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Epic's Sweeney: Platform convergence, freemium the inevitable future
Epic's Sweeney: Platform convergence, freemium the inevitable future Exclusive
June 27, 2012 | By Brandon Sheffield

Tim Sweeney, CEO of Epic Games, began GDC Taipei's second keynote with the note that "Being with Epic games, we're a technology company, and very dedicated to console." At the same time, Sweeney also acknowledged that there was a lot of truth to Ben Cousins' view of the future of game technology. "The fact that we're starting to converge on a common view on technology is very interesting to me," he added.

Still, Epic isn't looking to only make smaller game experiences. "We're gamers, and we develop the kinds of games we want to play ourselves," he says, which means "big games with guns and chainsaws."

"We try to push technology to show what is possible in games," he says, rather than trying to design games to meet the technology. "We try to take a longer-term view of the game industry. ... To be successful with a game engine today, we have to have started that engine 3 or 4 years ago."

For Unreal Engine 3, the company spent 4 years building Gears of War and the technology at same time, and put major effort into early adoption of new platform features. "Now we're in the same cycle, leading up to a new generation of engines," he said. "Whereas Unreal Engine 3 was developed primarily for consoles, Unreal Engine 4 has a very different set of goals."

What's possible, what's practical?

The company's first effort toward the next generation was the Samaritan demo, build in UE3. That demo had to run on three graphics cards, in a huge computer -- now it's more practical, a year later, on a single high-end graphics card.

"We came to the conclusion that there's the possibility for dramatic leaps in technology," he said. "Some people say, 'oh, graphics are good enough, and we can focus exclusively on gameplay now.' We don't feel that way at all," he added, saying that there's a lot further to go.

"We came to the conclusion that in the old days we built engines that would extract the most performance possible out of the PC, and we had to have a large art component to achieve that," he said. Gears of War had 100 artists working on it, including contractors, for example. "Maximizing the productivity of these artists is now the most important cost factor."

Thus, with UE4, the company hopes to "Increase the level of visual quality, but also increase the performance and efficiency. ... The tools investment is paying off. Artists are able to build content more productively than before. And with the Unreal Engine as a whole, we found it's much easier to scale down from high end to low end devices than in this generation," he said. "We expect to be able to build games that can scale from a smartphone to a high end PC. ... We expect an unprecedented amount of content portability for the future."

"We've been very happy with the game industry's growth," Sweeny said. "For a while we were worried that the divide between the console growth in the west, and the growth of PCs, would increase." Still, and this is where his opinion begins to converge with Cousins' keynote yesterday, Sweeney revealed that "The most profitable game we've ever made, in terms of man years invested versus revenue, is actually Infinity Blade. It's more profitable than Gears of War."

This is why Sweeney believes that future growth will be fueled by free-to-play. "Nowadays the high end of the game business is in these console game," he says. "Activision invests almost $100 million per year in Call of Duty." And who can realistically afford to do that? At the same time, he notes that Epic has been "very very surprised to see how fast smartphone and tablet devices are improving."

Sweeney says, for instance, that the iPad 3 is approaching the performance of the Xbox 360 and PS3 -- and the pace of improvement is faster than Moore's Law. "We expect DirectX technology to be widely available on these mobile devices in the next few years," he added. "We're also seeing an interesting thing happen in terms of the overall development pattern globally."

PC online dominated Asia, but in the U.S. it was mainly just World of Warcraft that was successful for some time, while console was a separate market. "These platforms are rapidly converging, with a set of common capabilities," he said. "The lowest end device [the iPad 2] is still a DirectX 9 device!"

Sweeney sees online game distribution coming rapidly to console. "I think the console business we see in the United States and Europe will be just another platform," he says. You should soon be able to ship a freemium game on PC, and on console, simultaneously. "That is a very realistic possibility."

Convergence is going to change the market interestingly, says Sweeney, as he points out the two biggest FPS in the world are Call of Duty in the west, and Crossfire, made in Korea, but little-known outside Asia. "I think in the future, these two games will be competing head to head," he says. "It's possible to build one game that has global appeal and ship it in all markets."

"North American and European developers are far, far behind the state of the art Asian business models," he cautions. "We've been building these games like Gears of War where you go into the store and you buy a piece of plastic! You just buy this DVD. That is going to change rapidly."

He says that Western developers need to learn to change with the times, and put a lot of effort into learning about the free to play market. But also the learning will happen the other way, as well. "Asian online games are far ahead of Western games in terms of business model, but the Western games do have a real advantage in terms of production values," he says.

Unreal everywhere

Epic's new engine strategy is "Unreal Everywhere." "Put this one engine on all platforms worldwide," he says, including PC online, web browsers with Flash, iOS, Android, and console. The most important thing is to build scalable games -- the goal is not have to rebuild for platforms.

This interest in free to play and Asia is part of what inspired the company's recent partnership with Tencent, in which the latter company bought a minority stake in Epic. In the past, Epic had worked very closely with Microsoft, but the world is changing. "You might in the future see the Epic relationship span different publishers and different platforms across the world," says Sweeney.

"I think like a typical American, in that I just want to buy the game once," he says. But freemium has grown to eclipse the global retail market. "I agree that this is going to be the way that almost all games will be distributed worldwide," he says. "Where is this going in the long-term future? We're at a point in the world's history where we're starting to run into resource limitations. ... The virtual environment is completely unlimited. It makes me wonder if some day the virtual economy could be greater than the economy for physical goods."

"All these Western developers spending 30 million to develop these games for dedicated consoles - all of these companies are going to be invading the asian markets within the next five years or so," he says, "and they'll be free to play, worldwide, global products. ... The only way to survive is to go global."

"The game industry is the most exciting one on earth," he concluded. "We've seen unprecedented change, just in our lifetimes. It's an unprecedented amount of change, and also opportunity."

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Robert Green
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Based on the titles that usually populate the top grossing charts in iTunes, I sincerely hope that free to play isn't inevitable. If anything, the fact that Infinity Blade II is still fairly high up on the sales charts suggests to me that there are plenty of gamers out there actually willing to spend decent money upfront on a high quality game. This isn't freemium after all, it's a pretty expensive game by iOS standards.
If freemium seems 'inevitable', that's just because it's making a lot of money right now. But by that logic, music games and motion controlled consoles are the inevitable future as well. If we're assuming that farmville-style games will satisfy people in the long run, we may be setting ourselves up for failure.
It's hard to argue that AAA development costs too much, but I can't help but think there are other ways to solve that problem whilst still charging for your product up front. If we look at other entertainment industries, those that have been around for decades longer than games, how many of them have gone to a freemium model?

Bob Charone
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television channels are freemium

Robert Green
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I agree with Cameron. TV is a combination of ad-supported and subscription, neither of which really correspond to the freemium model. The closest analog I can think of in the TV world is the WWE, with their regular broadcasts serving as promotions for regular PPV events. Even then though, they definitely don't stop you halfway through watching and tell you that you can continue watching for a fee or watch the rest of it a week later if you don't, and you still need a pay-TV subscription to watch in the first place.

Jorge Molinari
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Quote: Sweeney revealed that "The most profitable game we've ever made, in terms of man years invested versus revenue, is actually Infinity Blade. It's more profitable than Gears of War."

A sad fact for which I’m proud to not have contributed. As we all know, companies base their decisions on profits, not sales. To all the hardcore gamers who plunked down for Infinity Blade: Look what you did. If the hardcore games start to dwindle at least I know I had nothing to do with it: I purchased new copies all 3 Gear of War Games and never bothered with the Infinity Blade games.

Ujn Hunter
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I am going to save SOOO much money in the future. ;)

Bob Johnson
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Too much extrapolation going on.

And what works in one culture doesn't necessarily work in another.

We can see that today.

Jorge Molinari
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"They got a game they liked instead of a game they presumably would not have? (It's not like Gears of War was something you could miss if you were interested in anything related to games.) What in the world is hardcore about Gears of War anyway?"

Call ‘em whatever you like. AAA, big budget, high-production values… I happen to use the term "hardcore” sometimes. The point is money talks. I support with what is aligned with my tastes, and shun what is not, even if it comes from a company that I like; ESPECIALLY if it comes from a company I like. I don’t want to send the signal that going in a different direction than what I like is profitable. That is why I will get all the BF3 expansions except “Close Quarters” and I pre purchased the new X-Com even though I probably will not have much time to play it until a few months after it is released.

Carl Chavez
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It's unfortunate to hear Tim Sweeney talk about freemium models in relation to a global marketplace, because all of his statements regarding the upcoming dominance of freemium and multi-platform development can also apply to the traditional buy-once model. Steam and Desura show that this works quite well with their buy-once, run-on-any-system-globally models.

I'm not against freemium, but I am against blanket statements like those of Sweeney's and Cousins' when the most likely outcome (in my eyes) is a shared space of free-to-play, freemium, and buy-once games, depending on the individual preferences of the player and the preferences of a particular game's audience, where no one model dominates the market. I foresee free-to-play and freemium being far more numerous and earning higher gross revenue, but buy-once having the advantages in innovation, long-term income through loyalty to an IP or a developer, overall quality, and overall lower prices for the consumer.

Eric Geer
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I believe there is a time and place for "freemium"(They really need to coin a new term for this, because this is definitely a misnomer/oxymoron) There may be people that enjoy this type of delivery method---I personally do not---freemium implies that I get the first taste for free and everything thereafter that I will get nickle and dimed. It's worse than a subscription.

Subscription is an all you can eat buffet, Retail Full game is traditional restaurant ordering, and Freemium is a la carte---Freemium is cheap if you don't eat a lot, but if you are hungry, its not the best option for big meals(This is why publishers want to go this way)

I'd prefer something more like episodic delivery method--it could be beneficial to all parties involved--devs/publishers/customers.(might hurt publishers a bit--oh, well they can take it)

But it would be less of an upfront cost for customers and developers because they could provide a part of a game that they could test on the market. There is not such an initial cost to develop and same with the purchase point. And it would save in overall costs if the first episode is not well recieved then change the path or scrap entirely and start a new episodic game.

Todd Masten
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Market realities are seldom black or white; they lie somewhere in the grey. And, with the recent investment by Tencent, you can't blame him for trying to hype the business model of the company that just gave him millions of dollars. Nobody has a crystal ball, this is all speculation and opinion.

Christopher Plummer
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I agree with you Todd.

I also don't think Sweeney is saying that the other models will go away. I think he's saying that no game publisher who wants to stay in business can avoid diversifying into freemium games. I imagine their new engine is meant to empower publishers to continue making console games that they can then scale to other platforms and purchase models.

An example I would point out is the FIFA franchise. They do really well on all platforms, and even have a Free to play version, FIFA ONLINE, that quadrupled their revenues in Asia. The EA Sports team has been refining these for years, so they probably have a pretty efficient pipeline to roll these out, comparatively speaking. IMO Unreal is pitching their engine as a way to level this playing field for other franchises that don't already have an engine prepared to handle the new retail environments.

Matthew Jackson
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Good read...i think todd has a good point. the gaming industry is going to continue to grow in my opinion with all the platforms out there. i play with a lot of video games and even have a few airsoft replica guns and its a lot of fun and something i want to continue to play with

Matthew Jackson
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Pretty into airsoft and have a lot of airsoft guns from the video games i play and i also won a high end rifle with this special that they offered.