Epic Games CEO Tim Sweeney is renewing his attack on “gatekeeper” platform owners.

Epic Games CEO Tim Sweeney opened the Unreal Fest event in Seattle today with a news update that included sharp criticism of monopolistic platform owners.

Sweeney is a big supporter of open platforms and an open metaworld. In fact, he’ll be talking about this topic in a virtual conversation at our GamesBeat Next 2024 event, taking place October 28-29 in San Francisco. (You can use this code to get 25% off: gbn24dean). That’s why Sweeney continues to put pressure on major platforms to provide more favorable terms to game developers.

He started this by offering a price cut to users of Unreal Engine 5, Epic’s game development tool. For those who release games first or simultaneously on the Epic Games Store, Epic is lowering the royalty rate from 5% to 3.5% for Unreal creators.

He noted that Epic is in a better financial situation than a year ago, when Epic had to lay off a lot of employees. Sweeney said the company has spent the last year rebuilding.

“I’m pleased to tell you now that the company is in good financial shape and that Fortnite and the Epic Games Store have set new records in terms of simultaneity and success,” he said.

Fortnite peaked last holiday season at 110 million monthly active users, and Sweeney said the Epic Games Store is seeing record success. He said the company has placed an emphasis on moving towards large social games and meta-world concepts. The strategy involves unifying the advanced features of Unreal Engine 5 with Unreal Editor for Fortnite (UEFN) to create Unreal Engine 6, which aims to make game development easier and more scalable.

He also pointed to the financial cushion resulting from Disney’s $1.5 billion investment, which has partnered with Epic Games to create a Disney-based virtual world with all the Disney characters – connected to the world of Fortnite. He noted Epic’s small but important victory over Apple in U.S. courts and in the European Union regulatory arena, allowing developers to promote alternative app stores without (overly harsh) penalties from Apple.

He also noted Epic’s legal victory over Google’s Google Play app store in the Epic antitrust lawsuit (in addition to a federal victory over Google in a search antitrust case). However, he continued to have harsh words for Samsung and Google, noting a new antitrust lawsuit over their alleged collusion to block Fortnite’s return to the Samsung app store for Android smartphones.

Sweeney noted that there is a generational shift in the gaming industry: established titles with familiar gameplay are not doing as well with consumers, while gamers are gravitating towards important games with more friends.

“This is all happening in the context of the gaming business. It’s changing rapidly in ways that we, as game developers, have only seen a few times in our lives. “It’s a generational shift, and although one of the manifestations of it that we’re seeing now is a lot of high-budget games being released that don’t sell as well as expected, while other games do incredibly well.” Sweeney said. “We’re seeing a real trend here where gamers are gravitating towards really big games where they can play with more friends. This is therefore a manifestation of Metcalfe’s Law, which states that the value of a network or social experience increases in proportion to the number of friends you can connect with.

“And in the gaming world, that means you and your friends get together and play games, voice chat, attend concerts, and do all these cool virtual things online,” he said. “And this trend… some people call it the metaverse, and we don’t all agree on what that means. When some people hear the word metaworld, they think of what Facebook is doing with VR and now AR. Some people use the metaverse to describe everything they don’t like about the current season of Fortnite. But when you look at what’s happening in the world of Fortnite, it’s new and exciting, and it’s something that has never happened on this scale in the history of entertainment, with all of the original story evolving alongside the original content , as well as all the world’s brands participating, dropping in, musicians, reaching out to users, Disney, Star Wars and others, all coming together to create world-class entertainment.”

This is the future of gaming, he said.

Back to growth

“The main goal for this decade is to help all developers achieve” their development goals, he said. “Our strategy to achieve this is to share everything we’ve built with you, so you can do the same things. And this isn’t just news for game developers. This is also a message for the entire real-time industry.”

This means film and TV creators can use Unreal Engine for virtual production on a massive scale. The same goes for architecture, automotive, fashion, music, enterprise and gaming companies, he said.

“The common thread in all of this is that we all want to get our content out into the world, and we’re all using the same tools to bring it together like never before. I think Fortnite is just one demonstration. “Other games are doing similar things, but as this has been more widely adopted around the world, we believe this is an opportunity for growth for everyone and we have moved beyond the current malaise in the gaming industry,” Sweeney said.

Epic’s next journey is to create Unreal Engine 6. There is Unreal Engine 5 to create high-end games for consoles, mobile games, and PCs. There is also a new development thread for user-generated content creators and smaller companies using Unreal Editor for Fortnite.

“Over the next few years, we intend to combine these two strands of development,” he said.

This will lead to Unreal Engine 6 and gameplay programming fundamentals that will be easier to learn and more scalable.

He said Epic will help anyone create a game once and then choose one platform or make it available on all platforms and all app stores at once.

Regarding Metaverse, he said Epic participates in standards bodies such as the Metaverse Standards Forum and other groups to define standards applicable to all engines and all digital content creation tools.

“The ultimate goal of this effort is to achieve technical interoperability between games and all kinds of game engines and to achieve economic interoperability in an open system,” he said. “Game developers can easily create experiences themselves, in Fortnite or anywhere else. Shopping in one place is honored in others, and the whole economy is an open economy in which everyone can participate.”

He said Epic and Disney are working together to build “a new Disney ecosystem that’s owned by Disney, but also fully connected to Fortnite, so that everything you find in one place can work in another and your experiences won’t be disconnected , and you have the same friends, the same objects, and the same social experiences as always.”

He said this partnership is just the first step towards an open system in which all companies and creators can participate together as partners in the future.

More court proceedings

He said a really important aspect of this effort is “Epic’s fight to open mobile platforms to competition, because for a vibrant digital ecosystem to exist in the future, we need fair competition from monopolistic rent collectors now.”

He said app stores focus on limiting what developers can do, either by imposing more restrictions to prevent things like the metaworld or by taxing developers to the point where they take all the profits from game sales.

“We’re at a point where game development is expensive. That’s a low margin, and game companies suffer from it. “Apple and Google make far more profit from most games than the developers themselves make by contributing nothing,” Sweeney said.

Tim, tell us how you really feel.

He recalled how he grew up programming an Apple computer to follow Steve Wozniak’s vision of Apple rather than Apple’s modern corporate vision. He misses the days when you could do anything on a computer without having to ask permission from a corporation. He noted that this is why there is more innovation on Windows, Mac and Linux platforms than on mobile platforms. He called Apple and Google “gatekeepers.”

“Among the arguments we’ve had here, he noted that the Apple thing is an ongoing fight to open up payments so that developers can process payments without an Apple intermediary and without Apple fees,” he said.

He noted the “huge victory” against Google in a jury trial late last year, when Google lost on all counts in the antitrust case. He pointed to the European Union’s implementation of the Digital Markets Act, which allowed Fortnite to return to iOS in Europe.

He also said the UK and Japan have passed new laws, and many major developing countries around the world have important laws in place.

“The world is changing for the better. There is much more to do. We will keep fighting until we win,” he said.

I asked Apple, Google and Samsung for comment.