Friday, November 06, 2009

Industry Shake-Up?

Some of you know that I work in the Video Game industry.  See my last post.  I do not work for a company that makes games.  I work for a company that makes what is called a “Game Engine”.  If you are not a gamer you have no idea what i am talking about.  If you are a gamer then you are familiar with the term. The company I work for is called Emergent Game Technologies.

Yesterday, another game engine maker Epic (Makers of the Unreal Engine), decided to offer part of their engine to developers for free.  Yes, that’s what i said, for free.  Most around the office here, upon hearing the news, were a little pissed off.  But then most of us started to really look at the announcement to try to understand what it meant to Epic (the makers of Unreal) and to us as a game engine company.
What does this mean to Epic?
    1. Sales leads
    2. Sales leads
    3. Sales leads
When you download the engine from Epic, you supply all the standard info.  Epic then follows your progress. 

Then there is the gotcha.
    • No Support - To quote Epic directly "Epic Games, Inc. will not be providing direct support for this product. "
    • If you develop an internal application, you pay Epic $2500 per seat, per year.  To quote Epic directly "If you are using UDK internally within your business and the application created using UDK is not distributed to a third party (i.e., someone who is not your employee or subcontractor), you are required to pay Epic an annual license fee of $2,500 (US) per installed UDK developer seat per year."   Did I say free above?
    • If you develop a game and that game is sold with revenues greater than $5000, you pay Epic $99 plus 25% of your revenue.  To quote Epic directly "If you are creating a game or commercial application using UDK for sale or distribution to an end-user or client, or if you are providing services in connection with a game or application, the per-seat option does not apply. Instead the license terms for this arrangement are US $99 (Ninety Nine US Dollars) up-front, and a 0% royalty on you or your company's first   $5,000 (US) in UDK related revenue, and a 25% royalty on UDK related revenue above $5,000 (US).  UDK related revenue includes, but is not limited to, monies earned from: sales, services, training, advertisements, sponsorships, endorsements, memberships, subscription fees, rentals and pay-to-play." Did I say free above?
    • Only available for PC development.  If you want consoles, you pay Epic their normal price for the engine.  Did I say free above?
So, to my untrained eye, what this means is Epic will get money from you some way or another. This is great for Epic. A smart move. You could basically say that this is just a glorified, extended evaluation of the product. A single AAA license that comes from this move could mean Epic brings in a half million dollars. And that is conservative.

This is not necessarily great for game developers. It limits their choice because they will immediately go for FREE. I equate this to Microsoft offering Internet Explorer for free back in the 90s. I started using it, because it was free. But, the industry paid for it in the long run. Now we have less choice. Sure there is Firefox and Chrome. but those are relatively recent. It took a long time for competition to get were they needed to be to break Microsoft’s hold on the market. They are still trying.

What does this mean for Emergent Game Technologies?  We differentiate ourselves in a couple of ways.
  1. Our support to customers and evaluators is second to none.  Does Not Change!
  2. Our product, Gamebryo LightSpeed, addresses the rapid proto-typing, rapid iteration areas of game development like no other product. Does Not Change!
  3. Sales – This is the change – We now have to address the gap.  Those startups looking to evaluate an engine that will grab the first one they can get their hands on.  I can assure you, our Sales and Marketing Team is already implementing a strategy that addresses this space.
Will Emergent become the Netscape of game engines and fade away into (made with Gamebryo) Oblivion? I wouldn’t count on it.  Will Epic continue to dominate the market and grow market share?  In the short term, yes.  But who knows what tomorrow will bring.

Till next time…