Executive Vice President at Epic Games Saxs Persson has shared some behind-the-scenes details regarding the company's recently-released UEFN, talked about the editor's capabilities and advantages, and discussed monetization strategies.
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80.lv: Can you do a little intro? How long have you been with the company? What do you do there?
Saxs Persson, Executive Vice President at Epic Games: I'm Saxs Persson, and I have been at Epic Games for 14 months. I've known Tim Sweeney since back in the 90s when we were programming together, and we've always been philosophically very aligned. UEFN, I would say, represents the next step of his and my vision for how these ecosystems need to evolve.
I've been in games for over 30 years, and we started within a year of each other. It was always about making the best game, but at some point, it became much more about enabling other people to make games – and it is actually much more fun and fulfilling.
I think Epic Games started working on Unreal Engine in 1993 or 1994, and UEFN is the next logical step for the company. How do we get the power of Unreal into more hands, and when you make something in Unreal, how do we get players to connect with that much easier than making a finished game – worrying about multiplayer, store rules, and how to sell it. We want to provide an ecosystem that's ready for the game and then for developers to just focus on the game. That was the biggest thing.
It's 100% up to the creator where they want to go, and the only thing you can purchase is what you purchase in the item shop. How do we construct an economy that's fair to everybody? Where you can build a business knowing that if people play your game, if they're successful, and if there are people who like it, you will make money.
That's the philosophy around the economy and those two pieces – how do we have a fair and transparent economy and how do we have tools in the hands of creators with a built-in audience – are the essence of what the announcement was about and the proof of why we did it is that 40% of the time in Fortnite is already being spent with other people's islands, not in Battle Royale.
That number grew from zero four years ago when there were no in-game tools and has just been increasing. We also think that 40% is about as far as we can go with in-game tools, because functionally, it is a remix of things available in Fortnite. Unreal Editor opens up custom assets, custom meshes, Sequencer, landscape tools, and more – a lot of the things Unreal Engine can do, now in a world with a one-click publish so we should see an explosion in genres and that is what we think the next growth is going to come from the ecosystem.
Thoughts on Utilizing User-Generated Content
80.lv: There are a lot of companies trying to leverage user-generated content to grow. Why do you think this is going to be more successful than other experiences? Where are you going with this?
Saxs Persson: We think the magical combination – our first-party content, plus creator content – has been the reason why it's been very successful. I think what we are very good at is inspiring people with our first-party content to use that as a springboard and we're not going to change that. We're still going to make games, creators will make their games and they're all going to be in the same ecosystem. I think that is a fundamental difference between us and Roblox, but very similar to Minecraft.
I think at 70 million monthly active and 500 million total player accounts we have one of the biggest of these ecosystems, and reaching scale is actually difficult, like taking off from zero to 70 million monthly active users – that's a hard journey. But once you're there and people are coming in the door every day, figuring out how we can serve our players better, what is it they're missing and how can we close the gap between them.
Fortnite is about fun with your friends in a squad flowing between all these different experiences – that's the core of what's made Fortnite successful and everything we announced is doubling down on that. We want to increase the range of diversity of these experiences and the quality of these experiences, and for those players to just feel like they don't have to go anywhere else to be successful.
80.lv: I think in this case there can be two pieces to this puzzle – there is Fortnite with 70 million users and there's also Unreal Engine 5, which is a huge competitive advantage that a lot of the competitors don't have, right?
Saxs Persson: With this engine, people trust us to make their cutting-edge games and now we are going to power creators of every shape and every size to use the full power of Unreal Engine, and that's kind of nuts.
We have a ninja team inside Epic – the team that worked on Matrix Awakens. CTO Kim Libreri's team takes no prisoners – they go for it. When we speak to them about their expectation of Unreal Engine and UEFN, whenever there's a delta between Unreal and UEFN, it needs to be fixed. They expect a workflow that's just as good as what they would use on a feature movie. They've pushed UEFN tremendously the last three months that they've been working on this demo – for us not to be so narrowly focused on just taking some of the things from UE. They make sure Fortnite creators can create better things.
At some point, Unreal Engine 6 will connect directly to Fortnite so you will just need to choose to publish into Steam, EGS, or Fortnite – that's the obvious goal there.
80.lv: When you're developing games, there’s a system of guardrails, so you need to give some restrictions in order to streamline creativity. Do you use this kind of philosophy as well when you're thinking about content created by users?
Saxs Persson: The robot demo we showed is 400MB, and it downloads and plays in less than a minute. I think what’s been an important starting point for us is for UEFN to have some limits on how big these islands can be for now, and we want people to have some constraints in their creativity to really make gems rather than just make these sprawling 40GB installs. That's not the spirit of what we're trying to build. We're trying to build a spirit when you can browse between these things and you need to be immediately satisfied.
We keep talking about entertainment per minute. Players are very sophisticated. Similar to when you go to YouTube if, in the first two or five seconds, a creator comes at you with a voice you don't like, or a background that's kind of annoying, or a clickbaity title – you've already made your choice. Our ecosystem is not that different – players expect that the image captures what the experience is, but when you go in and you have fun within 30 seconds of coming in – if not, they bounce immediately.
It's slower than TikTok – it's not like two or three seconds or something – but it's the same feeling that I could go anywhere at any point so you have to grab my attention. We think it's really healthy, because it forces our creators to think about what is the essence of what they are trying to make. There's an art in there on being concise and trying to communicate your mechanics as fast as you can and get players into the game really fast, then you can immerse them right, but we don't see this as an obvious place for creators to make an opening five-minute cutscene.
