What Epic Games’ past tells us about Epic Games’ present battle.

HUNTING FOR THE END OF THE LONG TAIL • AUGUST 18, 2020

Today in Tedium: A couple years ago, I tried Fortnite for about 10 minutes, felt like it went a bit over my head, took it off my phone and deleted it. I prefer my adventures in two dimensions (or in the case of Legend of the Mystical Ninja, 2.5 dimensions), and I can fully admit when something isn’t for me. But symbolically, I understand that Fortnite represents something important for the gaming industry: A developer and publisher controlling its own destiny, with a product so popular that they can get away with it. One can complain that Epic Games protests too much, but the truth is that Epic’s billion-dollar scale, from its roots as a literal one-man basement operation, reflects the extreme success of an independent streak—one that was on full display when Epic, unprompted, went around the machinations of Apple and Google’s respective app stores in an effort to avoid the infamous 30 percent cut. The difference between Epic’s basement and the California garage of its cage-rattled rival, Apple, is that Epic remembers what that basement looks like. Yes, this is a debate about money—but (whether you believe it or not) Epic is thinking about everyone else’s money, too. Today’s Tedium tries to pinpoint the factors from Epic’s long history made it do what it did last week. — Ernie @ Tedium

Today’s GIF is from my personal favorite Epic MegaGame, Epic Pinball, which was so successful that it helped fund the development of Unreal. Oh yeah, be sure to check out our sponsor below.

1991

The year that Epic Games was first founded as Potomac Computer Systems in Potomac, Maryland. Its founder, Tim Sweeney, started the business as a computer consulting business, a failed endeavor that proved the basis of a much more successful one—that as a publisher of shareware video games, starting with the ANSI-colored ZZT in 1991. He stuck with the somewhat generic name he came up with in part because he already had stationary printed.

A screenshot of ZZT, Epic MegaGames’ original shareware title. (via MobyGames)

Why Epic MegaGames became more than just a basement developer

For many years, shareware represented innovation far away from the highly commercialized nature of high-end publishers like Electronic Arts, which came to be known as AAA publishers.

It was a model built for people with free time, budding programming skills, and a creative itch to be scratched.

During the 1980s, computer games would often be published, only to find wide-scale distribution on copied floppies that would spread that application far and wide. Shareware flipped this rampant piracy on its head for a time, by making a demo so enticing that excited users would send checks in the mail.

As I wrote in 2016, shareware was the original in-app purchase, a proto-punk model for the modern-day App Store, the very thing that Epic Games is very publicly fighting against right now.

In this context, Tim Sweeney’s simple, hackable ZZT, a text-based game at a time when even small publishers were going all in on VGA graphics, stood out. In a July 1991 preview of the game published in Computer Gaming World, the magazine swooned, saying that “this pleasant piece of shareware is truly charming.”

The game was released under the Potomac Computer Systems name, in part because that’s what Sweeney already had lying around. But Sweeney’s ambitions—he had his eye on competing with Apogee, the iconic shareware publisher that later became 3D Realms—would grow bigger than Potomac.

Back in 2009, friend of the newsletter Benj Edwards did an in-depth interview with Sweeney for Gamasutra, with the Epic founder noting that, after he actually chose Epic MegaGames, the name of the company throughout the 1990s, as an attempt to make the company sound bigger.

“I was trying to grow PCS into a real company, so at that point I realized that we needed a serious name, so I came up with ‘Epic MegaGames’—kind of a scam to make it look like we were a big company,” Sweeney said.

(To be fair, a lot of other shareware developers did the same thing.)

An ad for Jill of the Jungle, which was distributed via BBS catalog in the early 1990s. (via MobyGames)

Most people in the shareware business had one or two hits and let it stop there. But Sweeney, who caught the entrepreneurial bug while still a college student, made connections. While continuing to develop his own games such as Jill of the Jungle, he found other developers doing interesting things and leveraged his existing shareware-publishing infrastructure to give them a platform.

