Epic Games is a rising and arguably dominant technological player in the race to develop a metaverse, as the creators of one of the most prominent game engines, The Unreal Engine. Its game Fortnite, already resembles an early version of what could potentially be a metaverse as it hosts social aspects such as concerts with 12.3 million attendees, on top of the base competitive shooter game. The tech giant is also in development of a metaverse in partnership with Lego to compete with the likes of Metaās (formally Facebook) metaverse; although Epicās metaverse aims to be more family friendly and a space for kids as opposed to the more corporate and mature marketing of Meta. This explains the large investment of $2bn by Sony and Kirkbi (75% stakeholders in Lego) into the video game company, now valuing Epic Games at $32bn. In this article from The Wall Street Journal, Denny Jacobs goes into detail about the investment as well as how it compares to other video game industry investments, and how it may affect the creation of digital worlds in the future. ā Ross Sinclair
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āFortniteā Maker Epic Games Valued at Nearly $32 Billion in Funding Round
Epic raises $2 billion in biggest fundraising for a videogame company in two decades
āFortniteā creator Epic Games Inc. raised $2 billion, the most for any gaming company in two decades, from investors includingĀ Sony GroupĀ Corp.
The funding means that Epic is now valued at $31.5 billion, after Sony and Kirkbi A/S, the holding company of theĀ Kirk KristiansenĀ family, put in $1 billion apiece, according to a statement.
The company, which also countsĀ Walt DisneyĀ Co. and ChinaāsĀ Tencent HoldingsĀ Ltd. among its investors,Ā was valued at $28.7 billionĀ as of last April. Its chief executive,Ā Tim Sweeney, remains the companyās controlling shareholder.
The company said the funding will advance the companyās aims to build the metaverseāa term used to describeĀ a virtual environmentĀ in which people can use digital avatars to work, play and shopāand its continued growth.
āAs we reimagine the future of entertainment and play, we need partners who share our vision. We have found this in our partnership with Sony and Kirkbi,ā Mr. Sweeney said.
The $2 billion investment in Epic is the largest in the gaming space dating back to 2002, according to research firm PitchBook Data Inc. The three previous largest investments were also in Epic, with a $1.78 billion investment topping the list before Monday.
The latest funding round comes days after Epic and the Lego Group, which is 75% owned by Kirkbi, said they are partnering to build a version of the metaverse that is child- and family-friendly.
Epicās latest valuation will be closely watched by investors after a string of recent deals in the videogame space this year. In January,Ā MicrosoftĀ Corp. agreed to buyĀ Activision BlizzardĀ Inc. in anĀ all-cash deal valued at about $75 billion. Later that month, Sonyās videogame unit said it was buying videogame developer Bungie Inc. in aĀ deal valued at $3.6 billion.
The investment from Sony and Kirkbi in Epic is meaningful by itself and by industry standards ābecause there are very few billion-size dollar deals done in [the] game industry,ā saidĀ Martin Yang, executive director at investment bank Oppenheimer & Co. The average size of gaming-industry investments is typically in the tens of millions, with something in the hundreds of millions considered a rare, large-size investment, added Mr. Yang.
Josh Chapman, a managing partner at Konvoy Ventures, a venture-capital firm that invests exclusively in the videogame industry, said that the size of Sony and Kirkbiās investment is rare but not out of the question for Epic because it has been raising capital for a long time.
āThis is certainly a very sizable transaction that makes a lot of sense for Epic by bringing in Lego [intellectual property] plus all of Sonyās assets,ā said Mr. Chapman.
The videogame marketplaceĀ has reached new heightsĀ after more people turned to it during the Covid-19 pandemic, prompting companies to capitalize on the recent momentum.
Sony said in late March that its videogame unit isĀ bolstering its subscription option, which has been gaining prominence throughout the industry as a way to lock in players to specific hardware, franchises and apps. Microsoft has offered a single subscription service since 2017. The two companies consider cloud gaming, also called game streaming, to be the future of game distribution.
As Mr. Sweeneyās company has grown, he has also taken on two of the worldās biggest technology companies. Epic has been in legal disputes withĀ AppleĀ Inc. andĀ AlphabetĀ Inc.ās Google after the two companies in August 2020Ā pulled āFortniteā from their app stores. The move came after Epic rolled out a new way of making in-game purchases that circumvented the cut the tech giants make from digital transactions within apps.
Apple last monthĀ argued a judgeās ruling should be overturnedĀ in its appeals fight with Epic.
āFortniteā quickly became a global phenomenon after its debut in 2017. While it is best known for its free āBattle Royaleā mode, where 100 players duke it out until only one combatant or squad remains, it is alsoĀ home to concerts, movies and designated areasĀ just for socializing. Epic said āFortniteā had more than 350 million registered users in 2020.
Epic said in March that it was committing proceeds from āFortniteā to humanitarian relief for people affected by theĀ war in Ukraine. It said itĀ raised a total of $144 million.
Epic was founded in 1991. In addition to the shooter game āFortnite,ā it makes the Unreal Engine, a suite of software tools for developing videogames and producing special effects for television shows, movies and other types of digital content. It also owns the studios behind hit games such as āRocket Leagueāā and āFall Guys: Ultimate Knockout.ā
Write toĀ Denny Jacob atĀ [email protected]
