Sony has invested $250 million for a minority stake in Fortnite maker Epic Games, the companies announced today. Epic Games has raised $1.83 billion till date including this new money.
The companies said the deal binds an already close relationship and strengthens their shared goal to advance the state of the art in technology, entertainment, and socially connected online services. This close relationship was under rated in May when Epic first showed the upcoming new Unreal Engine 5 graphics running on a PlayStation 5. As the company itself has unveiled, Epic Games raised $1.58 billion in three previous funding rounds. In 2012, the company accepted a $330 million investment from Tencent for a 40% ownership stake.
In this deal, the investment enables Sony and Epic to extend their collaboration, with Sony’s portfolio of entertainment assets and technology and Epic’s social entertainment platform and digital ecosystem (think Fortnite’s increasing use as a social space or the Epic Games Store), to create different experiences for consumers and creators. The conclusion of the investment is subject to customary closing conditions, including regulatory approvals.
Epic officially said, it will still be able to publish to other platforms. As noted, Sony is getting only a minority part of Epic Games, and it is not acquiring a dominant stake in the company. Sony is buying a 1.4% stake in Epic, which means the deal values Epic Games at $17.86 billion.
The deal is essential for Sony because they need allies in the upcoming console war. Sony plans to launch the PlayStation 5 game console in competition with Microsoft’s Xbox Series X, later this year. But Epic has said that its Unreal Engine 5 and Fortnite will work with all game platforms, as Epic has generally been objective when it comes to making cross-platform technology. If Sony gets any benefit from investing in Epic, it isn’t clear from this deal.
In a statement, Sony CEO Kenichiro Yoshida said that Epic’s technology keeps it at the forefront of game development and that is exemplified in the features of Fortnite. Epic CEO Tim Sweeney, said in a statement that both Sony and Epic have created businesses at the intersection of creativity and technology and they share a vision of real-time 3D social experiences that will lead to a convergence of gaming, film, and music. He also said the parties plan to build a “more open and accessible digital ecosystem for all consumers and content creators.”
The music acknowledgment seems like a call out to the recent virtual Travis Scott concert in Fortnite, which drew more than 27 million people. The mention of a more open and accessible digital ecosystem is also a surprise, as Sweeney has long been a proponent of open systems, while Sony has been an representative of a company that protects its proprietary technology. Sony has, however, enabled Fortnite to function as a crossplay game that also lets friends play each other across other platforms.