The two companies announced on Thursday that Sony invested 250 million dollars in Epic Games. It means that Sony has a 1.4% interest in the game production studios and retailers and that Epic is estimated at 17.86 billion dollars, VentureBeat says.
According to the press release, the investment would allow both parties to expand their relationships through Sony’s leading portfolio of entertainment properties and technology and the virtual entertainment network and digital world for Epic’s consumers and creators to develop new experiences.
For Sony, the deal is important because, in the coming Console War, it needs allies. Epic has said that Unreal Engine 5 and Fortnite will work with all game platforming, as Epic has been neutral to build cross-platform technologies. This year, Sony is planning to launch the PlayStation 5 game console, competing with Microsoft’s Xbox Series X. It is not evident from this transaction that Sony has any benefit from investing in Epic.
Kenichiro Yoshida, Sony CEO, said in a statement that Epic technology is still a leader in game development, and this is illustrated in Fortnite features. While Epic CEO Tim Sweeney said in his speech that both Sony and Epic produced businesses at the crossroads between innovation and technology, expressing a vision between 3D interactive real-time environments leading to fusion in games, film, and music. He also stated that the parties intend to build a digital ecosystem that is more open and accessible to consumers and content generators.
The connection to music appears to be a recommendation for a new gaming concert by Travis Scott in Fortnite that reached over 27 million people. The fact that Sweeney has for many years embraced open system implementations, while Sony is an example of a business that preserves its proprietary technologies, is also surprising by considering a more transparent and usable software ecosystem. Nevertheless, Sony has allowed Fortnite to function as a crossplay game, which enables friends to also play on different platforms.
Sony and Epic have been working together for years, and the new PlayStation 5 console of Sony has been dubbed “remarkably balanced” and has been praised by Sweeney for its latest solid-state push. In May 2012, Epic used a spectacular PlayStation 5 demo to showcase the functionality of the new game engine update, Unreal Engine 5. At the time, Sweeney also said that Epic had worked closely with Sony to create their next-generating console architecture. “We’ve done great work in the area of storage with Sony for a long time,”
Earlier Offers by Epic Games
The offer is separate from one published in June by Bloomberg, which according to Venturebeat, indicated that the company’s worth after the transaction was set at $17 billion and that Epic Games managed to raise $750 million from a pre-money price of $16.3 billion. Epic refused to comment on this arrangement.
Epic Games is both Fortnite’s developer and publisher and has over 350,000,000 registered users. And he is also the creator of the Unreal Engine, a fundamental tool for many games (and more and more for making films and TV).
The latest investors interested in the separate round are T. Rowe Price Company and Baillie Gifford, Bloomberg reported in June. Established KKR&Co. Owners, citing unidentified sources, will also participate. Epic has commented on this detail too.
Epic Games Financials
According to earlier reports by Venturebeats in June, funding from Epic Games presented us with a peek in the financial position of the organization because the private company Epic will not reveal its earnings or sales. Epic has denied the following numbers.
Sources informed GamesBeat that Epic Games reported revenue of $4.2 billion and a profit of $730 million earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2019. The expected sales of $5 billion for 2020 is $1 billion EBITDA.
Again, only April was 400 million dollars in revenue, according to VentureBeat, due to the pandemic. In April, 3.2 billion players spent hours in the Royal Shooter war, sources said.
Epic Games did better in 2018 than in 2019. Reports announced 2018 sales of $5.6 billion, while EBITDA amounted to $2.9 billion. Epic used a great deal of the funds in the Epic Games shop to increase the workforce and several purchases for Fortnite or Unreal Engine.