 10,000.

Now you have to ask how many of those games would have happened absent a Unity, and the answer is "Most would not." But it's a chicken-egg problem: without Unity, the games wouldn't have existed, but if Unity asks for too much money to publish the game with their engine, the game also doesn't exist.

It's a conundrum that caused Unity's predecessors to mostly try and fail (with a few exceptions that are still around), and I've been impressed by their ability to thread the needle on this market. But it's a delicate market... lacking a Unity out there, I doubt OnlyCans Team would have rolled their own engine, but I also doubt they'd have paid money to Unreal to execute on their novelty idea. They just... Wouldn't exist. Unity has to pull far, far less revenue from developers of a game project than Unreal does to maintain the existence of the ecosystem they grew around themselves.

> In 2005 (the year Unity hit the market), there were thirty-nine new games on Steam. In 2021, there were over 10,000.

While I think your point still holds, I think it should be noted that 2005 was 2 years after steam released. And still primarily a distribution platform for valve’s first party games. There were many more games available via other distribution channels.

It's also worth noting that Steam has partially opened up for independent developers in 2012 with Steam Greenlight (via manual curation), and fully opened up only in 2017 with Steam Direct. Before that, you had to be an approved partner to be able to publish on Steam.

It's unlikely for a small indie to roll a mobile game engine But if you are talking about companies with millions of dollars of income from gacha games like Hearthstone, most of them have already attempted to roll their own or even used in production already. (NeoX from NetEase, Cyllista from Cygames and Supercell’s unnamed engine…) For mobile game engines, they are not striving for crazy visual fidelity since mobile hardware is really limiting. Those who stick with Unity now because it’s cheaper, but if Unity tries to charge way more, they will definitely spend that markup to push their own tech onto production instead of surrendering money to Unity.

Unreal has technology moats like Lumen and Nanite to justify the royalty while Unity doesn't.

Even CDPR decided to defunct their engine and are sticking with Unreal for future titles.

> Very few new games use their own engine.

On Steam, it seems to be about 20% - pretty much the same share as Unreal's: https://www.gamedeveloper.com/business/game-engines-on-steam...

There's also a difference between rolling your own in-house engine like Frostbite or REDengine, and making a game on your own with no general-purpose engine using something like SDL. There's little point in doing the former nowadays, but there's plenty of titles that still successfully take the latter approach. General-purpose engines make this whole field obviously more approachable and for some kinds of projects are the only viable option, so the percentage share of no-engine games will likely continue going down, but I don't expect absolute numbers to drop significantly.

> people holding the purse strings turning around and asking "Why don't we just use an open source engine or build our own?"

Those people should be fired

You can't fire the people with the money. ;)

You don't have to follow through. You just make the case to the engine licensor that you will take that option if they don't reduce their price. Alternatives are bargaining chips, even if they are poor alternatives. Not every seller will make concessions when you do this. Some do, and some say "OK then let us know if you change your mind" and wait.

The Unity goal of democratizing game development specifically targeted game engine royalties which were a massive barrier to entry. 5% may seem small but before Unity stole their thunder, Epic used to charge upwards of 20% royalty plus a massive upfront cost in the six figures, which put a commercial engine out of reach for independent developers.

If Epic was charging 20% + upfront costs, it seems like Unity could have beat them to the punch with 5% and still stolen their thunder.

Yeah, except in the early days Unity wasn’t really a production ready game engine. Very few games would release on unity and fewer made money. Unity’s profit model had generally been users who wanted to make games enough to buy a license, but there were few incentives for Unity to make a game engine good for Shipping games.

Unity has always had a pretty predatory business model. And has basically never made money from successfully shipping games.

If one wanted to solve that, perhaps "$X per month and 5% of sales after the first $50k"?

With UE the 5% only kicks in after the first million dollars. This solution you provided seems worse as now Im paying for seat licenses and royalties.

That's assuming Blizzard would've gone with Unity if there was a 5% royalty. Unreal isn't necessarily getting 5% out of bigger titles either, that's just the standard license.

Hmm, I wonder if maybe the royalties model is better for the developer in addition to possibly making more money for the engine. I know I wouldn't shell out a ton of money on an ongoing basis for a project I don't know will ever go anywhere; most people presumably think similarly.

This would also help Unity's image of being an engine for bad games; currently, bad games use the free version of Unity, meaning they show the Unity logo splash screen, while all good games built on Unity use the paid version which allows customizing the splash screen.

If there was only one version of Unity, which was free up-front but took a 5% royalty, it seems like a lot of problems would be solved for both Unity and developers.

Only small devs stick to the basic contract. Bigger games that expect to bring in a lot of money will go for a custom contract with Epic instead.

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