A truly Epic deal

Several months ago, you may remember that speculation was rife that Microsoft was considering the acquisition of Epic, with a figure of $1 billion floated around. You may also remember Mark Rein joking to us that, actually, it’d need to be more like $2 billion.

It’s not surprising that Epic would be the subject of takeover rumours – not only is it a successful, growing game developer, it’s also the provider of this generation’s most popular third-party game engine, Unreal Engine 3.

If you actually think about it, though, and in particular about what Microsoft would have to gain for such a massive outlay, that particular rumour was never really plausible.

Of course, it’d get the teams behind Gears of War and Unreal Tournament, which would certainly be a boost to its internal development capabilities. More attractively, it’d get total ownership of Unreal Engine. Aside from creaming off the undoubtedly massive profits coming from Unreal licensing – something that any large conglomerate could do – it could apply the engine to its in-house game development teams.

Except, well, there aren’t that many of them – certainly not enough to make a $2 billion investment worthwhile, anyway. And then what’s to say that Rare, Lionhead or Turn 10 would even want to use the Unreal Engine? They’ve all got their own technology, engines customised to their particular needs, and custom-rigging an all-purpose solution to do what theirs already does might not be something those studios would be happy to do given the already pressured contemporary development cycles.

No, Microsoft wouldn’t look to spend that much money on acquiring an engine, especially not given how catastrophically EA managed to bungle its company-wide adoption of RenderWare – undoubtedly the UE3 of its time – after it purchased Criterion in 2004. EA had far more internal studios that stood to benefit from the unified technology, and at that time had the difficult hurdle of the hardware generation jump to handle. Both are big reasons to look at acquiring external tech; Microsoft has neither of these. It doesn’t even have the potential to make the move in order to spite opposition – if it acquired UE3 and removed (or downgraded) PS3 support it’d shoot itself in the foot by removing Unreal’s main raison d’être, cross-platform support.

However it’s history past and present – fingers burnt over the wide-spread adoption of RenderWare and Epic’s current lofty position in the industry – that fuelled speculation back in February and still sets tongues wagging today, with industry pundits constantly speculating an eventual acquisition.

Although Epic may deny, dodge or play down the acquisition question, allow us to speculate for a moment and ask: who would want to buy Epic?

Well, buying the North Carolina studio would be appealing for pretty much any venture capital group – like we’ve said, those Unreal profits must be quite tasty – but probably not tasty enough to want to spend $1 – $2 billion (even if that upper bound is a joke figure).

Current trends would point to only one set of candidates to seriously eye such a deal: that is, tool and hardware providers already taking prominent position in the industry.

Intel’s purchase of Havok last year showed its intent to enter the middleware field, and its tech ally NVidia now owns Ageia’s PhysX middleware – and given the rivalry between those two and the AMD/ATI group there’s always a counter-attack waiting to be made.

Assuming someone was to make a move for Epic (which we are not claiming, by the way, just speculating), if you look back at recent announcements, it seems that out of all the more ‘neutral’ technology companies that are most likely to grab a piece of the pie is Autodesk – and there’s several reasons why it in particular could benefit from owning an engine.

Firstly, a large part of Autodesk’s business comes from the visualisation and architectural industries, owning as it does the industry-leading AutoCAD and Revit packages. At Autodesk’s World Press Day in London last week, one insider mentioned to Develop that Autodesk was certainly aware that Epic’s Unreal Engine 3 had been used by top American architectural firm HKS to provide visualisations for the new Dallas Cowboys stadium, and that it was now offering this facility to all of its clients.

Real-time visualisation is an important bullet point for the architectural industry and, given that it’s in the business of selling ‘visions’, is often used by firms to give clients an impression of what the designed facilities will look like once completed. Autodesk’s viz-related products already include walkthrough features, but they’re of nowhere near the quality of a specially-built 3D engine like Unreal, both in terms of equally important fine detail and large scope.

While high-quality renders of designs may take an hour for a single frame, UE3 can produce images of a not-dissimilar visual fidelity at 30 frames per second, massively cutting down time wasted during production. While time would need to be spent getting CAD artists accustomed to Unreal’s constructive solid geometry-based world system, it could (and has proven to) save large amounts of time for these firms.

But outside of that industry there’s also potential for Autodesk. Its film and animation customers could benefit given the interest in game engines recently from the animation industry, such as UE3’s adoption by a Warner subsidiary for a new HD cartoon series, something that could potentially gain traction if marketed and tweaked sufficiently. And with pre-viz software recently a hot topic amongst the likes of Lucasfilm, ILM and Steven Spielberg, just think how useful (as both a PR ‘sell’ and actual execution) it could be to offer movie firms a UE3-powered pre-visualisation tool, one that could even potentially integrate with the team making ‘the game of the movie’.

Of course the real boon could be for game developers. Imagine the scenario: the makers of the industry’s two favourite 3D modelling applications also owning the most popular engine of the moment would enable Autodesk to build an out-of-the-box pipeline between engine and toolset. Of course, such a pipeline already exists, as UE licensees will attest – but having both ends owned by the same company could massively facilitate the development of a stable, dependable interconnecting pipe, with flexibility provided by already known languages like MaxScript and MEL.

That cooperation between tool and engine could even help in the future, when the next generation arrives, for ensuring that Max and Maya provide all the features needed for a next-generation engine right from the get-go. Sure, that sort of dialog exists already, but would certainly be more effective if both teams were in-house. Given that this asset export path is still a thorn in many developers’ sides, providing a package of the industry leading tools with the industry leading engine could prove a massively tempting (and certainly lucrative) bundle.

So, while there would be benefits to owning Epic, does that mean Autodesk would actually do it? Well, its acquisition of Kynogon earlier this year signalled the intent to enter the game middleware field, and it used the Kynogon execs to build a new Autodesk middleware team – a clear sign of future plans. It’s also a particularly acquisition-happy company, having grown massively over the past few years by continually purchasing not only its competitors but also complementary technologies (such as yesterday’s acquisition of RealViz and its 2D-to-3D imaging technology).

Very recently, Develop has asked Autodesk about this very possibility in a soon to be published Q&A with senior exec Marc Petit – and the (carefully chosen) answer was that doing so would make the company own a game developer itself, therefore losing the objective, neutral and impartial position that Autodesk says it prides itself on. But, of course, there’s always the potential to only purchase the UE team and spin out Epic’s game development arm (and given the earning potential of the Gears of War franchise it wouldn’t be surprising if Epic’s current owners wanted to keep a slice of that particular cake).

So, while it may all be pie-in-the-sky supposition – and some developers could be worrying about nothing – it’s worth considering that the benefits of purchasing Epic are far greater to a lot of the companies less directly involved in the game development industry. Should Epic ever be bought, chances are that it won’t be a publisher that takes the plunge, meaning studios can likely breathe a sigh of relief.