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Unreal Console Success

Epic's Michael Capps on the company's console success and the risks of acquisition

Epic Games has really raised its profile on videogame consoles over the past few years - first with Gears of War, most recently with Unreal Tournament 3, and in a variety of titles from numerous publishers.

The company was also in the spotlight last year thanks to outspoken members such as Mark Rein and Cliffy B, not to mention some grumbling from developers which culminated in a lawsuit being filed by Silicon Knights.

The recent Game Developers Conference in San Francisco provided us with an opportunity to chat with Epic's president Michael Capps on their new console focus, the debate between creating and licensing engines, and what has made the Unreal Engine in particular so ubiquitous.

GamesIndustry: Shortly before GDC began, there was a rumour that Microsoft would be acquiring Epic Games. From the tone of your comments, can I assume that is not happening?

Michael Capps: Did you see Mark [Rein's] response? I loved it - Two billion and then we'll start talking.

So, no takers at $2 billion yet?

[Laughs] That would be great news if someone were willing to pick us up for $2 billion. I think that works out to 20 million per person, give or take some - so that's some expensive office managers and IT folks.

But you can live with that...

It is really nice to be thrown around in that kind of story...I guess.

What I enjoyed the most was watching the media pile on of "Escapist magazine reports that such-and-such magazine reports that WRAL reports that Kotaku reports that someone speculates..."

That was my favourite. It all ends with a chain of "speculates" at the end. It was just somebody making it up - "Wouldn't it be cool if..." Ah well, whatever.

But that's what people want to know about. And after all the big name acquisitions last year, you can no longer discount...

It doesn't sound crazy any more, right? That's the thing.

Exactly. The rumour was within the realm of possibility. But as far as you can talk about, nothing is going on?

Roger that.

Between Cliff saying that PC gaming is in disarray, and Mark leading up the PC Gaming Alliance...

I don't know about leading the alliance. Just being the loudest voice in the alliance? I'll agree with that. [laughs]

Are they at odds with each other?

We're a PC gaming company at heart, right? We've been making PC games for 15 years. I made the first console-only game for Epic which was Unreal Championship II - the first time we made something only for consoles.

And that was a little hard for us, because we're PC gamers. It was a transition for us. But with Unreal Tournament 3 - after we saw the success of Gears of War on console, we knew it was going to be cross-platform from the beginning. We start out on the PC for development just because it is an easier platform to develop for but we had to make it for console if we were going to be successful.

The numbers I've been seeing for hardcover PC franchises like Half-Life and Call of Duty are 8:1 or 10:1 sales ratios, consoles to PC, and we can't ignore that you know?

Peter Molyneux just talked to us, and his opinion was that the PC gaming market right now consists just of The Sims and World of Warcraft - "sucking the air out of the market" as he put it. Do your specific PC sales figures...

We haven't announced our comparisons.

We're just about to hit PS3 in Europe, and UT3 hasn't come out for 360, so we're not the best comparison source. The only place we are worldwide right now is PC.

But, for sure, the Gears franchise is so strongly weighted towards console over the PC version we put out.

You know, I pissed some people off last year at GDC by saying that the narrow range of folks who can afford to do high-end, Direct X 10 PC gaming are also the guys who really understand how BitTorrent works.

It's unfortunate. Piracy is a huge problem and it is a bigger problem in the high end. So if you aren't making a casual [game] or a Sims or something like that, it is even more of a concern.

There is piracy, I guess, in modded Xboxes but it is just a blip.

You just announced Gears of War 2 as your big game for November. Still an Xbox 360 exclusive for now - no PS3 or PC version?

Absolutely. The sales of the Xbox 360 SKU versus the PC SKU on Gears don't exactly make us think that we should change that. We will stick with the console, even more than before.

What announcements have you made around GDC in terms of new partners picking up the Unreal 3 engine?

You know, I'm the worst guy for that...[laughs]

It used to be that we would get a licensee and there would be this huge celebration, we would announce it in a meeting. And now every time we have a company meeting - every two or three weeks - it's like "Here's are five more guys..."

It does seem like we hear of development studios licensing your engine more frequently these days ...

