Fortnite Has Epic Creative Ambitions | Unreal Engine for Fortnite (UEFN)

Welcome to Roblox 2.0.

Epic’s announcement at GDC of Unreal Editor for Fortnite (aka UEFN) is potentially a massive industry game changer, and it would be good to understand the implications.

While we knew this was coming since at least 2020, when Epic invested $15M into Manticore, it’s quite another thing to see the vision implemented live in Fortnite.

At Epic we believe the industry is ultimately headed to games becoming more like open platforms where creators can build their own worlds. Built in Unreal Engine, Core exemplifies this future and goes one step further by providing the environment for anybody to create great multiplayer games, and a metaverse playground where players discover endless entertainment.

- Adam Sussman, President of Epic Games on the Manticore investment in 2020

Key points from announcements:

• Currently in public Beta
• Epic announced Creator Economy 2.0, which will share 40% of Fortnite revenues with Fortnite creators based on player interest and engagement
• A custom programming language called Verse was developed and included with UEFN
• Epic unified its digital asset stores into a single store called Fab; it’s currently available in alpha as a plug-in to UEFN with Fortnite-optimized assets

Cool tech demo:

Ok, so why do I think UEFN could be massively huge?

First of all, massive hit games don’t just come from nowhere.

Most hit games have some indication of product-market fit to scale somewhere. Many of them come from game mods. From MOBAs to tower defense to even Battle Royale and many more, most new types of gameplay were born from game modes or mods.

Secondly, the Fortnite audience base automatically makes UEFN instantly relevant.

The enablement of Fortnite’s large fanbase tied to Unreal creator tools is a massive win. A huge community and incredibly powerful technical capabilities. This is basically peanut butter + chocolate!

Third, Epic’s economic model *potentially* upstages Roblox’s developer payouts, making it much more compelling for developers to jump on to UEFN.

Many professional developers have shied away from Roblox because of the perception of limited upside. Increasing economics will open the funnel for more professional developers to consider UEFN seriously.

Roblox currently shares 24.5% of revenue (for in-game, aka in-“experience” transactions through developer exchange) and 5.1% of revenue for share of “engagement” by Roblox premium users.

While Roblox claims this means that revenue payouts are 24.5% + 5.1% = 29.6%, this would only be true if the 5.1% of share from engagement were for all Roblox revenue rather than just for premium users’ revenue.

It’s also unclear if the pie chart above is gross or if they have already netted out some expenses. From Roblox: “Note that the chart doesn’t reflect our expenses as disclosed in our GAAP financial statements.”

I would be disappointed if Roblox mischaracterized their developer margin, so hopefully, I’m wrong on this.

While it’s difficult to compare Roblox and Fortnite Creative 2.0 revenue directly, I believe that 40% of all Fortnite net revenue (note this number is net not gross) may potentially be substantially higher as Fortnite revenue likely subsidizes Fortnite creators.

Essentially, the Fortnite money printing machine makes money that gets shared with creators, who are rewarded for engaging and retaining players. Hence this model theoretically also takes the pressure off creators to be forced to monetize strongly and lets them focus on retaining and engaging instead.

Or at least that is my current belief. It’s still early, so let’s see what happens.

Also, the new unified digital store, Fab, already linked to UEFN, shares 88% of revenue back to developers.

The above represents my current interpretation of economics. However, I believe the UEFN economics will be more favorable simply because I know Tim Sweeney thinks a lot about ecosystems and developer economics:

Fourth, limited players in a huge market.

There is only one major competitive creator platform in Roblox, which has a greater audience limitation in its focus on kids. Fortnite has a much broader audience range, making it more attractive to developers. Further, while Roblox has been rumored to have been working on higher fidelity capabilities for Roblox for at least the past five years, progress on this front has been relatively slow.

While we have seen some progress, for example, FRONTLINES on Roblox, developers will also have a much broader range of audience, game fidelity, and technical capability with UFEN relative to Roblox.

Fifth, UEFN provides longer-term career progression.

Many of the Roblox developers I have spoken with have felt limited in their capability to progress as developers. For example, I’ve noticed that most Roblox players I’ve met are under 16 years of age, say 5–16, and the developer community I have spoken with is largely 16–25.

UEFN + Verse enables young developers to jump in and develop for Fortnite Creative but then opens up the potential for those same developers to expand into standalone development using Unreal Engine + C++ later in their careers.

Roblox has not considered the ongoing professional durability of their creators, which Epic with UEFN will likely use to win over professionally-minded developers.

Finally, Tim Sweeney talked about why an open-world MMO creative space, whatever it’s called (Metaverse or whatever), is so important:

It’s a much more enjoyable and personal and empathetic medium than today’s social networks, for example. Of all the ways you can engage with your friends, it’s awesome to be together in person, it’s awesome to be together in Fortnite, either playing battle royale or going to a concert. It’s not awesome being on Facebook with everyone griping about politics and showing how awesome they are through photos. It’s very impersonal and asynchronous. And you lose the empathy when people aren’t interacting naturally.

In summary, hats off to Epic, kudos to Tim Sweeney for being a badass, and let’s see how Roblox responds because we now have a real creator platform battle on our hands!

References:

• Unreal Editor for Fortnite (Fortnite)
• Epic’s New Unreal Editor For ‘Fortnite’ Must Be Seen To Be Believed (Forbes)
• Epic Games Leads $15M Investment in Manticore Games® (BusinessWire)
• Fortnite’s Unreal Engine editor lets it compete with Roblox (Polygon)
• Unreal Editor for Fortnite launching in beta today (GamesIndustry.biz)
• Verse Language Quick Reference (Epic Games)
• Roblox FRONTLINES (Roblox)
• Tim Sweeney explains how the metaverse might actually work (The Verge)
• Developer Economics (ROBLOX)

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