Choosing a game engine is not just a technical decision for indie studios — it is a licensing decision with revenue implications that can persist for years after you make it. The events of recent years in the game engine market have made developers more attentive to license terms than ever before. Here is what indie studios need to understand about the major options before they commit.
Unity: Subscription Tiers and the Royalty History
Unity went through significant licensing controversy in 2023 when it announced a Runtime Fee based on per-install counts, then reversed and modified its approach following industry backlash. The current state as of 2025 is that Unity operates on a subscription model with revenue-based tiers.
Unity Personal is free for studios earning or expecting to earn under $200,000 per year in revenue. It includes the full engine feature set for this tier. The Unity logo splash screen is required. Unity Pro costs $2,040 per seat per year and is required once revenue exceeds $200,000 per year. The enterprise tier (Unity Enterprise) is custom-priced.
The lesson from the Runtime Fee controversy is that Unity's license terms have proven changeable. Studios that built multi-year plans around specific Unity pricing assumptions found those plans disrupted. This is not a reason to avoid Unity — it remains one of the most feature-complete engines with the largest asset ecosystem — but it is a reason to read current terms carefully and factor licensing cost variability into financial projections.
Unreal Engine: The 5% Revenue Share Model
Unreal Engine is free to use, download, and develop with for any project. Epic Games takes a 5% royalty on gross revenue exceeding $1,000,000 per product per quarter. Below that threshold, you owe nothing. For the vast majority of indie studios, Unreal Engine costs nothing in licensing fees until you achieve meaningful commercial success.
The 5% royalty applies to commercial products shipped using Unreal. Internal tools, demos, and free games are exempt. Epic also waives the royalty for games sold through the Epic Games Store (their competing platform with Steam), which reduces friction for studios considering multi-platform publishing.
The trade-off with Unreal is that its C++ architecture and Blueprints visual scripting system have a steeper learning curve than Unity. For indie studios without C++ experience, the initial development velocity may be lower, even if the licensing economics are more favorable.
Godot: Truly Free, MIT Licensed
Godot Engine is released under the MIT License, which means it is completely free for any use — commercial, educational, or otherwise — with no royalties, no revenue thresholds, and no per-seat fees. You can ship a game generating millions of dollars in revenue and owe Godot's developers nothing. The MIT license also means you can modify the engine itself and keep those modifications proprietary.
Godot has matured significantly with versions 4.0 and 4.1, adding substantially improved 3D capabilities. For 2D games and mid-complexity 3D projects, Godot is a completely serious choice. For AAA-level 3D with advanced rendering requirements, Unreal still has a technical edge.
The Godot Foundation accepts donations and there are paid support options from third-party consultants, but the engine itself has no commercial licensing component. For indie studios prioritizing long-term cost certainty, Godot's licensing stability is unmatched. Resources like License Day have covered this topic in the context of total cost of ownership for development tooling.
Middleware and Asset Licenses
Beyond the engine, indie studios commonly license audio middleware (FMOD, Wwise), physics plugins, and asset packs. FMOD has a licensing threshold where studios earning under $200,000 per year pay nothing; above that, annual fees apply. Wwise is free for projects with under $1.5 million in funding or gross revenue, with pricing applied above that threshold.
Asset store purchases through Unity Asset Store or Unreal Marketplace typically grant use in shipped commercial products but prohibit redistribution of the asset files themselves. Always read the license type (Standard vs Extended on Unity Asset Store) before using purchased assets in commercially distributed games.
FAQ
Can a solo developer use Unity Pro features on the free Personal tier?
No. Pro features are available only on Pro and higher subscription tiers. A solo developer earning under $200,000 per year uses Unity Personal, which includes a defined feature set. Pro features like advanced profiling tools, build size removal options, and priority support require the Pro subscription.
Does the Unreal Engine 5% royalty apply to game jams and free releases?
No. The royalty applies only to commercial releases generating revenue. Free games distributed at no charge are exempt regardless of how many people download them.
Is Godot suitable for a studio that needs long-term engine support?
Godot's development is community-driven and backed by the Godot Foundation. The MIT license means the codebase will remain accessible and forkable even in worst-case scenarios. Long-term support stability is arguably stronger for an MIT-licensed open-source project than for a commercial product whose terms can change at corporate decision-making discretion.
Conclusion
Unity offers the largest ecosystem and free tier up to $200,000 in revenue, with the caveat that terms have demonstrated the potential to change. Unreal Engine is free until $1M quarterly revenue and then costs 5%, rewarding studios that scale. Godot is genuinely free forever under MIT with no revenue conditions at all. For most indie studios just starting out, the choice between these comes down to technical fit and team experience more than licensing cost — but knowing the license terms before you ship prevents expensive surprises at exactly the moment success arrives.