Part of what has changed is that we make publisher deals now. So when publishers are talking to teams about a game pitch they say "Well, we've already bought the Unreal engine, we've already got it. You don't need to worry about negotiating for it - we have it."

So, we're getting a lot more pick up that way - "Okay, we've got this game idea, we've got a team and we need some tech. Let's get rolling." They'll just use our engine as sort of a default plan and so we get a lot of...We don't know that. It is a surprise to us. And then they'll say "This is using the Unreal engine" and we'll say "Okay! Great!"

I heard you speak at DICE and I remember your quote about not just being the president but also a member - a reference to those old hair club for men commercials...

Which I should also be a member of... [laughs]

It was in reference to using middleware as well as providing it. I know you just announced a partnership with Ageia's PhysX, but are there any others that you plan to incorporate?

Oh, we've got a lot of...We probably have almost 20 members of the partners program, but we use seven or eight. We use RAD's Bink Video, we use the Ageia' PhysX engine, OC3's facial animation stuff, Whole Tomato - we use their Visual Assist tool for compiling, Speed Tree, which is the fast foliage rendering - we used that in Unreal Tournament to great success. I'm sure I'm leaving out two or three.

Part of the reason that we're doing this is because we were using them ourselves and wanted to make it really easy for a licensee. Basically, there is an "#ifdef" at the cop of the code. "Ifdef" you paid for speed tree - yes or no, right? If you paid for it, you just flip the button - bam, it works in your engine and you are ready to go.

One of the highlights of GDC is that you see a lot of middleware on display. Are there any that you've been able to look at this year that have impressed you or have sparked an interest in partnering with them?

God, I wish I could leave my booth to see. Luckily they come to us.

One of our partners program guys said that 85 per cent of his business comes from Unreal Engine 3 folks who see it working in the engine and call and say "Well, we'd like to try it out." It's USD 20,000 for your tool, maybe it will help us, let's try it out. Send us an eval and they pick it up.

It's actually been a really big part of his business, so we're finding these guys come to us more than the other way around. It is a whole new sort of submarket - licensing to Unreal Engine partners, because we've just really been successful with it this console cycle.

I was able to meet with Natural Motion and ImageMetrics this week, and they had some interesting things going on...

We just signed up Natural Motion and we used ImageMetrics...I believe we used them on Gears to some extent.

Has there been any headway in or resolution of the Silicon Knights lawsuit?

That's a big "no comment" from me. I'm sorry to do that to you. I'd love to have that resolved - that would be great. But at this point I've got no comment to make.

I saw Dennis at DICE. He looks well, and I've heard great things about Too Human and I'm excited to play it - I'm a gamer.

Last year we heard a few companies who were using the Unreal engine complaining that it was taking a while to get up to speed with development on the PS3 platform. Do you think that is something that is improving as you guys come to terms with it?

Well, you know, any time someone ships our engine ahead of us on a platform it is going to be a little tougher, right? I mean, we were the very first live demo on the PlayStation 3 back at the launch. We've been working on PlayStation 3 literally since day one. But we never shipped a game on the PlayStation 3 until this year.

So, anybody who beat us to market had a little extra trouble, I'm sure, because they had to dot the i's and cross the t's themselves. But at this point our engine has shipped on the PS3 on more titles than any other engine - even internal Sony engines or anything else. It's the most used engine on PlayStation 3 by far.

I feel pretty darn good about it. I certainly wouldn't have been embarrassed before, if anyone had used it in the summer, or whatever else.

The PlayStation 3...I guess the polite way to's a quirkier platform because it is not a direct map from a PC platform. It's got a lot of power that you have to work hard to use. Whereas the Xbox 360 certainly looks a lot more similar to, say, a quad core PC because it has a GPU and three very similar processors.

So, everybody has headaches going to the PS3 for the first time, but then when you can really tap into the power of it, you can do some really cool stuff.

Are you planning any downloadable content for UT3 on PlayStation Network?


We love to give free content to our users. We ship four bonus packs for Unreal Tournament and four more for Unreal 2003. We love giving away cool free stuff to our guys to support them for buying our games.

What we'll do on PlayStation 3 - I don't think we've made any announcements about it yet, but it would be silly to assume anything other than we are going to try our best to put lots of cool content out there.

