It really is funny to read some of the comments in here. Bad-mouthing engines because of how it was implemented/presented in Game X is stupid and pointless. It’s like saying, “Don’t build with wood! I once saw a house built with wood and it was total crap. The windows were crooked, the welcome mat was mispelled, and you had to go through the bathroom to get to the dining room. Stone is the only thing you should build with. Stone rocks!”
Now I’m no expert, but I’ve tinkered with Unreal, CryEngine and Unity, but the biggest factor on the quality of my projects was my ability, not the engine’s. While I personally think Unreal Engine 4 is the best thing since sliced bread, remember that when this game started development CryEngine was well ahead of UE3. UE4 wasn’t even released until after WH licensed CryEngine and started development and Unity was (and stil is) not an option for a big open world game like KCD … at all.
As for developing their own engine? Yeah, that is not something you start off with. The days of rolling your own engine for indies are long gone. at least for anything bigger than a match-3 or puzzle game.