Perspectives

Epic Games $1.78 Billion Investment Will Go A Long Way

Epic Games is in an expansion phase as they attract new investors to continue supporting demand for their products.

  • Epic has recently raised $1.78 billion and is worth $17.3 billion.
  • The capital is needed to support the expansion of the Epic Games Store, continuing to develop the Unreal Engine and other Epic Games properties.
  • Epic Games is attractive to investors because it is an established brand that creates games, develops software engines for third-party titles, serves as an online community, and produces a developer-friendly application service that could become an attractive place for application developers.
  • Suppose Epic Games ever offers an initial public offering. In that case, investors will be able to cash out on their investment successes or continue to hold a stake in a company that has appreciated.

Over the last few years, esports has risen from obscurity, transforming into a highly popular and profitable industry. Epic Games Inc. has been along for the ride and has been one of the driving factors of its rise due to the success of the battle royale title Fortnite.

Epic Games receives significant investments from household names

Investors have recognized Epic Games’ value in the industry and have regularly injected capital into the online gaming developer.

Announced on Thursday, August 6, the investments amount to US$1.78 billion from several big-name companies and initial capital accounts. With this most recent round of investments Epic Games’ current valuation soars to US$17.3 billion.

Sony Corporation (NYSE: SNE) is perhaps the most recognizable name in this recent round of investments but also includes investments from Baillie Gifford & Co., funds and accounts from Carolina Panthers owner David Tepper, funds and accounts advised by T. Rowe Price Associates, Inc., Ontario Teachers’ Pension Plan Board, Lightspeed Venture Partners, Fidelity Management & Research Company LLC, and BlackRock Inc. Sony’s investment of US$250 million gives the Japan-based multinational conglomerate a 1.4% stake in Epic Games.

What’s next for Epic Games?

According to Epic founder and CEO Tim Sweeney, Epic Games is developing “a new kind of digital ecosystem using real-time 3D technology, services that connect hundreds of millions of people, and a digital storefront that offers a fair business model.”

The quote seemingly refers to further developing the successful Unreal Engine, hailed on the Unreal Engine website as “the world’s most open and advanced real-time 3D creation tool.” The Unreal Engine has served as the gameplay engine for successful titles, including the Batman: Arkham series, Injustice: Gods Among Us, and Star Wars Jedi: Fallen Order.

The last part of Sweeney’s quote seems to indicate some of the capital will go towards the Epic Games Store. This distribution outlet provides a higher cut to game and application developers than the Apple store, Valve, and Google Play store. Sweeney has regularly aimed at these companies for such business practices.

What’s the opportunity for investors?

Epic Games is currently in the expansion stage of venture capital, requiring additional money to continue supporting the demand for its products and expanding its new Epic Games store. As such, it is attractive for venture capital firms who expect a significant payoff if Epic Games eventually goes public with an initial public offering (IPO).

Epic has attracted significant interest from investors due to the success of its profitable title Fortnite as well as its successful Unreal Engine. As one of the most successful companies in the esports industry, investors who hope to claim their stake in the future success of the sector have naturally flocked to the company that has helped spur the esports revolution.

Epic Games isn’t a publicly-traded company, so investment opportunities are limited to asset management funds, corporations, and deep-pocketed capital investors. If Epic Games goes public, it could become an attractive stock option for the everyday stockholder.

An individual interested in owning stock related to Epic Games properties could purchase stock in Tencent ($TCEHY), which owns 40% of Epic Games. They are one of the world’s largest gaming companies and are as close as you’ll get to invest in the successes of Epic Games.


Written by Christopher Connors | image credit: NGame Esports

Leave a Reply

%d bloggers like this: