Epic Games, the creator of “Fortnite”, valued at nearly $32 billion in funding
“Fortnite” creator Epic Games Inc. has raised $2 billion, the most for a video game company in two decades, from investors including Sony Group Corp.
The funding means Epic is now valued at $31.5 billion, after Sony and Kirkbi A/S, the holding company of the Kirk Kristiansen family, invested $1 billion each, according to a statement.
The company, which also includes Walt Disney Co. and China’s Tencent Holdings Ltd. among its investors, was valued at $28.7 billion last April. Its chief executive, Tim Sweeney, remains the company’s majority shareholder.
The company said the funding would advance the company’s goals of building the metaverse – a term used to describe a virtual environment in which people can use digital avatars to work, play and shop – and its continued growth. .
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“As we reimagine the future of entertainment and gaming, we need partners who share our vision. We’ve found it in our partnership with Sony and Kirkbi,” Sweeney said.
The $2 billion investment in Epic is the largest in the gaming space since 2002, according to research firm PitchBook Data Inc. The previous three largest investments were also in Epic, with an investment of $1. $78 billion tops the list heading into Monday.
The latest funding round comes days after Epic and The Lego Group, 75% owned by Kirkbi, said they were teaming up to create a version of the Metaverse suitable for children and families.
Epic’s latest valuation will be closely watched by investors after a string of recent gaming deals this year. In January, Microsoft Corp. agreed to buy Activision Blizzard Inc. in an all-cash deal valued at approximately $75 billion. Later that month, Sony’s video game unit said it was buying video game developer Bungie Inc. in a deal valued at $3.6 billion.
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Sony and Kirkbi’s investment in Epic is significant on its own and by industry standards “because there are very few billion dollar deals done in [the] gaming industry,” said Martin Yang, executive director of investment bank Oppenheimer & Co. The average size of gaming industry investments is typically in the tens of millions, with anything in the hundreds million considered a rare and large investment, Yang added.
Josh Chapman, managing partner of Konvoy Ventures, a venture capital firm that invests exclusively in the video game industry, said the size of Sony and Kirkbi’s investment is rare but not out of the question for Epic because it has been raising capital for a long time.
“This is certainly a very important transaction that makes a lot of sense for Epic using Lego [intellectual property] as well as all of Sony’s assets,” Mr. Chapman said.
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The video game market has reached new heights 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 video game unit was bolstering its subscription option, which has gained prominence in the industry as a way to lock gamers to specific hardware, franchises and apps. Microsoft has offered a unique subscription service since 2017. Both companies see cloud gaming, also known as game streaming, as the future of game distribution.
As Mr. Sweeney’s business grew, he also hired two of the biggest tech companies in the world. Epic has been in litigation with Apple Inc. and Alphabet Inc.’s Google after the two companies in August 2020 removed “Fortnite” from their app stores. The move came after Epic rolled out a new way to make in-game purchases that circumvented the cut the tech giants are making to digital in-app transactions.
Last month, Apple argued that a judge’s decision should be overturned in its appeal battle with Epic.
“Fortnite” quickly became a worldwide phenomenon after its debut in 2017. Although best known for its free-to-play “Battle Royale” mode, where 100 players compete until only one player remains fighter or squad, it also hosts concerts, movies, and designated areas just for socializing. Epic said “Fortnite” had over 350 million registered users in 2020.
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Epic said in March that it was committing proceeds from “Fortnite” to humanitarian aid for those affected by the war in Ukraine. He said he raised a total of $144 million.
Epic was founded in 1991. In addition to the “Fortnite” shooter, it manufactures the Unreal Engine, a suite of software tools for developing video games and producing special effects for TV shows, movies, and games. other types of digital content. It also owns the studios behind hit games like “Rocket League” and “Fall Guys: Ultimate Knockout.”