On October 26, Pitchbook reported that “Fortnite” maker Epic Games Inc. received a massive $1.25 billion cash infusion from a host of high-profile Silicon Valley venture capital and public equity firms.
Investors in the hugely successful Cary, North Carolina-based software developer include ICONIQ Capital, KKR, Kleiner Perkins, Lightspeed Venture Partners, Smash Ventures and Michael Jordan-backed e-sports company AXiomatic. Following this round, Epic Games is now valued at a staggering $15 billion. As a result, the company has greatly surpassed analysts’ expectations as the Bloomberg Billionaires Index pegged the company as being worth between $5 and $8.5 billion in June.
Epic Games’ remarkable valuation is due largely to the success of its cross-platform, free-to-play sensation, “Fortnite: Battle Royal.” Released in September 2017, “Fortnite” has been played by more than 125 million people and has brought in $1.2 billion in micro-transactions as of this May.
As a result of the investment, the above firms join Chinese multinational Tencent Holdings Limited and Disney as Epic stakeholders. In 2011, Tencent acquired 40 percent of Epic for $330 million and in 2017, the developer was chosen to be part of the Walt Disney Corporation’s Disney Accelerator program.
Humble Beginnings and PC Gaming Innovation
Like many contemporary gaming heavyweights, Epic Games has humble beginnings. Founded as Potomac Computer Systems by self-taught programmer Tim Sweeney in 1991, the company’s first release was a DOS action-adventure puzzler entitled “ZZT.”
In 1992, Sweeney renamed his company Epic MegaGames to give it a more professional air and in 1998, the developer released the groundbreaking first-person shooter “Unreal.” The game was a critical and commercial success and helped to establish the company in the PC gaming world.
Epic also licensed out “Unreal’s” titular game engine to other developers who used it to launch hugely successful franchises like “Deus Ex” and “BioShock.” In 2014, the Guinness World Records named “Unreal” as the most successful videogame engine.
Successful Forays into Console and Mobile Gaming
In the 2000s, the developer pivoted from PC to console gaming, having renamed itself as Epic Games in 1999. In 2006, Epic released the sci-fi third-person shooter “Gears of War.” Produced for only $12 million, the game went on to generate more than $100 million in revenue and spawned three best-selling sequels.
Five years later, Epic released its first mobile game, an iOS action role-playing title called “Infinity Blade.” Upon release, “Infinity Blade” became the fastest-grossing app ever released for the platform at that time, selling more than 270,000 copies in its first four days.
‘Fornite’ and the Future of eSports
Like the previous two decades, Epic Games continues proving itself to be one of the most forward-thinking developers in the games industry in the 2010s. Understanding that the future of gaming lies in games as a service, Sweeney led the company in making a deal with Tencent, which owns “League of Legends” developer Riot Studios.
With support from Tencent, Epic was able to launch “Fornite” in 2017. In its July 2017 initial iteration, the game was a sandbox survival game titled “Fornite: Save the World.” It did decent business and received moderately positive reviews.
However, its second iteration as a free-to-play cross-platformer called “Fortnite: Battle Royal” proved much more successful. In addition, to bringing over $1 billion in microtransaction revenue, the title is also the most streamed and watched game on Twitch.
Epic has also taken steps to revolutionize the world of eSports. In May, Epic announced that it will be spending $100 million in tournament prizes with an eye toward making “Battle Royal” into an eSports mainstay. In addition, at this year’s Electronic Entertainment Expo, Epic revealed it will launch an open competition for everyone, the World Cup for Fortnite players in 2019.
Can Epic Games Conquer eSports?
Throughout its 27 year history, Epic Games has effectively conquered every sector of gaming it has entered. However, with experts estimating that competitive gaming will only generate $900 million in global revenue in 2018, Epic is betting big on the market expanding considerably.
So can Epic Games bring eSports into the mainstream?
Leave your thoughts in the comments below!