Hello,
I have a question about whether royalties are due for the type of business we operate. We are a software development company that has recently started using Unreal Engine to develop experiences for clients (education, training, in-store visualization experiences, biomedical visualizations, architectural visualizations) for which we frequently receive more than $3000.
For these projects are we exempt from paying 5% royalty on what we receive from the client? Also, if in future projects the customer wanted to provide access to one of our delivered VR experiences as one part of a sold product (or subscription-based product), would that change the answer?
I posted some relevant info I found on the faq page below.
Thanks.
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(From FAQ)
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If I release a commercial product, what royalties are due to Epic, and when?
Generally, you are obligated to pay to Epic 5% of all gross revenue after the first $3,000 per game or application per calendar quarter, regardless of what company collects the revenue. For example, if your product earns $10 from sales on the App Store, the royalty due is $0.50 (5% of $10), even though you would receive roughly $7 from Apple after they deduct their distribution fee of roughly $3 (30% of $10). Royalty payments are due 45 days after the close of each calendar quarter. Along with the payment, you must send a royalty report on a per-product basis. For more information, see here. -
Are any revenue sources royalty-free?
Yes! The following revenue sources are royalty-free:
[[1]] Ancillary products, including t-shirts, CDs, plushies, action figures and books. The exception is items with embedded data or information, such as QR codes, that affect the operation of the product.[[2]]
Consulting and work-for-hire services using the engine. This applies to architects using the engine to create visualizations as well as consultants receiving a development fee.
[[3]] Non-interactive linear media, including movies, animated films and cartoons distributed as video.
[[4]] Cabinet-based arcade games and amusement park rides.
Truly free games and apps (with no associated revenue).