Epic Games: $15 Billion Battle Royale

Michael Wenner
Dec 20th, 2019
Cary, North Carolina is a town with a population just under 170,000. Cary has changing seasons, a low cost of living and was even once named the fifth-best place to live in the U.S. It sounds like a great place. It's also the last place you'd think would be home to one of the world's hottest video game developer: Epic Games.

Founded in 1991 in Potomac, Maryland, Epic Games owns a handful of video game developers, a cloud-based software developer and Unreal Engine—a commercially-available game engine that was named the most successful video game engine by Guinness World Records.

But of course, Epic Games is best known for its hit video game Fortnite. In case you live under a rock, Fortnite was launched in 2017 and has taken over the gaming world ever since. The game is available in three different game mode versions. Fortnite: Save the World is a shooter-survival game where up to four players can fight zombie-like creatures. Fortnite Battle Royale is a game where up to 100 players fight to be the last one standing. Fortnite Creative allows gamers to create their own worlds and battle arenas. Fortnite can be played on Windows, macOS, Nintendo Switch, PlayStation 4, Xbox One, iOS and Android.

Fortnite Frenzy

The growth in Fornite has been nothing short of spectacular. Fortnite surpassed 100 million downloads on Apple’s iOS in just 138 days, helping the game gross $1 billion in revenue within its first year. Tim Sweeney, CEO of Epic Games, announced in March that Fortnite had surpassed 250 million users and $2 billion in revenue. Even people who aren't playing Fornite are obsessed with it. In 2018, Twitch users watched more than 1.3 billion, yes billion, hours of Fortnite streaming.

The success of Fortnite drew Epic Games into esports. Earlier this year a 16-year-old went home with a $3 million prize after winning the Fortnite World Cup. Three others also became millionaires following their success in the competition. Epic Games dropped $100 million in prize money for the 10-week Fortnite World Cup.

Press 'A' to Invest

In 2012, Chinese internet giant Tencent acquired 40% of Epic Games for $330 million. Sweeney was interested in a deal with Tencent for two main reasons. He saw the video game industry moving to a games as a service model (GaaS), which Tencent had experience in, as well as the ability to leverage Tencent to enter the Chinese market. To this day, Sweeney is still the majority shareholder of Epic Games, owning more than 50% of the company.

Press 'X' for Profits

Last October, seven investors including KKR and Kleiner Perkins invested $1.25 billion in Epic Games at a valuation of $15 billion. The company reportedly booked a profit of $3 billion in 2018. Disney also became an investor in Epic Games in 2017 after selecting the company to be part of its Disney Accelerator program. The program provides Epic Games access to Disney's executives and the potential to work with Disney in the future.

While the video game industry is highly competitive, Epic Games clearly has a winner with Fortnite. In case the game loses interest over time, as many video games do, Epic Games has been diversifying itself through acquisitions of video game developers and software companies and appears to be in a strong position to continue innovating. With some of the smartest people in the gaming industry and biggest investors supporting Epic Games, this is a company that should continue to see success for years to come.

Tech News, Funding Rounds and Holiday Cheer!

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A smarter approach to recruiting. Jumpstart, a recruitment platform that believes it can solve diversity issues through a pool of job candidates ordered by algorithms, has raised $8.5 million in Series A funding. The platform currently focuses on entry/early-stage roles such as engineering internships, but plans to expand to a wider range of higher-level jobs. The company has helped its users find jobs at companies such as Twitch, Lyft and Pinterest. Founder and CEO Ben Herman said Lyft hired a third of its interns for next year through Jumpstart, with 82% coming from underrepresented groups.

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