Epic Games Inc., the studio behind the ubiquitous video game Fortnite, has closed a $1.25 billion investment round from a coalition that includes KKR & Co., Vulcan Capital, Kleiner Perkins and startup AXiomatic Gaming.
The diverse group covers a large swath of the entertainment world, including technology, traditional sports, sports gaming and live events. The deal values Epic Games at $15 billion, according to someone familiar with the matter.
Enlisting new backers is a rare event for the closely held Epic Games, which was founded by Chief Executive Officer Tim Sweeney in his parents' basement in 1991. But the success of Fortnite -- and its every-man-for-himself approach -- has given Sweeney the chance to broaden his investor base. He sold a 40 percent piece of the company to Chinese Internet giant Tencent Holdings Ltd. in 2012.
Fortnite quickly became a cultural phenomenon after Epic Games made the title free to play and introduced the "battle royale" mode, which lets 100 players compete to be the last person standing on an imaginary island. Rappers and celebrities have embraced the title, and athletes in the World Cup even celebrated goals with a dance from the game. It's also the most popular game to watch on Amazon's streaming service Twitch, though viewership has dropped in recent months.
Other investors in the $1.25 billion round include Lightspeed Venture Partners, Iconiq Capital and Smash Ventures.
Fortnite cracked $1.2 billion in sales within months of its release and has made a billionaire out of Sweeney, the company's controlling shareholder. Tencent bought its 40 percent of Epic Games at an $825 million valuation. Other minority owners include Walt Disney Co. and Endeavor.
Epic Games' overall sales are expected to top $4 billion this year, according to a person familiar with the finances, who asked not to be identified because the details are private. The Wall Street Journal previously reported on the valuation.
In addition to owning Fortnite and other titles, Cary, N.C.-based Epic Games developed the Unreal Engine -- a popular software for game developers. It forms the back-end technology for hundreds of video games, including Capcom Co.'s Street Fighter V and Microsoft Corp.'s Gears of War 4. It's also becoming popular beyond gaming: Fox Sports is using the software to power its new virtual studio set.
Business on 10/27/2018