You agree to pay Epic a royalty equal to 5% of all worldwide gross revenue actually attributable to each Product, regardless of whether that revenue is received by you or any other person or legal entity, as follows:
a. Gross revenue resulting from any and all sales of a Product to end users through any and all media, including but not limited to digital and retail;
b. Gross revenue resulting from any and all in-app purchases, downloadable content, microtransactions, subscriptions, sale, transfer, or exchange of content created by end users for use with a Product, or redemption of virtual currency, either within a Product or made externally but which directly affect the operation of the Product;
c. Gross revenue from any Kickstarter or other crowdfunding campaign which is directly associated with Product access or in-Product benefit (e.g., in a multi-tiered campaign, if an amount is established in an early tier solely for Product access, your royalty obligation will apply to that amount for each backer with the same access, but not on additional amounts in higher tiers based on ancillary benefits);
d. Your revenue from in-app advertising and affiliate programs;
e. Revenue from advance payments for a Product (from a publisher or otherwise); and
f. Revenue in any other form actually attributable to a Product (unless excluded below).
However, no royalty is owed on the following forms of revenue:
- The first $3,000.00 in gross revenue for each Product per calendar quarter;
- The first $5,000,000.00 in gross revenue for each Product from the Oculus Store;
- Consulting fees or work-for-hire fees which are non-recoupable for services performed using the Licensed Technology (e.g., an architect-created walkthrough simulation or a contractor-developed in-house training simulator);
- Revenue from an Unrestricted Product, including for clarity, revenue from a Product which solely relies on the Licensed Technology for production of non-interactive linear media (e.g., broadcast or streamed video files, cartoons, or movies) and which is Distributed in a form that does not contain the Licensed Technology or, in order to deliver, rely on servers running the Licensed Technology;
- Revenue from a Product which is only Distributed to Engine Licensees (such as through the Marketplace);
- Revenue from ancillary products which are not software and which do not contain embedded information (such as QR codes) which affects the operation of the Product (e.g., comic books, soundtracks, apparel);
- Financial winnings generated by awards for the Product;
- Revenue from donations for a Product which are not tied to Product access or in-Product benefits;
- Revenue from interactive amusement park rides which use the Licensed Technology; and
- Revenue collected from an end-user buyer of in-game items or other in-game content for your Product which is sold by an end-user seller and which is actually paid to the end-user seller and is not retained by you or any other party.
The royalty is based on gross revenue from end users, regardless of whether you sell your Product to end users directly, self-publish via the App Store or any similar store, or work with a publisher. The following simplified example illustrates the application of the royalty to gross sales: if your Product earns $10 on the App Store, Apple may pay you $7 (having deducted 30% as a distribution fee), but your royalty to Epic would still be 5% of $10 (or $0.50).
Royalties that you pay on an advance payment of revenue for a Product that is recoupable by the payer, such as a publisher, may be credited against future royalty payments that you incur under this Agreement for that Product.
Royalties must be reported and paid on a per-Product basis. The $3,000 per Product per calendar quarter royalty exemption may not be aggregated across multiple Products.
Within 45 days after the end of each calendar quarter in which a Product earns revenue outside of the above-listed royalty exclusions, you must pay to Epic the full amount of the royalty due for that quarter and send Epic a royalty report on a per Product basis. Detailed information on royalty reporting and payment can be found at unrealengine.com/release.
The royalty will be payable under this Agreement with respect to each Product for as long as any Engine Code or Content (including as modified by you under the License) incorporated in or used to make the Product are protected under copyright or other applicable intellectual property law.