The biggest deal in video games this year just happened, and it's only July. Sony ($SNE), a worldwide publisher and developer of many studios and game franchises, is no longer hitching their wagon to just their popular PlayStation console. The company announced its investing $250 million in Epic Games ($PRIVATE:EPICGAMES), makers of Fortnite, for a 1.4% ownership stake. Epic is now worth $17.86 billion, according to Venture Beat.
In the press release, the explanation was simply that both publishers would "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 Games is no stranger to outside investors taking big swings on it, since Tencent already put in their own $330 million back in 2012 for a 40% stake in the company.
Just to put this into perspective.— Daniel Ahmad (@ZhugeEX) July 9, 2020
When Tencent invested $330m in Epic Games back in 2012, that got them a 40% stake with Epic valued at ~$825m.
Sony's $250m investment today gives them a ~1.5% stake with Epic valued at ~$17bn. https://t.co/LR2Q3SqxAI
CEO and founder Tim Sweeney showcased the developer's latest Unreal Engine 5 demo last month using the PlayStation 5 hardware, and had quite glowing things to say about it. Some speculated that this was a sign of a new partnership blossoming, and he even admits it in a tweet.
Yes, here’s what I said back in May below. Serious investment discussions followed from the Unreal Engine 5 demo we showed on PlayStation 5. I guess they liked it!https://t.co/c9x4q1v87P https://t.co/XoOTR5hThU— Tim Sweeney (@TimSweeneyEpic) July 9, 2020
If we were to wildly speculate, this could lead to Sony's movie division making a Fortnite movie/TV show, but that's just putting two and two together. While this deal won't put exclusive games on PlayStation consoles yet, nor does it impact the Epic Games Store on PCs, Sony getting into buying ownership stakes in other companies can be seen as a shot across the bow at rival Microsoft. MS and its Xbox brand bought Minecraft creator Mojang for a cool $2.5 billion, and that has paid for itself very quickly.
Each console maker is snatching up talent left and right as they go into the next console war, which should help Sony compete with Microsoft since they don't have the same size or access to capital.
Of course the main reason why some of you clicked on this article was to see just how gargantuan Fortnite has become since it came out years ago. It's still very profitable, and still one of the most played (and watched) games to ever be created.
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