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Epic has two separate revenue policies that can affect Unreal Engine games: a conditional 3.5% engine royalty for qualifying Launch Everywhere with Epic titles, and a separate Epic Games Store commission that gives each product its first $1 million in net store revenue per year at a 0% store cut. The first concerns an engine license; the second concerns distributing a product through Epic’s store. Their thresholds and eligibility rules are different.
What is the Unreal Engine royalty rate?
Epic’s current licensing summary says qualifying game and application products that rely on Unreal Engine code at runtime and are licensed to third-party end users owe a 5% royalty on qualifying lifetime gross revenue above $1 million directly attributable to the product. Epic Games Store sales are excluded from that engine-royalty calculation. The summary is an overview; the Unreal Engine End User License Agreement (EULA) contains the operative definitions and obligations. Epic’s Unreal Engine licensing options and the Unreal Engine EULA describe the terms.
How do developers qualify for the 3.5% Unreal royalty?
Launch Everywhere with Epic can reduce the Unreal Engine royalty from 5% to 3.5% for qualifying products. It is not an automatic rate for every Unreal title or every launch. Under the EULA, the product must be released on or after January 1, 2025, on at least one platform that supports Epic Games Store. On each platform where the store is available, the product must be publicly released on Epic Games Store before or at the same time as its release on other stores, and it must satisfy the agreement’s parity requirements. Epic’s EULA, EULA change log and royalty reporting announcement explain the program and rate.
Because eligibility turns on the title’s platform availability, release sequence and contractual parity terms, a developer should assess the actual launch plan against the EULA rather than assume that simply listing a game on Epic Games Store qualifies it.
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How Epic Games Store’s $1 million threshold works in 2026
Epic Games Store also has a separate distribution revenue share. The current distribution terms give the developer or publisher 100% of the first $1 million in net revenue per product per year; after that annual threshold, the split is 88% to the developer or publisher and 12% to Epic. The threshold began June 1, 2025, for the remainder of that year. Beginning January 1, 2026, it resets each calendar year. Epic announced the change in its revenue-share update and lists the current split on its distribution page.
This annual store threshold is not the Unreal Engine royalty threshold. The engine license uses a $1 million lifetime threshold for qualifying gross revenue attributable to a product; the store policy uses a $1 million per-product, per-year threshold based on net Epic Games Store revenue. The storefront share does not replace the engine EULA.
Does releasing on Epic Games Store reduce Unreal royalties on Steam sales?
The 3.5% rate is tied to qualifying Launch Everywhere with Epic terms, including the release timing and parity requirements. It is not a blanket waiver of engine royalties on sales through other stores. Separately, Epic says Unreal Engine royalties are waived for purchases on Epic Games Store that are processed using Epic’s payment system. That transaction-specific waiver should not be confused with either the reduced 3.5% rate or the store’s revenue share. Epic’s distribution terms specify the payment-processing scope.
Are Epic Games Store in-game purchases exempt from Unreal royalties?
Not simply because they are made in a game sold on Epic Games Store. Epic’s stated engine-royalty waiver applies to Epic Games Store purchases processed by Epic’s payment system; it does not extend on that basis to in-app purchases or purchases handled by a developer’s own payment processor. The payment route and type of transaction matter, so check the applicable terms before treating a sale as exempt.
Which terms should a developer use for a specific game?
Use the agreement that governs the charge being assessed: the Unreal Engine EULA for engine royalties, and Epic Games Store’s distribution terms for its storefront commission. For a particular title, verify the signed license, its revenue and payment routes, platform availability, release timing, and any separate agreement with Epic. Public summaries explain the broad policy but do not settle title-specific contract interpretation.
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