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Epic Games, the studio behind “Fortnite,” is close to landing $750 million in new funding that would value the company at $17 billion. New investors T. Rowe Price Group and Baillie Gifford as well as existing investor KKR will join the round.
As the coronavirus pandemic is still pretty actual and the lockdowns around the world are still on, people are more and more playing the video games. Of course, the investors are monitoring the whole situation and looking for their possible profits. Epic Games Inc., which became famous among the gaming community by making the battle game Fortnite and acquired networking app Houseparty, are, by their own words, close to raising a $750 million round of funding at a valuation of about $17 billion.
New investors T. Rowe Price Group Inc. and Baillie Gifford are said to be contributing to the round. The other existing investors including KKR & Co. will also take part, said the sources familiar with the matter.
The valuation, which includes the new funding, is a pretty much of a boost from the $15 billion valuations the company had back in 2018.
The funding round still isn’t finished and some of the details might be changed for that matter.
Fortnite Maker Epic Games amid Coronavirus Pandemic
This is just one of the examples of how, even as many startups lay off employees and scale back operations due to the COVID-19 outbreak, there could still be possibilities for firms that provide what many now see as essential distractions.
While lockdowns are slowly beginning to lift around the world, people may be tentative to go back again to find some more traditional ways of fun as are movie theaters or concert halls. Video games are helping fill that entertainment emptiness.
Epic Games and its video game competitors are now becoming an actual destination to watch concerts and see new movie trailers. Approximately 28 million fans went crazy when in April concert by rapper Travis Scott happened. The concert was held virtually exactly in Fortnite. In May, Epic went out with a new trailer for the upcoming Christopher Nolan movie “Tenet” also on Fortnite.
Fortnite is a fight-to-the-death battle and survival game that’s especially popular with youngsters.
In 2019, Epic Games said it had $4.2 billion in revenue and $730 million in earnings before interest, taxes, depreciation, and amortization (EBITDA, a key measure of profitability). Revenue for 2020 is forecast to be $5 billion, with EBITDA of $1 billion.
However, just in April this year, thanks to the pandemic, Fortnite revenue was $400 million. Epic has said that in April, players spent 3.2 billion hours in the battle royale shooter.
Video game companies have been using the advantage of the revived interest in their products to do deals. Just, for example, Zynga Inc (NASDAQ: ZNGA)said this month to buy Turkish mobile-game maker Peak for $1.8 billion, while AppLovin Corp. in May gave around $500 million for Machine Zone Inc.
Sweeney sold 40% of the company to Chinese internet giant Tencent Holdings Ltd (HKG: 0700) in 2012. Other minority owners include the Walt Disney Company (NYSE: DIS), aXiomatic Gaming LLC and Endeavor Group Holdings Inc.