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Fortnite-maker Epic Games raises $1 billion; Valued at $28.7 billion

Fortnite-maker Epic Games raises $1 billion; Valued at $28.7 billion

Apr 15, 2021
01:24 am

What's the story

Epic Games has raised $1 billion in latest funding round at a current valuation of $28.7 billion. It has added nearly $10 billion to its valuation after Sony had pumped $250 million last year. The company is best known for its ground-breaking take on the battle royale genre with Fortnite, but it has lately been in the news for its ongoing battle with Apple.

Strategic partnership

Sony invests additional $200 million as it focuses on mobile

The $1 billion figure includes $200 million invested by Sony in the same round. The funding from Sony comes after it shut down its fabled first-party Japan Studio and recent announcement to focus on mobile games. Sony's apparent shift from AAA console game development to renewed interest in mobile gaming could be a sign of future mobile partnership between the companies.

Digital distribution

Tencent's 40-percent stake has allowed Epic to challenge Steam

Tencent owns more than 40 percent stake in Epic Games, which has so far allowed the company to deliver a credible alternative to Valve Corporation's Steam digital video game distribution platform. Epic Games Store has been using its vast funding reserves to purchase game studios and sign on exclusive AAA titles. It has also been giving away free weekly games on the platform.

Quote

Tim Sweeney hints at areas of focus for Epic Games

"Their investment will help accelerate our work around building connected social experiences in Fortnite, Rocket League and Fall Guys, while empowering game developers and creators with Unreal Engine, Epic Online Services and the Epic Games Store," said founder/CEO Tim Sweeney.

Projected losses

Epic Games' rapid expansion comes at a steep price

The fresh funding comes after Epic Games' acquisition of award-winning UK-based video game developer Mediatonic in March. The company is known for delivering the viral superhit take on the battle royale with Fall Guys. However, this meteoric expansion comes at a steep cost. The company committed $444 million to exclusivity deals in 2020 alone, and it is poised to lose $330 million this year.

Diminishing returns

Epic Games Store exclusivity deals haven't been sound investments

Epic Games' quest to challenge Steam is proving to be quite expensive. Of the $444 million it paid to developers for platform exclusivity last year, it has only recouped $265 million from those third-party games. Its prolonged and public battle with Apple and Google over app store fees is also taking a significant monetary toll, while also keeping the company in PR spotlight.