Tim Sweeney’s Remarks Part 2 | State of Unreal | Unreal Fest Chicago 2026

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Awesome. So, that is the first two of our next generation permissibly licensed open source releases and the first of many to come as we go about building more and more standards for interoperability for the future of gaming. And now I'd like to go and talk about the game business, which is in a time of both crisis and also opportunity. On the upside, there's a new generation of gamers coming in with new tastes in games and they're playing games at a higher rate than any previous generation before. And the biggest games like Fortnite are once again growing and thriving. But underneath this, there's a serious challenge to AAA developers and that's that a huge number of the new releases of major games are failing now. We're seeing often hundreds of millions of dollars of dev cost followed by tens of millions of dollars revenue and the dev costs are continuing to grow. It feels to many like a tidal wave is sweeping over the AAA game business. I'd like to back up and everybody has their theory for why this is happening, but I'd like to back up and identify the key generational changes and trends that are behind this. And because if we want to come up with an honest solution, we have to accurately identify the problem. And the key one of the key trends is that gaming is increasingly becoming socially driven. You know, in the old days it was you decide to play a game, you download it, you may play it by yourself or maybe play multiplayer with whatever strangers show up. Nowadays, it's much more about you getting together with your friends and then deciding what to do together online to play a game or experience. And this social increasing angle of gaming is creating a massive advantage for big games and big effort systems because a game with a lot of players is much more likely to contain a lot of your friends and a long established game with a huge player base has a much easier job of retaining players than a new game has of attracting new players. You know, thus we've seen a lot of the major new multiplayer games not gain a sufficient community and momentum to survive though in the past they might have. The other big change that's affecting gaming is that the economy is shifting from buying games to buying things in games. And you know, whether you're a fan of this or not the arithmetic of it is undeniable. I mean this is another thing that reinforces the success of very large existing ecosystems in games and makes it ever harder for new entrants to get in. And that is if you've been playing a game for a long time and it has a huge player base then you can buy with confidence knowing that things you purchase will still be useful to you days, weeks, or years later, whereas when a new game comes out it's a much more difficult decision to spend. You're not sure if you're going to play it next day, next week, next month and are much less likely to spend. And the final trend that's affecting gaming is that the market for players' attention has become extraordinarily competitive more so than I've ever seen before in my lifetime when we were competing with you know, lame television and other things. Nowadays there's all kinds of social media platforms as well as things like prediction markets that trend almost into vice all competing for people's time, all very effectively. And so to overcome these trends, you know, the game industry whether we like it or not is reorganizing itself and there are kind of two big predictions for the future as these problems reverberate throughout the industry. One view of the future is Roblox grows and eats gaming.

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A lot of people are saying this online. But yeah, what you have there is a centralized platform with a single gatekeeper that commoditizes all content, takes more than 70% of revenue, and has 450 million users on board. And so that's a real challenge to game developers. But we believe in a very different future and a much brighter one for the people in this room. And that is that a future of high-quality gaming rising to the challenge and linking up our content, linking up our communities, and linking up our economies to deliver fun and to serve gamers with great games in a way we've never done before. And to accomplish that, we're going to all need to change the way we build things. We're going to need to build better games. We're going to need to build them more efficiently. We're going to need to design up front and build for connected games where all of our player bases are connected socially and our economies are connected so that players, instead of seeing these as isolated products, see them as part of a global ecosystem that all game developers participate in together. You know, we want to work with all of you and with all of the game developers in the industry to achieve this together. The things we built with Unreal Engine 6 are our technological foundation for it. And you know, we believe that this is a big challenge that we all have to rise to. We need to win the competition for players' time, not only against other games, but also against YouTube and TikTok and everything else that people are doing online. And this was very much on our minds when we set out about building Unreal Engine 6. And it's also what was on the minds of really close partners like Disney and LEGO and other AAA game developers where we've been building increasingly close partnerships with them to build this together. You know, and it's very clear Fortnite has 80 million monthly active users. That's quite a lot, but we realize that this is not enough for Epic to do it alone. To build the ecosystem of the future, we're going to have to build it together. And I think the thesis for that is very optimistic that between all of us in the world's best games, many of which use Unreal Engine, and many of whose developers use Unreal Engine, and many projects we have, billions of active users. And so we have the opportunity to form up into team open and to define the future of gaming together again. And that's exactly what we want to accomplish in this generation together with you. So that's what we're doing. And thank you very much for coming here to Unreal Fest. And remember, where else in the world can Fortnite creators get together with AAA game developers and filmmakers and architects and car designers and people at Lockheed Martin who are designing things they're not even allowed to talk about here. And actually speak the same language, the language of Unreal and content and code and development. So I hope you have a great time and have a great opportunity to meet up with lots of people. Thank you very much.

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