Soon, this helped Epic live up to its name, as it came to publish sizable shareware hits hits under its name such as Epic Pinball and Jazz Jackrabbit, as it built a stable of developers that included well-known names such as Cliff Bleszinski, who became a key part of Epic’s second decade of existence. Also stepping in around this time was Mark Rein, a former id Software employee who brought his marketing skills to Epic.

“Some shareware developers made a single game and vanished; Tim Sweeney was able to spin the games label he operated out of his parents’ house into a full-fledged publisher,” writer Anna Anothropy wrote in her Boss Fight Book on ZZT in 2014.

And soon enough, he was able to do a lot more than that.

1992

The year that Ark Multimedia Publishing released ‌Onesimus: A Quest for Freedom, a Christian-themed video game that used the Jill of the Jungle game as the basis for its development. This game represented one of the first times Epic would license out its game engine to an outside developer, but it would be far from the last.

An example of the kind of hype Unreal generated pre-release. Like John Romero’s Daikatana, the hype was strong for the game. Unlike Daikatana, it actually shipped before the year 2000. (via RetroMags)

Why Epic MegaGames became more than just a shareware developer … by actually shipping its overhyped product

Forgotten today but well-remembered by anyone who played PC games back in the late 1990s, as 3D acceleration ramped up the capabilities of said games, was the flood of seeming vaporware that was breathlessly hyped by popular gaming websites and magazines for years without any sort of release.

These release cycles harmed the reputations of some of the most popular game developers of the shareware era, including companies Epic once considered direct competitors. John Romero, the id Software cofounder and game designer, saw his name associated with over-the-top advertising for the game Daikatana, which was to be his company Ion Storm’s breakout hit, reflecting the strength of the company’s developer-driven culture. Instead, it shipped in mid-2000, years after it had been announced and a lifetime of hype later in video games. It was not well-received. (Fortunately, another Ion Storm title, Deus Ex, was.)

But that, of course, was nothing compared to Duke Nukem Forever, the sequel to 3D Realms’ formative Duke Nukem 3D that took three years longer to finish than Guns N’ Roses’ Chinese Democracy, despite development beginning the same year as that infamous album’s recording process.

For a time during the 1997/1998 period, some gamers might have thought that Unreal was a part of this wave. In the 18 months after GT Interactive signed a deal with Epic MegaGames to release the company’s initial take on a first-person shooter, a similar breathlessness followed it, with mind-blowing screenshots appearing in magazines and online that only ratcheted up the hype.

“While a few gaming sites display screen shots and carry breathless descriptions of the wonders to come, and would-be players salivate, there is no sign that this oft-delayed title will come to market soon,” a 1997 Wired article, part of a year-end roundup on vaporware, stated.

But then a funny thing happened: Epic actually shipped the damn thing, and not only did the company ship, the game’s technology came to define the overall game industry. Just seven years after the release of the text-only ZZT, Sweeney had built a company whose technology had leapfrogged the technical king of PC gaming at the time, id Software’s Quake series.

And like both ZZT and Jill of the Jungle, Unreal was not only a game on its own, but an underlying engine, one initially designed mostly by Sweeney himself.

Cliff Bleszinski, a longtime developer at Epic who formulated the company’s well-known Jazz Jackrabbit and Gears of War series before departing in 2012, noted in a 2014 interview with VentureBeat that the Epic of this era focused on the element of surprise in what it built.

“When you look at the Unreal series, we always used this philosophy of zigging when other people were zagging. You can’t have a shotgun, but you can have the flak cannon,” he said. “I have a saying—when you spend all your development time figuring out what players think you need in your game—things like standard shotguns—you’re not putting in the features that make your game unique.”

As Sweeney told Edwards in his 2009 Gamasutra interview, this also extended to the technical end of things:

But with everything since then, we’ve always put a conscious effort into thinking, “How can we beat everybody technically?” Because if you beat them technically, it gives you an opportunity to shine in all other areas. VGA graphics isn’t just a technical feature—it means you can have much better artwork than everybody else. Even if your artists are only as good as the competition’s, they have more colors to work with, so they can do better work.

