- Epic Games has secured a whopping $2 billion in additional funding from Sony and KIRKBI to further its metaverse ambitions.
- While some see the Fortnite developer’s position to bring their games to Web3 as a challenge, others see the move as a positive.
The developer of one of the world’s most popular games, Fortnite, has secured $2 billion in additional funding in a bid to accelerate its metaverse ambitions.
Epic Games said on Monday that it had received $1 billion each from existing investors Sony Group Corporation and KIRKBI, the family-owned investment company behind The LEGO Group.
Following regulatory approval of the deal, Epic’s post-money equity valuation stands at $31.5 billion.
The new funding will be used to build on Epic’s vision for the metaverse and support its continued growth, according to a statement. Epic said it’s trying to create new “social entertainment” by exploring the connection between the digital and physical worlds.
“As a creative entertainment company, we are delighted to invest in Epic to deepen our relationship in the field of the metaverse, a space where creators and users share their time,” said Kenichiro Yoshida, Chairman and CEO of Sony Group Corporation.
Sony’s participation in the round extends to its $250 million cash infusion for Epic in 2020 and more $200 million One year later. Epic’s raised capital is slated for the developer’s project to build “real-time 3D social experiences leading to a convergence of games, movies and music,” CEO Tim Sweeney said at the time.
While the funds have been flowing in, questions are rising about how the developer will try to best monetize its efforts in a world seemingly designed for decentralization and individual ownership of digital assets.
“What they’ve been building with Fortnite is what they call a metaverse, but I’d say it’s a closed ecosystem, where they rely on outside investment and deal with huge intellectual property rights, rather than a more open ecosystem. web3 metaverse,” said Lost Relics and Codebit Labs director Cliff Cawley.
“It appears that some companies are simply using the term metaverse as another marketing term to ensure their balance sheets remain profitable for them,” Cawley added..
Fortnite is a hugely popular free-to-play battle royale game where 100 players drop onto an island and battle it out crafting, shooting, and looting their way to the top.
While the model is free to play, Epic makes substantial profits through microtransactions through its in-game store. Players can purchase skins, emotes, and sprays in exchange for the company’s in-game currency called V-Bucks, which are purchased with fiat.
Epic uses V-Bucks to get a big chunk of their profits. In 2018, the company generated $5.5 billion in gross revenue from its Fortnite title and $3.7 billion the following year, according to leaked documents of the Apple v. Last year’s Epic Games.
“It would be nearly impossible for Epic to seamlessly transition from Fortnite to a Web3 game,” said Simon Kertonegoro, CEO and founder of MyMetaverse. “Its gameplay and monetization are already set up to run on Web2.”
Web3 refers to the idea of a decentralized internet where data ownership is locally owned by the individual. Meanwhile, metaverses refer to the experience people will have based on an intersection of technologies including virtual reality, blockchain, and Web3 infrastructure.
Both concepts are in their infancy, but significant development and funding have continued to push the boundaries and explore new revenue streams that collectively share in the success of a particular title.
While revenue models will need to be looked at, some blockchain game developers believe that Epic’s foray into the metaverse will help position the fledgling industry front and center.
“We should definitely anticipate more innovation in the space as new economic models are introduced,” Brian Akaka, director of marketing at Laguna Games, the developer behind upcoming non-fungible token (NFT) title Crypto Unicorns, told Blockworks.
“It’s important for game developers to incorporate new mechanics as a natural part of the game, rather than treating it as an add-on.”
Kertonegoro believes that Epic is poised to take advantage of an entirely new title centered around the concept of monetizing in-game assets that give players the option to share in profits from Epic sales.
“I think Tim Sweeney and Epic Games, in general, are smart enough to know that in the end, whatever solution is best for players will always win,” he said.
Epic continues to distribute only a single class of outstanding common stock and remains under the control of its CEO and founder.
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