Ok so we are working on a large scale game project and I plan on releasing a few DLC packs for free, but I was wondering since whatever i release will be free if i owe epic royalties for the DLC. Or do I pay Epic royalties only for the main game sales? If I have free DLC none of us on the team will get any money for it so we would actually lose money if we had to pay them.
Royalties are owed on (royalty-bearing) product revenue, so no royalties are owed on products that have no revenue. Note that revenue can come from multiple forms other than straight payment, such as in-game ads.