Before Gears of War took the world by storm, Epic Games literally started out in the basement of Tim Sweeney's home. The following is a history of how Epic Games emerged to become one of the most influential videogame makers in the world today—straight from the founder's lips.

Sweeney started working on pretty simple shareware games when he was still in college. His first offering was ZZT, a little text game that had players moving a smiley face around the screen and picking up pennies. It was one of the first games that shipped with an editor and tool kit that allowed gamers to build their own levels.

"It became quite popular among people who wanted to build their own games without programming," said Sweeney, who was making about $100 a day off of this first effort in interactive entertainment. "This was before the Internet. We sold it through message boards and mail order catalogs. There were a decent amount of orders for that. And from that I saw there might actually be a business opportunity there."

Sweeney's second game was Jill of the Jungle, which was a platform game like Mario or Sonic. He said it was a pretty basic game for that time frame. It was released in 1992 and it sold even better than his first game, bringing in about $1,000 a day. At the time, Sweeney's big competitor was Apogee Software, which created shareware hits like Castle Wolfenstein and Commander Keen.

"In order to make Epic look like a legitimate company at that point, I called it Epic MegaGames to make it look big and powerful," said Sweeney. "And of course it was just me making games in my parents' basement. From that point on I started recruiting external developers who were building their own little games."

Cliff Bleszinski (a.k.a. CliffyB) had created an adventure game, Palace of Deceit, using visual BASIC. James Schmaltz, who made Solar Winds and Epic Pinball, which was the third-best selling shareware game in the 90s, also joined up as a remote developer. Epic MegaGames had five small teams of one to four people, which Sweeney helped manage and also kept a hand in programming a lot of content. Mark Rein called Sweeney and told him he could help sell a lot more copies of these games, so he came aboard and he started signing deals to publish games though other channels.

"By 1995 we had five external projects going on," said Sweeney. "It was clear that the real industry growth was in retail distribution of PC games. Games would have a few million dollars of development funding from a publisher and sell a million or more copies at stores. We looked at Doom and Duke Nukem as the big examples of hit games then."

Sweeney and his team knew that for Epic to continue to grow into a successful company, they needed to move away from these small shareware games and create large-scale games. Schmaltz, Bleszinski and Sweeney started working on the first Unreal game in 1995. It was a three-and-a-half year development cycle. And not a single member of the team had any experience developing 3D games at all. Sweeney had written a line of 3D code, Schmaltz was just learning the modeling packages like 3D Studio Max, and Bleszinksi was starting to build levels.

"After a few false starts there, I wrote the Unreal editor as the basis for building levels for the engine while James was building all of these really cool models for the game," said Sweeney. "It started out as a medieval fantasy in a Dungeons & Dragons type of universe with an action game. We had some really cool dragon mesh and castles and things like that. About a year into development, we heard Quake was going in that same direction. That was before Quake decided to go in the sci-fi direction, too. So we reinvented the game design around science fiction environments, but not the dirty, gritty environments like Gears of War, but beautiful sci-fi universe where everything is like reality plus with exaggerated, vibrant colors but fairly realistic style."

Epic built the game around this alien environment, where players crashed a spaceship on this planet that was like the Bermuda Triangle of the galaxy. The team brought on more level designers. Schmaltz actually had his own separate company, Digital Extremes, which was developing Unreal with Epic. After two-and-a-half years they showed a playable demo at E3 and both the media and the game industry were impressed. Epic signed a big publishing deal with GT Interactive, which later became Infogrames and Atari.

"We had a whole lot of funding for the project," said Sweeney, who now had 15 developers spread all over North America. "We were a virtual company with people working from their homes. We realized we needed to get everybody together to finish the game. James and his gang were based outside of Toronto in this little college town, Waterloo, and we all moved there and spent the last year finishing Unreal together. That's when the game really came together. Before that it was slightly playable and we had a few levels and a few monsters, but it wasn't anything resembling the full game experience. We went through the hell of finishing and polishing a game. We had 20 people by the end of the project. It was a huge learning experience."