What is Epic Games now worth? And who owns the Cary company after its Disney deal?
Epic Games, the prominent private video game maker in Cary, hasn’t always kept its valuation a secret.
When the company raised $1.78 billion in the summer of 2020, it publicized its new $17.3 billion valuation. The next year, Epic secured another $1 billion and shared it was then worth $28.7 billion. And in April 2022, Epic celebrated a valuation of $31.5 billion after getting investments from Sony and the parent company of Lego.
By then, Epic was among the world’s most valuable private businesses, a three-decade ascent fueled by industry successes Unreal and the Unreal Engine, Gears of War, and the 2017 blockbuster Fortnite, which reached 100 million users in November.
But after receiving a large investment last week, the Triangle company has been mum about its worth.
On Feb. 7, Disney said it would buy a $1.5 billion equity stake in Epic, with ambitions to marry the companies’ intellectual properties and technologies in a virtual “persistent universe.” Asked how the two companies valued Epic, company spokesperson Elka Looks said in an email “we aren’t sharing this.” A spokesperson for Disney also declined to say.
In an article published the day after the partnership was announced, The Information cited “a person familiar with the matter” who said the two sides valued Epic at $22.5 billion, a 28.5% decline from two years ago. Both Epic and Disney told The News & Observer they wouldn’t comment on the report.
If correct, the $22.5 billion valuation is still above Epic’s 2020 valuation. And even now, Epic is worth considerably more than it was a dozen years ago when the Chinese technology company Tencent acquired around 40% of the company for $330 million.
A nearly 30% drop in less than 24 months is stark, if understandable, said Joost van Dreunen, a professor at New York University and author of the 2020 book “One Up: Creativity, Competition, and the Global Business of Video Games.”
“The enthusiasm at the height of the pandemic has diminished somewhat since then,” he said. “It is now a sobering market that is focused less on growth and more on profit and creating value.”
What Epic and Disney see in each other
Last fall, Epic Games laid off roughly 16% of its staff — more than 800 workers, including 170 in the Triangle area. High costs of building out a metaverse, a shared virtual space where users can play, shop, attend concerts and more, contributed to these cuts, company CEO and cofounder Tim Sweeney said.
As Epic has sought to evolve Fortnite from a game to a broader experience, van Dreunen says teaming up with Disney — which owns Marvel, Pixar, and Star Wars — could better position the younger Cary company for longer term success.
“The difficult of the online gameplay world is acquiring users and keeping them,” he said. “Having a strong brand like Disney solidifies Fortnite and Epic Games. It signals quality in a digital entertainment space.”
This isn’t the first Epic and Disney collaboration. Disney has previously invested in Epic on a smaller scale, and Fortnite players have been able to purchase Marvel-themed outfits, known in the game as skins. In 2022, the companies also released a Marvel-Fortnite comic book crossover.
As for what Disney seeks in the partnership, van Dreunen pointed to Fortnite’s main demographic.
“The collaboration between legacy media like Disney and this novel, immersive experience of Fortnite — that goes a long way towards catering to, especially younger audiences, that legacy media is desperate for across the board,” he said.
In a statement last week, Disney CEO Bob Iger called the investment “Disney’s biggest entry ever into the world of games.”
Who owns Epic shares now?
Once the Disney deal closes (it is still subject to regulator approval), Sweeney will remain the company’s controlling shareholder, though Epic declined to say what percentage stake he’ll hold.
Other shareholders include:
Mark Rein, Epic’s other cofounder, who according to Forbes owned 4% of the company as of 2021. Rein currently serves as a vice president at Epic.
Following its latest investment in 2022, Sony owned roughly 5% of the company. Kirkbi, the Lego parent company, invested $1 billion at the same time.
According to The Information report, Disney will have a 9% stake in Epic.
Other Epic investors in the past few years include T. Rowe Price, Fidelity, the Ontario Teachers’ Pension Plan Board, BlackRock managed funds, and Carolina Panthers owner David Tepper.
However, the Chinese technology company Tencent is the largest investor. In 2012, it took a minority stake in Epic, reported at the time to be 40% of the company.
NC Reality Check is an N&O series holding those in power accountable and shining a light on public issues that affect the Triangle or North Carolina. Have a suggestion for a future story? Email realitycheck@newsobserver.com
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