Sony Interactive Entertainment will invest $250 million in “Fortnite” developer Epic Games, the game publisher announced Thursday in a deal that VentureBeat estimated placed an $18 billion valuation on Epic.
Sony will take a 1.4% minority stake in Epic, which is also backed by Chinese tech conglomerate Tencent. Tencent took a roughly 40% ownership stake of Epic Games when it invested $330 million in 2012.
By backing Epic, Sony gains further access to Epic’s proprietary game development technology, the Unreal Engine 5, which was used in a widely shared June 15 demonstration video of gameplay on the upcoming PlayStation 5.
The Unreal Engine turned heads after its PlayStation 5 debut in May, where Epic showed off the game development engine’s capabilities, which include enhanced levels of geometric detail and dynamic in-game lighting.
Epic Games CEO Tim Sweeney has been open about wanting to collaborate with Sony, noting several months ago in May: “100% of the stuff we’ve been working on with Sony over the past months is now publicly announced: The UE5 demo on PlayStation 5, Nanite, Lumen, and Epic Online Services for cross-platform play across all platforms,” Sweeney said.
On Thursday, Sweeney said the investment discussions began shortly after the Unreal Engine 5 demo. “Serious investment discussions followed from the Unreal Engine 5 demo we showed on PlayStation 5. I guess they liked it,” he said.
“The investment allows Sony and Epic to aim to broaden their collaboration across Sony’s leading portfolio of entertainment assets and technology, and Epic’s social entertainment platform and digital ecosystem to create unique experiences for consumers and creators,” Epic said in a statement.
“Epic’s powerful technology in areas such as graphics places them at the forefront of game engine development with Unreal Engine and other innovations,” Sony Corp. CEO and President Kenichiro Yoshida said in a statement. “There’s no better example of this than the revolutionary entertainment experience, ‘Fortnite.’”
“Fortnite” has become a paragon of in-game entertainment since coronavirus forced the globe into quarantine — it used its massive multiplayer Party Royale battle mode as a virtual concert stage for rapper Travis Scott that attracted over 12 million unique viewers. Epic has held several other in-game concerts using Party Royale mode with artists like Marshmello, Young Thug, and Diplo.
Yoshida said that Sony intends to capitalize on Epic’s developing live entertainment offerings. “Through our investment, we will explore opportunities for further collaboration with Epic to delight and bring value to consumers and the industry at large, not only in games, but also across the rapidly evolving digital entertainment landscape,” Yoshida said.
The Sony spokesperson confirmed to TheWrap that Sony looks to capitalize on Epic’s live services as part of the deal. “We will be exploring opportunities for further collaboration mainly in the area of our entertainment businesses,” the spokesperson said. “This approach presents many touchpoints with the array of content, creative talent and IP we have at Sony, and we believe that, going forward, we can generate opportunities for new value creation in areas such as virtual platforms for live content.”