Just over a year ago, Epic Games laid off around 16 percent of its employees. The problem, Epic said, was its own big ideas for the future and just how expensive they were to build. \u201cFor a while now, we\u2019ve been spending way more money than we earn,\u201d Epic CEO Tim Sweeney wrote in an email to staff.<\/p>\n<\/div>\n
On Tuesday, onstage at the Unreal Fest conference in Seattle, Sweeney declared that the company is now \u201cfinancially sound.\u201d The announcement kicked off a packed two-hour keynote with updates on Unreal Engine, the Unreal Editor for Fortnite<\/em>, the Epic Games Store, and more.<\/p>\n<\/div>\n In an interview with The Verge<\/em>, Sweeney says that reining in Epic\u2019s spending was part of what brought the company to this point. \u201cLast year, before Unreal Fest, we were spending about a billion dollars a year more than we were making,\u201d Sweeney says. \u201cNow, we\u2019re spending a bit more than we\u2019re making.\u201d<\/p>\n<\/div>\n \u201cThe real power will come when we bring these two worlds together\u201d<\/p>\n<\/div>\n<\/div>\n Sweeney says the company is well set up for the future, too, and that it has the ability to make the types of long-term bets he spent the conference describing. \u201cWe have a very, very long runway comparing our savings in the bank to our expenditure,\u201d \u200b\u200bSweeney says. \u201cWe have a very robust amount of funding relative to pretty much any company in the industry and are making forward investments really judiciously that we could throttle up or down as our fortunes change. We feel we\u2019re in a perfect position to execute for the rest of this decade and achieve all of our plans at our size.\u201d<\/p>\n<\/div>\n Epic has ambitious plans. Right now, Epic offers both Unreal Engine, its high-end game development tools, and Unreal Editor for Fortnite<\/em>, which is designed to be simpler to use. What it\u2019s building toward is a new version of Unreal Engine that can tie them together.<\/p>\n<\/div>\n \u201cThe real power will come when we bring these two worlds together so we have the entire power of our high-end game engine merged with the ease of use that we put together in [Unreal Editor for Fortnite<\/em>],\u201d Sweeney says. \u201cThat\u2019s going to take several years. And when that process is complete, that will be Unreal Engine 6.\u201d<\/p>\n<\/div>\n Unreal Engine 6 is meant to let developers \u201cbuild an app once and then deploy it as a standalone game for any platform,\u201d Sweeney says. Developers will be able to deploy the work that they do into Fortnite<\/em> or other games that \u201cchoose to use this technology base,\u201d which would allow for interoperable content.<\/p>\n<\/div>\n The upcoming \u201cpersistent universe\u201d<\/a> Epic is building with Disney is an example of the vision. \u201cWe announced that we\u2019re working with Disney to build a Disney ecosystem that\u2019s theirs, but it fully interoperates with the Fortnite<\/em> ecosystem,\u201d Sweeney says. \u201cAnd what we\u2019re talking about with Unreal Engine 6 is the technology base that\u2019s going to make that possible for everybody. Triple-A game developers to indie game developers to Fortnite<\/em> creators achieving that same sort of thing.\u201d<\/p>\n<\/div>\n If you read my colleague Andrew Webster\u2019s interview with Sweeney from March 2023<\/a>, the idea of interoperability to make the metaverse work will seem familiar. At Unreal Fest this week, I got a better picture of how the mechanics of that might work with things like Unreal Engine 6 and the company\u2019s soon-to-open Fab marketplace to shop for digital assets<\/a>.<\/p>\n<\/div>\n Fab will be able to host assets that can work in Minecraft<\/em> or Roblox<\/em>, Sweeney says. But the bigger goal is to let Fab creators offer \u201cone logical asset that has different file formats that work in different contexts.\u201d He gave an example of how a user might buy a forest mesh set that has different content optimized for Unreal Engine, Unity, Roblox<\/em>, and Minecraft<\/em>. \u201cHaving seamless movement of content from place to place is going to be one of the critical things that makes the metaverse work without duplication.\u201d<\/p>\n<\/div>\n But for an interoperable metaverse to really be possible, companies like Epic, Roblox, and Microsoft will need to find ways for players to move between those worlds instead of keeping them siloed \u2014\u00a0and for the most part, that isn\u2019t on the horizon.<\/p>\n<\/div>\n Sweeney says Epic hasn\u2019t had \u201cthose sorts of discussions\u201d with anyone but Disney yet. \u201cBut we will, over time,\u201d he says. He described an ideal where companies, working as peers, would use revenue sharing as a way to create incentives for item shops that people want to buy digital goods from and \u201csources of engagement\u201d (like Fortnite<\/em> experiences) that people want to spend time in.<\/p>\n<\/div>\n \u201cThe whole thesis here is that players are gravitating towards games which they can play together with all their friends, and players are spending more on digital items in games that they trust they\u2019re going to play for a long time,\u201d Sweeney says. \u201cIf you\u2019re just dabbling in a game, why would you spend money to buy an item that you\u2019re never going to use again? If we have an interoperable economy, then that will increase player trust that today\u2019s spending on buying digital goods results in things that they\u2019re going to own for a long period of time, and it will work in all the places they go.\u201d<\/p>\n<\/div>\n \u201cPeople are not dogmatic about where they play\u201d<\/p>\n<\/div>\n<\/div>\n \u201cThere\u2019s no reason why we couldn\u2019t have a federated way to flow between Roblox<\/em>, Minecraft<\/em>, and Fortnite<\/em>,\u201d Epic EVP Saxs Persson says. \u201cFrom our perspective, that would be amazing, because it keeps people together and lets the best ecosystem win.\u201d Epic sees in its surveys that \u201cpeople are not dogmatic about where they play,\u201d Persson says.<\/p>\n<\/div>\n Of course, there\u2019s plenty of opportunity for Epic, which already makes a widely played game<\/a> and a widely used game engine and is building Fortnite<\/em> into a game-making tool. (And I haven\u2019t even mentioned how Unreal Engine is increasingly used in filmmaking<\/a> and other industries<\/a>.) The end state sounds great for Epic, but Epic also has to make the math make sense for everyone else.<\/p>\n<\/div>\n And it has to do that without<\/em> much of a presence on mobile. The company has spent years in legal battles with Apple and Google over their mobile app store practices, and it just sued Samsung<\/a>, too. The Epic Games Store recently launched<\/a> on Android globally and on iOS in the EU, but thanks to restrictions on third-party app stores, the company\u2019s game store boss, Steve Allison, tells The Verge<\/em> that reaching its end-of-year install goal is \u201clikely impossible.\u201d<\/a> Any major change could take quite a while, according to Sweeney. \u201cIt will be a long battle, and it will likely result in a long series of battles, each of which moves a set of freedoms forward, rather than having a single worldwide moment of victory,\u201d Sweeney says.<\/p>\n<\/div>\n There\u2019s one other battle Epic is fighting: Fortnite<\/em> is still hugely popular, but there is waning interest \u2014 or hype, at least \u2014 in the metaverse. Sweeney and Persson, however, don\u2019t exactly agree about the term seemingly falling out of popularity.<\/p>\n<\/div>\n