In 1991, Epic was just one man, Tim Sweeney, working out of his parents' house in Potomac, Maryland. Under the name Potomac Computer Systems, Sweeney developed and released a simple DOS game, ZZT, one of the first ever games that could be easily modified with a scripting language. Distributed through BBSes and and mail order, ZZT spread like wildfire as users latched on to the ability to create new levels and new game types with the editor tools. Using the steady income stream from ZZT's popularity, Sweeney decided to step things up a notch and came up with the name Epic MegaGames to compete with major players in the shareware industry - or in his words, "I realized that we needed a serious name, so I came up with 'Epic MegaGames' -- kind of a scam to make it look like we were a big company."
Under this new name, and the success of ZZT under his belt, Sweeney quickly was able to parlay his abilities into a production and management role, collaborating with other developers to release titles that quickly took the early/mid 90's DOS game world by storm. Epic MegaGames was the name behind classics like Jill of the Jungle (a Sweeney solo effort), Jazz Jackrabbit (with Cliff Bleszinski and Arjan Brussee), Epic Pinball (with James Schmalz) and Ken's Labyrinth (one of the first FPS's, with Ken Silverman.)
Around late 1994, the Epic team decided to channel all of their resources, financial and otherwise, into a wildly ambitious project: Unreal. At the time, the cutting edge of 3D gaming was Doom II, and Unreal was, from the beginning, designed to be an engine with three full dimensions of freedom, dynamically located sound, dynamic lighting, and other features now taken for granted. On top of this, Sweeney and the Epic team added a real-time, in-engine editing system, UnrealEd. After years of development, the game was released in May, 1998 to wide critical acclaim. The Unreal Engine was considered a stellar technical achievement, at least as good as its primary competitor, id Software's Quake II engine, and was rolled into a package to be licensed to other development companies. Dozens of major hit games have incorporated Unreal technology since 1998.
After years of concentrating on engine development, in 2006 Epic Games released Gears of War, an Xbox 360 shooter which quickly leapt to the top of the charts, amassing nearly six million units sold. The 2008 sequel Gears of War 2 recently topped five million. Both received wide critical acclaim, primarily being praised for technical excellence and execution of classic concepts. Similarly lauded was 2009's Shadow Complex, one of the top-ten Xbox Live Arcade games of all time.
In 2007, Canadian developer Silicon Knights filed suit (case number 5-07-CV-00275-D) in U.S. District Court for the Eastern District of North Carolina, charging as follows: "Rather than provide support to Silicon Knights and Epic’s other many licensees of the Engine, Epic intentionally and wrongfully has used the fees from those licenses to launch its own game to widespread commercial success while simultaneously sabotaging efforts by Silicon Knights and others to develop their own video games." In 2012, just weeks before E3, Epic Games won the lawsuit, being awarded $4.45 Million in counterclaim damages, "namely that Silicon Knights breached the license agreement, misappropriated Epic's trade secrets, and infringed Epic's copyrights in the Unreal Engine 3 code."
Mere days following the lawsuit's culmination, on June 3rd, 2012 Epic announced they had met with team leadership from the recently dissolved 38 Studios subsidiary Big Huge Games, and will be establishing a new development studio in the Baltimore area to work on Epic's intellectual properties. Mike Capps was soon quoted by Joystiq that Epic has no intention of purchasing the Amalur IP from the state of Rhode Island: "We don't buy IP, we make IP."
Acquisitions and Subsidiaries
2007: acquired People Can Fly, the makers of the Painkiller series
2008: acquired Chair Entertainment, the makers of Undertow
2008: formed wholly-owned subsidiary Titan Studios
2012: acquired a significant proportion of the ex-Big Huge Games team, to form Epic Baltimore which was then re-named Impossible Studios
June 2012: Chinese company Tencent acquired a 40% share of Epic Games.