Epic Games today announced Unreal Engine 5 and that developers who use the Unreal Engine to create games will no longer have to pay royalties on the first $1 million in revenue.

The Unreal Engine has been free for everyone to use for some time, but until this change, a 5 percent royalty was due on every $3,000 in quarterly revenue generated by a commercial Unreal Engine game. This new $1 million standard is measured in lifetime earnings.

Less complicated, for example, a game with $2 million in gross revenue would pay Epic Games $50,000. (For revenue on the Epic Game Store, Epic waives the 5 percent royalty altogether, so the developer only pays the 12 percent Epic Store sales commission.)

For comparison, Unity does not collect royalties from commercial games. Instead, the engine maker charges $1,800 per year for a Pro license, which is required for Unity installations at companies that have brought in more than $200,000 in revenue or funding in the past 12 months.The Unity Pro license includes access to source code and, other features not available in the free version of Unity.

This change to Epic's royalty model is retroactive to January 1; for more information on how Unreal Engine royalties work, see here.

Unreal Engine 5 will be released next year and will be free to use, as will the latest version. The royalty scheme announced today will apply to all versions of the engine, and when the time comes, games created with Unreal Engine 4 can be migrated to UE5.