Sony Makes a $250 Million Strategic Investment in Epic Games
Sony has a purchased a $250 million stake in Epic Games, taking a minority stake in the company in announcement made last Thursday. Epic Games is the company behind Fortnite, Unreal Engine, Epic Games Store and a lot more.
With the investment, Sony acquires a 1.4% stake in the game development studio and publisher which has a valuation of $17.86 billion.
Following the fresh infusion of cash, Epic Games has now raised $1.83 billion to date. The investment enables the two companies to further cement a relationship that is already very close while also reinforcing a shared objective of advancing cutting edge entertainment, technology as well as socially connected online services. In a press release, the two companies stated that the investment would “broaden their collaboration” encompassing Sony’s top portfolio of technology and entertainment assets as well as Epic Games’ digital ecosystem and social entertainment platform to generate unique experiences for both consumers and creators.
The close relationship between the two companies was demonstrated in May this year when Epic showcased its upcoming Unreal Engine 5 graphics that run on PlayStation 5. Before the Sony investment, Epic Games had raised $1.58 billion in three earlier funding rounds. In 2012, Epic Games got a $330 million investment from Tencent in which the Chinese multinational conglomerate acquired 40% stake in the game development and publishing company.
In the latest investment round, Sony made the acquisition via a “wholly-owned subsidiary”. The nature of the partnership and its implication for both companies moving forward is not yet clear. However, as the press release suggests, it looks like a mutual broadening of their existing relationship.
A line in the press release also suggests that the two companies may be looking at creating Fortnite-like virtual media experiences such as the in-game Travis Scott concert tour which proved quite popular with gamers and non-gamers alike: “we share a vison of real-time 3D social experiences leading to a convergence of gaming, film and music,” in a statement from Epic founder and CEO Tim Sweeney. How could this pan out? Sony’s subsidiaries like Sony Music and Sony Pictures could leverage Epic Games’ know-how for closer tie-ins with its own PlayStation games.
That is the latest demonstration of the continued broadening of their mutual collaboration as Sony had originally prevented a crossplay on Fortnite in a bid to lock in users on its PS4. However, they have since walked back on this stance and now enable full crossplay with other systems.
Epic Games Founder and CEO Tim Sweeney further explained that the focus on building an “even more open” ecosystem was part of the rationale for Sony’s investment in Epic Games.
In this context of the collaboration and the investment, we are unlikely to see Epic exclusives on PlayStation yet but it could open the pathways for connecting the PSN Store with the Epic Games Store to possibly bridge the gap between the console and PC gaming. Xbox does something similar with its Xbox PC app and the Game Pass offers. For the time being, this is all speculative.