Getting back to your DICE debate...

I wish it had been a debate, don't you? That would have been so much better.

Well, yes, that was what I was expecting. I wasn't expecting you to come on one at a time.

We never talked to each other. There was no coordination. It was lucky, honestly, that I was so close to what Insomniac said. Yannis [Mallat, of Ubisoft's Montreal Studios], bless his heart, was in a completely different direction. He wasn't arguing, you know?

They are an excellent example of a studio that has licensed our tech and has been very, very successful with it - with games like Splinter Cell - and also developed their own tech and have been successful with that too. It is a good strategy if you want to make that kind of investment.

Knowing where you are coming from, are there any "competing" internal studio engines that you find yourself impressed with?

Oh, absolutely. There are a ton of really cool technical engines. Absolutely.

Naughty Dog's [engine]. The Halo 3 engine had some really cool features to it, and their online features are really good. Assassin's Creed is a great looking engine, right? There are a lot of great engines out there.

We compete with them in a lot of ways, but the biggest way we compete is the platforms we've been on, the number of times it has been shipped, the support and the content pipeline - nobody touches our content pipeline. That's really what sells our engine.

We walk into a shop that's got some engineers who aren't really excited about not writing the next engine - I was a coder. I understand. And a bunch of artists who look at our tools and say "Omigod! It is going to be so much easier, so much faster. We're going to get this game shipped." And the artists are jazzed.

And then the coders look at it and say "Yeah, okay, I guess he knows what he is doing. I suppose I can work with this..."

Certainly there are some impressive internal engines, but here at GDC you see a lot of breakthroughs or improvements coming from middleware. Does that seem to support your argument in favor of licensing engines?

They just don't get to "double dip" like we do, right? I mean that's the thing.

I have guys who don't work on games and don't think about games and work on our engine, making it better for all of our clients who are looking to make our own engine more flexible, faster, whatever else. That gives me a natural advantage over an internal studio.

Now the internal studio has some advantages. They can focus on one title and one title only. That's great. That is so much easier. No problem. It's hard enough just making a great game, you know?

That advantage that we have being able to re-sell the engine, make some profit and be able to support a team to be doing those things...It works great.

Now that we've been successful - much more so than we've been in the past - this console generation...As I said in my talk, NVIDIA cares more about us and Intel cares more about us, and Ageia. They all focus on our engine because it helps them make all of our licensees games better and faster.

They win, we win, everybody wins...[Pauses] We should all be standardised on one engine, and it should be ours! [laughs] Just think - it would solve so many problems!

One point that Insomniac made, which was a good argument for internal engines, was that they didn't have to worry about acquisitions - for example, when EA bought Criterion and its Renderware tool. Do you see that as a potential pitfall? I mean, you joked about Microsoft not being able to afford you, but what if a publisher offers a truckload of money and then only allows the Unreal Engine to be used on the Xbox 360 or only on the PlayStation 3?

There's always that risk, right?

To be frank, the Midway guys were a Renderware shop through and through. And Renderware kind of fell out from under them right when they were making their decision for the next-generation of technology. So they had the code and they could have keep going that route, and they were really scared that if they went with UE that they would have that same problem.

I mean, there is nothing we can do to convince someone that we are all not going to be hit by a bus tomorrow, right? I can't force my guys to keep working on the engine. Someone could start a really cool shop next door and take them all.

So, we do everything we can to ship a really complete engine, with really complete documentation, so if we stopped coding tomorrow everbody could ship their games and make great games.

There is no promise of what comes in the future - does that make sense? Our contracts don't promise the future - it is what you get now. And then, of course we keep adding stuff, because it is good business.

And we give all the source code - every line of source code - and that's crucial. Because we require it from our own middleware partners. When it happens, and it always does, that we're right about to ship and there is one bug in the code, we want to be able to fix it and go.

Or, God forbid, a company gets bought...Ageia just got bought, right? It could have been really hard for us. It turns out that they got bought by someone who really wants to keep them going and work with us closely, but that is a major dependency for us so we make sure we've got the source code so we can protect ourselves.

So we understand how developers think, I guess, because we think that way.

Michael Capps is president of Epic Games. Interview by Mark Androvich.

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