00:00 This episode of the podcast is about Epic Games, the makers of Fortnite and the Unreal game engine, and their impact on the gaming industry and other tech giants like Apple and Facebook.

07:33 Tim Sweeney, the founder and CEO of Epic Games, is a rare combination of a fantastic engineer and a fantastic business mind who doesn't have a lot of use for money and is more interested in the potential that business gives you to do in the world.

15:26 Tim Sweeney starts a lawn mowing business, undercuts the market, and uses the profits to start his own computer consulting company before transitioning into software development and creating his first game, ZZT.

23:01 Tim Sweeney and his team at Epic Games observe the success of id software's game Commander Keen and decide to create their own 2D side-scrolling game called Jill of the Jungle, recruiting talented individuals like Cliff Bleszinski and Mark Rein along the way, eventually leading to the release of several successful games and the decision for Tim to drop out of college and focus on the business full-time.

31:08 Epic Games releases Unreal Engine and gains demand from other developers to license it before the release of Unreal itself, leading to the success of games like Deus Ex and the expansion of the console market with the launch of the Xbox in 2001.

39:18 Epic Games partners with Microsoft to develop Gears of War, which becomes a huge success, but they realize that being a developer and publisher is not as profitable as they thought, leading them to explore a new model influenced by the success of League of Legends and the free-to-play model.

47:40 Epic Games partners with Tencent, sells a 40% stake in the company for $330 million, and refocuses the company around the Unreal Engine and the vision of creating infrastructure for operating games as a service.

55:51 Epic Games partners with Tencent, sells a 40% stake in the company for $330 million, refocuses the company around the Unreal Engine, rationalizes the console business, sells the Gears of War franchise to Microsoft, stops charging a licensing fee for the Unreal engine, and switches to a 5% royalty on revenue.

01:03:48 Epic Games launches Fortnite Battle Royale, a cartoony take on the Battle Royale concept, and quickly gains millions of active players across multiple platforms.

01:11:25 Epic Games launches the Epic Game Store with a 12 percent cut of revenue, undercutting Valve by 18 percent, and also introduces Fortnite Creator Mode and Fortnite currency, V-Bucks, while clashing with Valve and Steam over their take rate, and later taking the fight to Google and Apple over their app store policies.

01:19:49 Apple threatens to ban Epic Games' developer account and break the ability to use Unreal Engine for all iOS and Mac app developers, leading to a two-front war between Epic and Apple.

01:28:02 Epic Games generates significant revenue from its Unreal Engine business, which is used by developers to build mobile and cross-platform games, and also has a network economy through Fortnite that relies on cross-platform play and connections between friends.

01:35:26 Epic Games' Unreal Engine has enabled experiences like the Mandalorian TV series and the company's partnership with Tencent has been instrumental in their growth and success.

01:43:14 Epic Games has a highly profitable business model due to the low fixed costs and zero marginal costs of creating and distributing virtual goods, which has allowed them to generate significant revenue and success.

01:51:15 Epic Games' ability to take on Apple in their current dispute is likely due to their status as a private company with controlling shareholders, as opposed to a public company with public shareholders, and their ability to iterate and compound value through small iterations on their products.

01:59:02 The main issue at stake in the Epic Games vs. Apple dispute is the $200 million in revenue that Fortnite makes on iOS, with $60 million going to Apple, and the potential loss of credibility for Unreal Engine as a deployment target on Apple platforms.

02:07:10 The biggest danger for Apple in the Epic Games vs. Apple dispute is the potential loss of participation in the growing metaverse and the risk of consumers turning to other devices for content consumption if developers and creators no longer want to play on Apple platforms.

02:15:08 Apple needs to find a way to compromise with Epic Games and make a deal that preserves their control while giving on economics in order to become a great platform for developers again.

02:23:05 The use of Unreal Engine in filmmaking, as demonstrated by the Mandalorian, enables more creativity at a lower cost, and this could potentially be applied to the current Apple and Epic situation.