I think UE3 was an excellent engine for 3D AAA games. It powered a lot of awesome stuff last gen, had the flexibility that all sorts of developers stuck different third-party tech into it, seemed to have crazy good performance (my crappy PC ran most UE3 games really well at max settings) and seemed to provide enough ease for developers that they can freely build on it to add complex things in their games. Feels like it's pretty impossible that UE4 doesn't blow even Unity 5 out of the water.
I think the question is not just whether UE4 is powerful enough or easy enough to use, but if it's easy enough to use for the games indies and enthusiasts want to/can afford to make. Unity's always been aggressive on that front, and I think that earned them their current gargantuan user base.
The good thing going for UE is probably that UE4's free version is probably unhindered, while Unity Free has all sorts of weird limitations and missing features; nothing that prevents you from making and publishing complete and nice-looking games even for mobile (so the $4500 isn't really what it costs in all cases. Unity is royalty free, and you need to earn $100 000 before you're required to pony up $4500 for all those things.).
I wonder how Unity Technologies is going to react to Epic's news. Their PR has always been on the side of "we believe Unity Pro provides real value for developers, and the subscriptions are fairly priced".
To be fair to them, they do have some nice tools on their side for the businessy devs, like services for in-game ads, usage and performance telemetry.
I misspoke. A lot of the limitations were removed in Unity 5 free. It's pretty cool.