Why would anyone buy their game engine when it is available for free? Seems like a solution for a problem that doesn't/won't exist.

This was my question to. I suspect they're worried about someone making a paid version with extra features which aren't contributed back to the community.

For a moment, I was thinking Defold ought to dual-license their engine under both the current non-OSS modified Apache and the GPL. That way, you'd have the option to either:

1. Commercialise software created using modified versions of Defold, without releasing the source of your modified version, as long as you don't commercialize your modified version of Defold itself.

2. Commercialise a modified version of Defold, but you must make the source available under the GPL. (Which would mean that source could be used by the upstream project as well.)

But while typing this up, I noticed the flaw in this plan—the parenthetical isn't true! Because the upstream project would be dual licensed, they couldn't use GPL licensed code.

Why do you assume the problem won’t exist, when this exact thing happens all the time? Just to name a tiny handful of obvious examples: Oracle, Canonical, GitHub, RedHat, DataStax. Not only could someone add enhancements that justify the price, like several other comments have pointed out here, they could also simply offer support that Defold doesn’t offer, and they could do marketing that Defold doesn’t do. The number of paid products that are equivalent to and/or based on free products is innumerable.

There’s no reason to assume that a paid fork would reduce the number of free Defold users; it can happen, but depends on what is built and offered, and sometimes paid forks are good for the ecosystem and increase the number of overall users.

If they didn't prevent selling derivative game engines, someone could fork it and add a valuable feature that was only available in the paid fork. This could split the community.

The modified engine someone else is selling could have a potentially important extra features.

For example a company might try to sell a version of engine which has been ported to a console which original engine doesn't support. Game porting companies are very common and if it's their main business then they will usually have inhouse libraries or modified engine versions which significantly simplify the porting process.

That's exactly what's happening with open source game engines like Godot. Their documentation lists almost a dozen companies providing porting service for godot games. That isn't necessarily a bad thing, but it's up to author of game engine whether they want to allow others to profit from their work in such way.

Seems like currently Defold supported platforms cover most of the popular consoles, it was probably not the case during early development of engine when license was chosen or in a few years when next generation of consoles come out. Someone might also be selling a better console support than what defold provides out of the box. Beside the consoles there is also stuff like integration with various PC stores like GOG,Epic and others. Its not necessarily a huge work, but plenty of smaller devs want to focus only on the gameplay aspects. So once a game is finished (and you are tired from development process), buying anything which significantly reduces porting/integration effort can be an easy choice.

One more example of major feature which can require tight engine integration and motivate buying a modified version of "free engine" is multiplayer support. Good multiplayer support can be quite tricky with some game genres being harder than others. There have been many attempts at providing magic multiplayer solutions which under the hood automatically synchronizes all game entities without developer thinking about it. Such approach isn't necessarily going to be as good playing experience as designing the game with multiplayer support in mind from day 0, carefully thinking how the game state is organized, what when and how is synchronized. But that requires planning ahead, technical expertise and suitable budget. Commercial multiplayer middleware for existing engines are also not uncommon.

Whether something like that is considered an addon or modified engine version depends on exact licensing terms and the exact implementation details how game engine and addon code is organized.

A slightly different example - game engine built on top of game engine is RPG maker. For a long time RPGMaker has been it's own game engine. But few years ago developers of RPGMaker made a version of RPGMaker which is built on top of Unity. Plenty of other genre specific engines (especially for fighting games) built on top of general purpose game engines. Again the line between modified engine, addon and game with builtin editor is tricky.