A game engine is a bunch of re-usable code that does low-level stuff that’s needed by lots of different kinds of games.
For example most 3D games have person-like 3D models that are textured and animated, environmental objects like walls and floors, collisions between objects in the game world, music, sound, controller support, stuff like that.
If you’re a studio, you might develop 5 games (maybe over a multi-year period), all of those games will need common code to do that low-level stuff. So you share that code between all your games, writing it once and re-using it makes a lot more sense than re-writing it 5 times. That re-usable shared code is called a “game engine.”
If your game engine turns out really good, it might be a viable commercial product in and of itself. So in addition to being a business-to-consumer company that sells your games to the ordinary guy on the street, you can dabble in some business-to-business transactions by licensing your game engine to other studios to use in *their* games.
Nowadays a lot of the big game engines are available on the Internet at no up-front cost for any aspiring developer to download (but they typically do ask for a percentage cut of your sales if your game makes serious amounts of money).
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