We're currently working hard on polishing the Scaleform GFx integration in UE3. Our plan is to use this UI system in the future for all our games. The May UDK build contains a preliminary version of the Scaleform GFx integration, which is still in development. You can start working on your user interface design using Flash editors, as Scaleform GFx is an in-game system for rendering Flash. This is the full version of the Scaleform GFx SDK, but does not include Scaleform Video, is not included in the UE3/UDK bundle, but it is available as a separate add-on for UE3 Source licensees that want integrated Flash Video support. UE3 Source licensees that are interested in Scaleform Video should contact Scaleform directly at: email@example.com.
Once this integration is fully functional and tested, we will be phasing out our old UI system. This means at some point this year, UDK will no longer have support for the current UE3 UI system. UDK developers who wish to use an interface based on the current UI system will no longer be able to upgrade to newer UDK builds.
As mentioned in the press release, the Scaleform GFx UI system will be useable by UDK developers at no additional cost. That means it is free for non-commercial use, and included in the UDK commercial license terms for commercial use. To clarify: UDK users do not pay any additional fees to use Scaleform for commercial or non-commercial projects. The Scaleform GFx license is included at ZERO cost for all UE3 and UDK based applications on all platforms supported by Epic.
The only additional cost is for Adobe Flash studio, which most professional or even semi-professional users should have as part of the Adobe Creative Suite, which also includes popular tools like Photoshop, Illustrator, After Effects, and Premier. Adobe offers discounted academic versions and there are many other discounted resellers online.
There are alternative less expensive Flash authoring tools, such as Sothink SWF Quicker at roughly $85:
However, Scaleform only provides official support for content produced by the Adobe Flash toolset. That's not to say tools like Sothink won't work, but they are not officially supported.
Here's an update from the Scaleform development team: