‘Fortnite’ Maker Epic Games Worth Almost $32 Billion in Funding Round

‘Fortnite’ creator Epic Games Inc. raised $2 billion, the most for a game company in two decades, from investors including Sony Group corp.

The funding means that Epic is now worth $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 The Co.

and the Chinese company Tencent Holdings ltd.

TCEHY -2.46%

among its investors, valued at $28.7 billion in April. Its chief executive, Tim Sweeney, remains the company’s majority shareholder.

The company said the funding will advance the company’s goals of building the metaverse – a term used to describe a virtual environment where people can use digital avatars to work, play and shop – and the its continuous growth. .

“As we reimagine the future of entertainment and gaming, we need partners who share our vision. We found that in our partnership with Sony and Kirkbi,” said Mr. Sweeney.

Epic’s $2 billion investment is the largest in the gaming industry 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 topped the list heading into Monday.

The latest round of funding comes days after Epic and The Lego Group, 75% owned by Kirkbi, said they were working together to create a version of Metaverse suitable for children and families.

Epic’s latest valuation will be closely watched by investors after a string of new gaming deals this year. In January, Microsoft corp.

agreed to buy Activision Blizzard Inc.

in an all-cash deal valued at $75 billion. Later that month, Sony’s video game unit said it was buying video game developer Bungie Inc. in a deal worth $3.6 billion.

Sony and Kirkbi’s investment in Epic is significant in itself and by industry standards “because there are several billion dollar deals made in [the] gaming industry,” said Martin Yang, executive director of investment bank Oppenheimer & Co. The average size of investments in the gaming industry is usually in the tens of millions, with anything in the hundreds of millions considered an extraordinary 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 unusual but not out of the question for Epic because it has been around for so long. raises capital. .

“This is a significant transaction that makes a lot of sense for Epic with Lego [intellectual property] as well as all of Sony’s assets,” said Mr. Chapman.

The video game market reached new heights after many people turned to it during the Covid-19 pandemic, prompting companies to take advantage of the recent momentum.

Sony said in late March that its video game unit was strengthening its subscription option, which has gained notoriety in the industry as a way to lock players into specific hardware, franchises and apps. . Microsoft has been offering a unique subscription service since 2017. Both companies see cloud gaming, also known as game streaming, as the future of game distribution.

As the business of Mr. Sweeney, he also hired two of the biggest tech companies in the world. Epic has a legal dispute with Apple Inc.

and Alphabet Inc.

Google after the two companies in August 2020 removed “Fortnite” from their app stores. The move comes after Epic launched a new way to make in-game purchases that avoids the tech giant’s cutbacks on digital in-app transactions.

Last month, Apple argued that a judge’s decision should be overturned in its fight against Epic.

The rise of play-to-earn video games – where players trade NFTs – offers a glimpse of how the metaverse can attract users with monetary rewards, and the pushbacks that can be made. comes with it. Photo illustration: Josephine Chu

“Fortnite” quickly became a global phenomenon after its debut in 2017. Although it is best known for its free-to-play “Battle Royale” mode, where 100 players compete until one only player remains a fighter or squad, it is also home to concerts, movies. , and designated areas just for socializing. Epic said that “Fortnite” had more than 350 million registered users in 2020.

Epic said in March that it was donating profits from “Fortnite” to humanitarian aid for those affected by the war in Ukraine. He said it raised a total of $144 million.

Epic was founded in 1991. In addition to the “Fortnite” shooter, it produces 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 successful games like “Rocket League” and “Fall Guys: Ultimate Knockout”.

Write to Denny Jacob at [email protected]

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