 

And that’s been a big driving force with Unreal. Even nowadays, to try to stay as far ahead of the competition as possible in technical features.

But perhaps the most brilliant thing about Epic was that it explicitly turned its engine into an underlying business model. While id’s engines for Doom and Quake and 3D Realms’ engine for Duke Nukem 3D were reused for a number of popular games of the era, as those companies distributed the source code, Unreal’s underlying engine was designed with external developers in mind, with Epic even offering technical support as they used the fundamental tool. In many ways, the Unreal series was as much game as technical demo.

As a 1999 New York Times article notes, coming out around the time Epic dropped “Mega” from its name and just became Epic Games, Epic took a sizable-but-not-unreasonable cut—$250,000 to $500,000 for the underlying engine, and 5 to 7 percent of the royalties.

“There are games that look and feel a bit too much like Unreal,” said Epic’s Mark Rein, a cofounder and vice president of the company, in comments to the paper. “And there are some that you can’t even recognize. Our engine is really just the paints, and anybody can go out and buy a set of paints. What’s more important is the painter.”

Unreal Engine, over the years, would become one of the most important tools at the disposal of the game industry, and in later iterations would be used in films. It remains one of Epic’s most notable investments, and it was a huge risk at the time it was developed.

(Speaking of risk: Part, but not all, of the reason Duke Nukem Forever spiraled out of control was because 3D Realms made a mid-stream decision to switch to Unreal Engine, from the engine Quake 2 used. Not an easy shift to make—it effectively represented a reboot of the project, one of many reboots the game faced.)

To get to this new level, Epic had to give up its identity as an iconic shareware developer and partner with a larger company. But as a result it gained a significant technical edge that it maintains to this day.

“The philosophy behind it goes back to the 1980s with the idea of REYES, Render Everything Your Eye Sees—a funny acronym which means that given essentially infinite detail available, it’s the engine’s job to determine exactly what pixels need to be drawn in order to display it. It doesn’t mean drawing all 10 billion polygons each frame, because some of them are much, much smaller than a pixel. It means being able to render an approximation of it that misses none of the detail you’re able to perceive. And once you get to that point, you’re done with geometry. There’s nothing more you can do. And if you rendered more polygons you wouldn’t notice it because they contribute infinitesimally to each pixel on the screen.”

— Sweeney, discussing the strategy behind the to-be-released Unreal Engine 5 in a press call earlier this year. The engine, which started off with games, has become so hyper-realistic that many film studios have come to rely on it to render 3D effects. The Unreal Engine 5 technical demos, which lean on the capabilities of the Sony Playstation 5, highlight numerous examples of rock formations being displayed in real-time. If you didn’t know it was a game engine, you would likely be fooled.

Why Epic Games became more than just a AAA console game developer

Outside of Epic Pinball, one of my favorite Epic games of all time is the Infinity Blade series, an inventive iOS title that took advantage of the iPhone’s touch mechanics to create an interface that was native to the device it was on, rather than an old mechanic retrofitted onto a touchscreen. Developed by Chair Entertainment, an Epic acquisition, it was also a showcase of Unreal Engine on mobile devices. (Back in these days, Apple literally invited Epic onto its keynote stages.)

It was a huge hit at the time of its release. I would go so far as to call it my favorite mobile game ever. It’s a game that Epic Games perhaps would never make today.

The reason comes down to strategy. In 2012, two years after the release of the original Infinity Blade and a year before the release of the third and final part of that series, Epic made a bold move away from the big-tent console games for which it became known for in the late 2000s, thanks to the popularity of its Gears of War series, a sophisticated third-person shooter that was major hit on the Xbox 360. That game, however, was published as a first-party Microsoft title, and while deservedly a popular game series, it no longer reflects what Epic Games is now.

Fortnite has come to define Epic’s past decade of development. (via Epic Games)

The thing that defines Epic in the modern day is free-to-play games like Fortnite, in part because Epic self-consciously decided to embrace the free-to-play market around 2012. An in-depth feature on the history of Epic Games in Polygon, which predates the massive success of Fortnite, describes this shift as “Epic 4.0,” with version 1.0 being the shareware years, version 2.0 representing the early Unreal era, and version 3.0 reflecting its evolution into high-end console developer.

Sweeney cited interactions with Microsoft as part of what made Epic decide that it needed to strike out on its own again.

“We weren’t asking them for money, but you know as our publisher and proprietor of Xbox, it didn’t fit into their business plans and so they said no,” he told Polygon. “That made me realize very clearly the risk of having a publisher or anybody standing between game developers and gamers—and how toxic and destructive that process could be to the health of a game and its community.”

But this freedom didn’t come cheap. In 2012, the Chinese technology giant Tencent acquired 40 percent of Epic, ensuring that Sweeney and team maintained control of the company, while giving Epic room to find a destiny outside of the traditional publisher-driven system. Fair or not, it gives critics something to point at when discussing Epic.

Epic is far from the only company leaning on this free-to-play strategy, of course. Riot Games, owned outright by Tencent, defined this model of a single always-online game controlling its destiny with League of Legends. But Fortnite, for various reasons, has come to define it both from a technical and strategic standpoint.

The effort around Fortnite has proved all-consuming—notably, Epic let development of a rebooted free-to-play version of Unreal Tournament fall by the wayside in service to the cash cow—but incredibly successful.

Just as in prior iterations of Epic Games, the company has not been afraid of throwing out iconic ideas in service of the present day.

In many ways, Epic is not the perfect vessel for this battle against Apple over what it sees (and to be fair, many other developers see) as aggressive royalty fees.

It produces a game that, while highly popular, has produced its share of controversy. A 2018 story in The Wall Street Journal is perhaps most reflective of the dynamic Fortnite has in many households with young children.

Its partial Chinese ownership has been an issue in the past, as reflected by its Epic Games Store, but it has the potential to project bad optics at the current moment, given that Tencent, the company that owns the presidential target WeChat, also owns a significant chunk of Epic.

And of course, there’s all the chatter around its use of loot boxes, a phenomenon Sweeney said needed to end earlier this year, though Fortnite has been a key focus of criticism around this topic.

Add all this up, plus the fact that Epic is such a large company that its cofounder, Mark Rein, owns a chunk of an NHL team, and it might seem to observers that Epic is undeserving of sympathy in its fight against Apple and Google, even as it publicly claims that its reasoning for its high-profile protest is to fight aggressive fees on mobile titles.

But the fact of the matter is, and the reason why I think they remain a forthright player in the battle over royalties, is that Epic is a company that is not afraid of risks, of betting the company on something game-changing. Perhaps Epic 5.0 is a trust-buster.

It is one of the few companies on the App Store that is big enough to push back and one of the few companies independent enough (if not fully independent, given its ownership situation) to be willing to do so. If you’re a developer and don’t like the 30 percent cut, Epic is likely the best chance you have of seeing it go away. Maybe the ad parody is over the top. But still!

I also think, as I said earlier, Epic is the kind of company that remembers the basement where it all came to life the first time. Unlike many companies that have been around for 30 years, it’s still largely led by its founding team, even as high-profile figures like Bleszinski have come and gone. It’s a company that both at the beginning of its life and in the modern day has benefited from an open market, rather than one with a direct gatekeeper like Apple. With this move, perhaps it recognizes that. (It may also recognize that it wants to own a gate, as it already does with the Unreal Engine.)

Epic may be a company that changes and adapts with the times, but by no means is it one that forgets its lessons.

And the fact of the matter is, nobody else of Epic’s size can take the hit caused by directly making Apple mad. Sure, that costs them a potential Fortnite revenue. But this is a company that has thrived on doing the difficult thing over the years. It dropped shareware so it could make a jaw-dropping technical tool. It gave you the flak cannon instead of a shotgun. And years after finding comfort as a AAA game designer, it invested in the difficult-to-win area of free-to-play games.

Epic is a company that’s battle-tested. Bring on another test.