We're not putting any limits on it either – there's a whole range of possibilities of where creators are going to go, but what we've seen so far is entertainment per minute really matters. That is how players will be able to rate their time. When you have an hour to spend with friends, you want that hour to be spent actually doing things, not doing driver updates, not doing install times – all the things that happened in every single game. We're trying to shortcut that and say: "You know the ecosystem provides that for you, just make the game."
I think Fortnite has been synonymous with Battle Royale, and unbeknownst to most people, 40% of the time is actually not spent in Battle Royale, but for the casual observer they would say Fortnite is the shooting game, but for about 40% of the time that's just not true.
We want people to broaden their perspective of what Fortnite is and what they expect from the ecosystem. The announcement was an important step because we deliberately showed things that look very different. Forest Guardian is like a beautiful cave with the dragon coming out and the playable version of that, I think, is breathtaking. Done by one artist in the UK who just had an idea that he just wanted to execute. I think he did an unbelievable job of letting people feel that Fortnite can be whatever you make it to. It's an ecosystem – it's not about the shooting, it's about being there with friends and having fun with very few barriers between different experiences.
80.lv: Please tell us about the monetization. How does it work?
Saxs Persson: The principle is that Creator Economy 2.0 is an open, transparent way to drive the Fortnite economy, and it's focused on rewarding people who drive good engagement. The money comes from the item shop and you can't sell anything on your Island. What's in the item shop are things that don't affect gameplay, so there are no special items and no gameplay advantages – just outfits.
We like to say it's Halloween every day in Fortnite and you dress up to whatever you want to go, whatever you want to do. You don't have to and you can just use your default skin, but Fortnite has always been a place where if you have fun and you are with people that you care about, it is fun to be somebody. If you allow people to just focus on enjoying themselves, they will spend money and you don't have to tell them to spend money. That's just what they'll do.
The distribution of that is 40% of net revenue, which can be very simply calculated by taking gross revenue and removing platform fees (that's the only thing that's removed from there and there's nothing we can do about the platform fees).
60% happens to be what it takes to pay for our servers, customer service, back-end development, fraud protection, and all the things needed to run this ecosystem. 40% is what we can afford to pay back.
We're pushing that to the limit and a little bit more because we want it to feel like we are extending ourselves to the point where we have to be careful about what we spend too. The maximum should flow into game development distribution. Distributing this to all the islands that are in the ecosystem is done by looking at roughly two big things. One is new players brought into the ecosystem and the other thing is the quality of play on the island.
Epic’s own islands are also measured for engagement and participate in this pool, and essentially, that's what funds our game teams moving forward. It’s similar to any creator because if you make an island and it's successful, it’ll allow you to invest into the next island or into a better island or deeper island.
The maximum amount of money should flow back to the creators so they feel confident in investing in the next stage. Everything is paid in dollars – it's not VBucks, there's no translation layer, and there's no exchange rate. It is the money from the item shop translated into money given to a creator.
80.lv: Who has the IP if I build an Island and am successful?
Saxs Persson: You. You have your IP. If you build an island with your own assets, you have your IP and your assets, and you can move that into UE and publish it wherever. If you build something only with Fortnite assets that Epic owns, then of course you can’t take that and go publish it as your own.
Our philosophy has always been that developers will invest a lot more of their time, money, and energy if they feel they are building for themselves. The person who knows their own IP the best is the developer, so for us it’s a no-brainer. You own your own IP and all the assets you built or brought in, and you can take those anywhere or publish it anywhere.
But also, why would you? If you build in Fortnite now, you are part of an ecosystem that has potentially unbounded payment. Our job is to now prove that creators can be successful in this economy and that using our tools and publishing to Fortnite is less expensive than making things elsewhere. This is what we’re excited about.
80.lv: What are the incentives for creators from other communities to jump into your ecosystem?
Saxs Persson: If you compare how you would make money with Roblox or Minecraft or anywhere else, it's similar to how you would make money on Steam, meaning you have to sell something directly to players. And if we compare why loot boxes are so popular in other games? They are popular because they prey on a particular psychology urge we all have – to gamble. We just don't think that's a positive experience for players, period.
So our promise to a developer is that you don't have to think about where to put your gate for money or how to have a monetization loop that doesn't allow you to play too long before you have to pay to purchase before you bounce out. I think from a game design perspective, it has no benefits if you have “I know you're enjoying yourself and you need to enjoy yourself more because at some point I have to pop up an ad and now you have to purchase” in the back of your mind, and it has to be at the point where you're the most vulnerable, and that's when you're going to put a purchase portal.
I think if there's an alternative to that, like Creator Economy 2.0. We should offer it to developers and allow them to say, “actually I don’t want to participate in loot boxes or sales, I just want to make a fun game.”. In our conversations with indie developers in particular, this is what they struggle with. It’s very difficult to get people to pay for your game up front. It’s difficult to get people to be on board with paying full price and everybody waits for a sale. At the end of the day, they wonder: “did all the people who could have experienced my game actually experience it, or did my purchasing scheme limit the number of people who enjoyed it?”
So from an indie developer perspective, if you instead have this pure feeling of “I just want people to play my game, I think my game is really clever, I think people will love this game and if they just play it I get paid”? That is a magic formula for a ton of developers. Game Pass has a similar promise, so if you make a game just for Game Pass, you get something for being part of it. There’s no limit on what we’re constructing. We think that's important that you take a bet on yourself that people just like your game and that's it.
Inside Fortnite Creative, even with the tools that we've had for the last four years, there are already big creator studios that operate inside Fortnite that have employees and taxes to pay, just like a real business. Now we think there will be a lot more big businesses. We just haven't had an economy that could really scale with their ambition – UEFN and the new Creator Economy sets them up so they know that if they can make five islands and two of them are medium successful, they can pay for payroll to fund the next 10 islands. That’s the goal here.