(Photo by Christian Petersen/Getty Images)Įpic never had a problem making money - Sweeney told Polygon the first Gear of Wars release grossed $100 million on a $12 million development budget. LOS ANGELES, CA – JUNE 12: Gamers ‘Ninja’ (L) and ‘Marshmello’ compete in the Epic Games Fortnite E3 Tournament at the Banc of California Stadium on Jin Los Angeles, California. Tencent, Sweeney added, has provided “an enormous amount of useful advice,” while the capital enabled Epic to “make this huge leap without the immediate fear of money.” We recognized that the ideal role for Epic in the industry is to drive that, and so we began the transition of being a fairly narrow console developer focused on Xbox to being a multi-platform game developer and self publisher, and indie on a larger scale,” he explained. We were seeing some of the best games in the industry being built and operated as live games over time rather than big retail releases. “We realized that the business really needed to change its approach quite significantly.
That’s a strategy Sweeney called “Epic 4.0.” Speaking to Polygon about the Tencent deal, Epic CEO Tim Sweeney explained that the investment money from Tencent allowed the company to go down the route of freemium games rather than big box titles. They sensed a change in the way games were headed based on diminishing returns and growing budgets for console games, the increase of “live” games like League of Legends and the emerging role of smartphones.
Why would a proven company give up such a huge slice of its business? Executives believed that Epic, as it was, was living on borrowed time. However, the investment cards haven’t always been stacked in Epic’s favor.Ĭhina’s Tencent, the maker of blockbuster chat app WeChat and a prolific games firm in its own right, became the first outside investor in Epic’s business back in 2012 when it injected $330 million in exchange for a 40 percent stake in the business.īack then, Epic was best known for Unreal Engine, the third-party development platform that it still operates today, and top-selling titles like Gears of War. This past September, Epic commanded a valuation of nearly $15 billion, according to The Wall Street Journal, as marquee investors like KKR, Kleiner Perkins and Lightspeed piled on in a $1.25 billion round to grab a slice of the red-hot development firm. Founded way back in 1991, Epic hasn’t given revenue figures for its smash hit - which has 125 million players - but this new profit milestone, combined with other pieces of data, gives an idea of the success the company is seeing as a result of a prescient change in strategy made six years ago.
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