Graphics from Unreal Engine 5 rendered on a Playstation 5
What you may need to know
1. Last week Sony made a $250 million investment in Epic Games, the creators of Fortnite and Unreal Engine which has been used to develop hundreds of third party games. The Guinness Book of World Records called Unreal the “most successful videogame engine” of all time.
2. Contrast this with the $330 million investment that Chinese conglomerate Tencent paid in 2012 for a 40% share in (an admittedly pre-Fortnite) Epic Games.
3. Sony’s investment gives Epic a near $18 billion valuation, or a 20x return on Tencent’s investment to date. Epic’s revenue for 2020 is forecast to be around $5 billion, and not all from Fortnite.
4. The investment paves the way for greater integration between Sony and Epic outside of just gaming and Unreal’s use in Sony’s upcoming Playstation 5 launch.
5. Think of how Unreal could be used in the production of the Spiderman movie, or how a musician whose touring revenue is currently curtailed might stage a virtual concert in Fortnite as Sony’s Travis Scott did in April this year, bringing more than 12 million players onto the platform to view the event.
6. Sony needs Epic more than Epic needs Sony. Epic has successfully monetised the infrastructure that their core business was built on to the point that the infrastructure has become one of their core businesses.
7. There are currently more than 7 million people who license Unreal Engine for both gaming and enterprise. Epic CEO Tim Sweeney has already predicted that enterprise users of Unreal Engine will overtake game users soon with applications as diverse as architecture, medical research and car manufacturing.
8. Or, the Metaverse. The Epic CEO thinks that we’re three years away from a viable digital reality that converges with actual reality, like in almost every Black Mirror episode ever. I wouldn’t bet against him.
Kieran’s verdict: Invest early in the metaverse to avoid virtual disappointment later.
Previously: Broadsheet Game Review on broadsheet