The Unreal Engine End User License Agreement governs Epic’s real-time 3D engine for games, virtual production, architectural and automotive visualization, simulation and other uses.[1] It has two payment mechanisms that depend on what the licensee builds. A licensee developing a Royalty Product pays no seat subscription for that use but may owe royalties; for any other use it needs a seat subscription for each developer unless an exception applies.[1] Understanding which mechanism applies to which product is the core of an Unreal Engine licence position.
Editions
Epic describes three practical positions on its licensing page.[2]
| Position | Who | Cost |
|---|---|---|
| Free | Game developers until royalties apply after USD 1 million gross product revenue; individuals and small businesses with less than USD 1 million annual gross revenue; educators and schools | None |
| Royalty-based | Games or applications that rely on engine code at runtime and are licensed to third-party end users | 5% of lifetime gross revenue above USD 1 million, attributable to the product |
| Seat-based | Commercial use, USD 1 million or more generated in the past 12 months, and not creating a game or application that relies on engine code at runtime for third-party end users | USD 1,850 per user per year in the FAQ |
The EULA text underlies these positions. It gives a non-exclusive, non-transferable, non-sublicensable licence to privately use, reproduce, display, perform and modify the Licensed Technology, which covers Engine Code, Examples and Starter Content, but not assets downloaded from marketplaces such as Fab.[1] Epic’s FAQ adds that licensees may request custom terms, for example for Epic Pro Support, private training and negotiated royalties, and that Epic Pro Support is an add-on for companies with 10 or more Unreal Subscription seats and custom-term licensees.[2]
Metrics
Seat
A Seat is the right to allow one User to access and use the Licensed Technology; seats are automatically renewing subscriptions, and an individual Seat is personal to the assigned User and must be reassigned before a different User uses it.[1] A User may use several computers or workstations while occupying a single Seat, and two Users sharing one computer occupy two Seats.[1] The licence permits use only by individuals who access it with a valid user account, and when the licensee is a legal entity its employees or agents exercising its rights are Users.[1] Epic confirms that seats can be assigned to external contractors and are managed through the Epic Developer Portal.[2]
Company gross revenue threshold
The seat requirement falls away in three cases:[1]
- Personal and indie exception. While the licensee, together with its corporate group, has generated less than USD 1,000,000 of gross revenue over the last 12 months. The corporate group means entities that control, are controlled by or are under common control with the licensee, and revenue includes advances received or other funds raised.
- Educational exception. For an educational institution such as a school or library when its Users access the technology only for educational purposes. Institutions may also store the technology on any of their computers and let all users of those computers use it, though those users may not distribute it.
- Non-commercial exception. For Users accessing it only for non-commercial purposes; all uses by or on behalf of commercial entities count as commercial.
Epic’s FAQ says the USD 1 million figure is always measured in USD at a reasonable conversion rate, that seat pricing depends on annual gross company revenue and that royalty depends on lifetime product revenue, and that government organizations can use the engine free for non-commercial purposes but must procure it through a third party for commercial activity.[2] A plugin developer does not need a seat to develop plugins.[2]
Royalty Revenue
Royalty Revenue is all worldwide gross revenue attributable to each Royalty Product minus allowed exclusions, and the payment is that figure multiplied by the Royalty Rate.[1] It includes revenue from sales to end users through any media, in-app purchases, downloadable content, microtransactions, subscriptions, trade of user-generated content, crowdfunding tied to access, in-app advertising, advances from a publisher, and payments for inclusion in streaming, subscription or other game-delivery services, and it counts revenue regardless of who collects it.[1] A price paid to an app store is not deducted: the EULA’s own example computes the royalty on the full USD 10 price even when the store pays out USD 7.[1]
Counting / floors
Royalty-free distribution
A licensee may distribute some Products without royalties even if it monetizes them, although they may still need seats:[1]
- Non-Engine Products, which contain no Engine Code, need none to run and contain no Starter Content in source form, such as rendered video files or asset files.
- Products that do not directly generate revenue, for example a free configurator app used to sell cars.
- Distribution inside the company group for private use.
- A single client that hired the licensee on a work-for-hire basis under a written agreement recognizing the client as author or assigning copyright, with no further distribution.
- Location-based use at physical locations under the licensee’s or its distributors’ control.
