Epic Games announces they have purchased the Reality Engine, with the intention of integrating some of its features into the Unreal 3 Engine. Here's the announcement, which states they will not be developing the Reality Engine going forward, though they will offer its licensees a discount on the Unreal tech:

RALEIGH, May 12th, 2005 – Epic Games, one of the world’s leading developers of cutting-edge computer and video games and the pioneer of the award-winning Unreal® Engine, today announced that it has completed the purchase of the Reality Engine™ from Artificial Studios and hired its founder, and lead engine programmer, Tim Johnson. Tim will join the Unreal Engine 3 development team effective immediately and be part of Epic’s presence at the Electronic Entertainment Expo in Los Angeles, California next week.

Epic has purchased the Reality Engine outright, including intellectual property rights, trademarks, and copyrights. Epic does not intend to continue sales, development, or support of the Reality Engine, but will review its technologies for inclusion into Unreal Engine 3. Developers who had purchased Reality Engine licenses prior to this sale will be offered upgrades to Unreal Engine 3 at significantly discounted prices and should contact licensing@epicgames.com for more details.

Unreal Engine 3 provides a pathway to both PC and next generation console development, supported by the recent announcement that major game developer Silicon Knights will use Unreal Engine 3 exclusively for its next generation games. Other recently announced licensees include Bioware, the console game developer of the year, and renowned publisher Midway, which has acquired a studio-wide license.

“I am thrilled about joining the team at Epic Games” said Tim Johnson. “I’m a long-time fan of Unreal games and technology, and I am proud to be joining a company I consider to be a world leader in both game development and next generation middleware.”

“We’re very excited to have Tim Johnson join Epic Games,” said Epic founder and CEO, Tim Sweeney. “He brings six years of engine development experience to the Unreal Engine 3 development team, and he’s already brimming with ideas on how to improve our technology. Tim is a great fit for Epic – he clearly understands all sides of the licensing business, from engineering to customer support to business development. He will have a huge positive impact on our company and our engine licensees.”