If we consider the cost of the engine to other developers is $1 million, we can say that if it Epic had to use a third party engine, the game would cost $1 million more to make, or another company producing exactly the same GeOW game would ahve to spend $11 million. That gives a real cost to create the game, rather than saying the cost of developing UE3.0 is 100% additional cost on top of GeOW, which ignores the returns from multiple titles and licensing.
Shifty, you're overlooking the obvious point I was trying to make. The engine's R&D cost was omitted when Rein was discussing Gears development total. And Epic isn't going to sell to 3rd parties exactly what UE3.0 cost to develop & optimize, so you're example is flawed.