What triggers the Royalty Addendum
Any other Product is a Royalty Product, including its Ports, meaning later adaptations for other platforms or crossplay-compatible versions.[1] Even then, no royalty is owed unless the Product directly generates more than USD 1,000,000 of gross revenue.[1]
Rate and exclusions
The Royalty Rate is 5% unless the Product qualifies for a reduced rate.[1] A Launch Everywhere with Epic Release, a Royalty Product that on or after 1 January 2025 is released on at least one platform supporting Epic Games Store, is published there before or simultaneously with other stores on each such platform, and keeps content, feature and marketing parity, pays 3.5% going forward, reverting to 5% if the conditions stop being met.[1] The EULA temporarily waives the parity requirement for iOS and promises four months’ notice before reinstating it.[1]
The EULA excludes the following from Royalty Revenue:[1]
| Exclusion | Amount or scope |
|---|---|
| Quarterly | Revenue from a calendar quarter in which the Product’s gross revenue is below USD 10,000 |
| Lifetime | The first USD 1,000,000 of lifetime gross revenue per Royalty Product |
| Oculus Store | The first USD 5,000,000 of lifetime gross revenue from the Oculus Store or its successor |
| Epic stores | Sales on Fab or the Epic Games Store and subsequent in-Product purchases using Epic’s payment services |
| Recoupable advances | Royalties already paid on a publisher advance are credited against later royalties |
| Licensed audience | Revenue from Products distributed only to parties separately licensed by Epic |
| Other | Non-software ancillary products such as soundtracks, cash prizes for awards, donations not tied to access, sales and value added taxes, and Epic MegaGrants funding |
Epic’s change log records how these terms developed: update 15 introduced the USD 1,000,000 lifetime and USD 10,000 quarterly exclusions in place of an earlier USD 3,000 quarterly exclusion, update 19 added seat subscription detail and extended audits to seats, and update 20 added the 3.5% rate and renamed the Notice of Distribution as a Release Form.[3]
Virtualization & partitioning
Seats are tied to Users, not hardware, so virtual machines and remote workstations do not change the count: one User occupies one seat however many machines are used.[1] Distribution rules matter more. The licensee may not let end users incorporate the Licensed Technology into their own products, and must distribute engine code in object code and as an inseparable part of the Product.[1] Products that include Engine Tools, such as editors, may be distributed only through Fab or a fork of Epic’s GitHub UnrealEngine Network.[1] Engine Code may be given to another licensee of the same version, and snippets of up to 30 lines may be posted in public forums.[1]
Cloud / BYOL
When a licensee uses cloud features of the Licensed Technology it temporarily grants Epic access to its input data for the sole purpose of generating the requested output, and Epic states it does not retain the data after processing.[1] Distribution of a Product to end users through a network counts as Distribution, since the definition includes making functionality available on a network.[1]
Programs
- Release Form. Before distributing a Royalty Product that will generate revenue, the licensee must submit the release form at unrealengine.com/release, and again before starting to earn revenue from an already distributed Product.[1]
- Reporting. Within 45 days after the end of each calendar quarter in which Royalty Revenue is earned the licensee reports revenue per Product and pays; late amounts accrue interest at the 30-day average SOFR rate, compounded monthly, and payments are non-refundable except where the law requires.[1]
- MetaHuman. From Unreal Engine 5.6 MetaHuman is included in the Unreal Engine licence, and MetaHuman characters and animation are Non-Engine Products, but rendering them outside Unreal Engine above USD 1 million of annual revenue requires an Unreal Engine seat.[5]
- Plugins. Marketplace plugins offered per user may only be used by the number of users licensed.[4]
- Renewal. A licensee that does not renew keeps its tools and projects, but the EULA still requires new seats or renewal for continued use unless revenue has fallen below the threshold.[2]
Restrictions
The EULA prohibits combining the engine with code under licences such as the GPL, LGPL (except dynamic linking) or Creative Commons ShareAlike, renting or leasing the technology, granting security interests in it, and using it as a training input to a Generative AI Program; it also bars using MetaHuman characters and animation curves to build or train AI databases.[1] Products with credits must carry Epic’s trademark and copyright notices.[1]
Audits and compliance
The licensee must keep accurate books and records sufficient to verify seat and royalty compliance. Epic may audit them through an independent third-party auditor on reasonable notice, during business hours and no more than once every twelve months; Epic bears the cost unless the audit shows a shortfall of more than 5%.[1] Epic may share a user’s work email address with the employer for seat compliance on the employer’s request.[1]
Out of scope
This article does not cover Epic’s consumer terms of service, the Epic Games Store developer agreement, publishers’ separate contracts or custom licences, whose terms are not public. The EULA itself shows no effective date, so the version should be recorded at the time it is accepted.