Last year, Epic Games—the developer behind games like Bulletstorm and Gears of War—revealed the Unreal Development Kit: a version of the ubiquitous Unreal Engine 3 that anyone could download, for free. Use it for educational purposes or to release a noncommercial game and you wouldn't have to pay a cent. Use it for a commercial game and you'd need to pay an upfront fee of $99 and royalties on any revenue greater than $5,000. Epic has now raised the royalty threshold quite a bit: now you don't have to pay anything until you earn at least $50,000.

"Under the new rules you are not required to pay royalties on revenue earned from the use of UDK until that revenue exceeds $50,000, which represents a 10-times increase over the previous threshold of $5,000," Epic's Mark Rein wrote on the UDK forums. "We're really excited about folks making some amazing things with UDK and we realize that a lot of you are just started in the business so not having to pay royalties on your first $50,000 should help you get a financial footing toward building a quality game development business."

The royalty percentage remains the same as before at 25 percent, but this still is a huge boon to small developers, letting them earn a solid amount of money before having to actually pay any significant fees. The royalties only apply to the revenue earned above the $50,000 threshold. Here's an example of how the new structure works in practice, straight from Epic:

A team creates a game with UDK that they intend to sell. After six months of development, they release the game through digital distribution and they earn $60,000 in the first calendar quarter after release. Their use of UDK during development requires no fee. Upon release they would pay US $99.99 for a Royalty Bearing license. After earning $60,000, they would be required to pay Epic $2,500 ($0 on the first $50,000 in revenue, and $2,500 on the next $10,000 in revenue). On subsequent revenue, they are required to pay the 25% royalty.

The UDK was designed mainly with PC game development in mind, but as of the release of Infinity Blade this past December it also supports development for iOS games. Rein told Ars several months ago that the UDK is also up and running on Android devices, available for licensing, proving the Engine's versatility.

So far, the UDK has been used to develop several notable titles, including the action-puzzle game The Ball, which began life as an Unreal Tournament 3 mod before being released on Steam. The action-RPG Dungeon Defense, meanwhile, was created by Trendy Entertainment in just four weeks using the UDK, and the game essentially served as a demo for the ambitious cross-platform title Dungeon Defenders.

But no matter what platform you're creating for, this is great news for indie developers. They now have access to powerful tools, but only have to pay royalties if they release a game that makes a significant amount of money. Smaller devs can now take care of themselves before they have to kick back money to Epic, and that's a very good thing.