Agreed. For an example, Mass Effect 3 is a relatively recent game on the Unreal engine that sold over 1.5 million copies + DLC, probably for revenue of something like $100mil. 5% of that $100mil per successful game should be enough to keep Epic in business.
AFAIK Every AAA game pays a flat rate per game (in the 100k-500k range), not the rev share. The rev share agreement would only be for indie / non-pros.
Based on industry knowledge, the AAA flat rate game licencing costs don't seem to be going down.
One reason might be that once you have a few Unreal engine / Cryengine games under your belt, the cost to switch engines is HUGE. You're basically locked in unless you want to re-hire / re-train the majority of your programmers.
Epic is still offering other licensing structures as needed/requested for their larger clients. I'm sure if you had a game explode and start selling millions of copies they would work with you to come up with a different licensing scheme so you weren't paying them millions (plural) of dollars, but possibly some smaller set amount and a smaller royalty.
