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Sony has taken a decision to invest $250 million into Epic Games, in a strategic move to continue the working relationship between the two major gaming giants.
Japanese multinational conglomerate corporation Sony Corp (TYO: 6758) has acquired a portion of popular gaming company Epic Games. Sony has invested $250 million, to purchase a minority position in the video gaming company, to further the professional relationship between the two firms.
American video game and software developer Epic Games is best known for popular games like Fortnite, the Infinity Blade series, and Gears of War. The company, as part of the new partnership with Sony, will allow both companies to collaborate further. On the one hand, Sony is a large player in the gaming industry, with its digital community and hardware. Epic Games, known to create very entertaining and widely-loved loved games, also has a large following of fans and creators alike. The partnership between both companies promises to create amazing experiences for all persons in the gaming community.
Sony and Epic
The new deal means that Sony now owns 1.4% of Epic Games. This is not a controlling stake and does not box Epic into a corner. The American gaming company will not be restricted from creating and publishing games on other non-Sony platforms. With $250 million at 1.4%, the deal values Epic Games at $17.86 billion.
According to an official press release, Epic Games Founder and CEO Tim Sweeney believes that the two firms will create a better ecosystem for gaming and other media forms:
“Sony and Epic have both built businesses at the intersection of creativity and technology, and we share a vision of real-time 3D social experiences leading to a convergence of gaming, film, and music. Together we strive to build an even more open and accessible digital ecosystem for all consumers and content creators alike.”
More Than Just Gaming
While Epic is not a music company, famous American rapper Travis Scott recently held a virtual concert in collaboration with Fortnite. The two companies could possibly venture more into the music industry on the success of the concert. More than 27 million people joined the concert.
The collaboration could also prove very useful for Sony as it prepares to release the upcoming PlayStation 5. Scheduled for release later this year, the PS5 will be going head to head with Microsoft’s rival console, the Xbox Series X. Although Epic will not exclusively release games on PlayStation, the deal could be profitable for Sony in the long run.
Back in 2012, the Chinese conglomerate Tencent Holdings Ltd (HKG: 0700) acquired a 40% stake in Epic Games, with a whopping $330 million. Tencent is also a major player in the gaming industry and could support or compete with Sony.
Ampere Analysis’ head of games research, Piers Harding-Rolls has also spoken on the partnership. In a conversation with CNBC, he says the deal is more about widening both horizons:
“I see this as more strategically broad. Epic is increasingly active in production across different entertainment markets and is enabling content convergence through Fortnite. Much of this aligns to different businesses within Sony.”
The investment deal is however incomplete and is subject to regulatory approval.