Epic Games is a US-based video game and software development company founded by Tim Sweeney in 1991. It has its headquarters in Cary, North Carolina. Epic Games has since grown to more than 40 offices worldwide.
Epic Games has evolved to become a leader in the interactive entertainment sector with its 3D engine technology. It also runs one of the world’s leading games, Fortnite, with over 350 million accounts and 2.5 billion connections.
The company develops Unreal Engine that powers leading games in the world. Unreal Engine has also been adopted across film, television, architecture, automotive, simulation, and manufacturing industries.
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Epic Games Background
According to Epic Games co-founder, Tim Sweeney, the company has evolved through four major phases.
The first phase was way before Epic Games was founded. The company was initially called Potomac Computer Systems, founded and solely operated by Tim Sweeney.
Sweeney ran the company from his house. He would stack game disks in an envelope, then send them to customers, who would write back checks.
Even in its formative stages, Potomac still managed to attract top talents, including Mark Rein, Epic Games co-founder, and Cliff Bleszinkski, the 17-year-old who designed Jazz Jackrabbit in 1994.
Other releases in the first phase of Epic Games included the 1998 Unreal Engine release, the 1999 Unreal Tournament release, which shifted more towards multiplayer gaming, and the 2006 Gears of War.
In 1992, Sweeny renamed Potomac Computer Systems Epic MegaGames, where he began releasing shareware games like Jill of the Jungle, Epic Pinball, and Ken’s Labyrinth.
The second era happened between 1998 to 2005. Epic Games grew from 15 to 25 employees during this phase and had to adjust budgets to accommodate big games. Epic MegaGames officially changed to Epic Games in 1999.
In the third phase, Epic Games shifted from PC to consoles, while the fourth phase occurred from 2012 to modern-day Epic Games, which has fostered a seismic shift in the company’s game path from consoles back to PC.
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Epic Games Net Worth
Before we get into how much the Epic Games company is worth, we must also know how much the company CEO, Tim Sweeney is worth. According to Celebrity Networth, Sweeney is worth $5 billion.
However, earlier reports by Forbes indicated that the CEO was worth $7.4 billion by the end of the second quarter of 2021, following a new funding round that valued Fortnite at $28.7 billion.
By April 2022, Epic Games was valued at $32 billion after its recent funding and acquisition by Tencent Holdings Inc. Tencent acquired a 40% stake in the company for $330 million at a valuation of $825 million.
Epic Games’ valuation from 2012 to 2022 shows the company’s relevance in only ten years. In 2012, the company was valued at $825, and by July 2018, it had grown exponentially to $4.5 billion.
Its exponential growth by 2018 was aided by the 2017 release of Fortnite, a battle royale game and a survival-based shooter game that amassed enormous popularity in just eight months.
By April 2022, Epic Games was valued at $32 billion thanks to China’s tech giant Tencent and $1.25 billion in funding from investors, including KKR & Co.Inc, Iconiq Capital, and Smash Ventures.
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Epic Games Business Model and Revenue
As mentioned, Epic Games develops, publishes, and distributes games through an end-to-end digital ecosystem for developers and creators.
Epic Games makes money through licensing agreements for creators and developers who use Unreal Engine. Some games like Fortnite are free on Epic Games Store but generate revenue through in-app purchases.
Epic Games has a storefront where it takes a 12% cut on all game purchases.
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Unreal Engine
Unreal Engine is Epic Games’ most progressive real-time 3D creation tool that allows you to bring real-time experiences to life. It is a complete suite for game development, automotive visualization, linear film, and TV content creation.
Epic Games only charges companies or any software maker who uses Unreal Engine for commercial purposes once the software exceeds a one million revenue in gross. Sports Tech Biz says the company takes 5% of all gross income from using the engine.
Unreal Engine further expounds on the 5% royalty, noting that it only applies if you are distributing an off-the-shelf product that contains Unreal Engine codes, such as a game. There are also custom licenses that you can get by contacting the Unreal Engine team.
Unreal Engine was the primary reason Epic Games landed a $1.5 billion valuation from venture and private equity leaders KKR and Kleiner Perkins. Unreal Engine has also made Fortnite a household name.
It is continually growing into a critical recipe across multiple sectors of the economy, including medical research, car manufacturing, and architecture.
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Fortnite
Fortnite is a free video game by Epic Games that has taken the gaming industry by storm.
Since its release in 2017, the game has continually offered unique experiences with its distinct versions, which let you play on Xbox, PC, PlayStation, Android, and Nintendo Switch.
Fortnite has various monetization strategies and holds a record of the highest revenue generated for Epic Games. According to Business of Apps, 2018 was a big year for Fortnite, generating $5.4 billion in revenue.
Its revenue decreased in 2019 and 2020 following a ban by Google and Apple from their stores. Apple banned Fortnite in 2020, citing a violation of some of their guidelines, which restrict third-party apps to only download their in-app items through AppStore.
Fortnite rose again in 2021, when it generated $5.8 billion in revenue through Fortnite in-app purchases, including outfits and skins that gamers pay for with real money.
Epic Games also made money through Fortnite’s Save the World initiative of 2017.
The company makes money the old school way through the Save the World Campaign by charging players $15.99 to access the campaign, providing endless NED outfits, a NED-kit detector, Homebase Kevin back bling, and tackling challenges and completing daily quests.
Epic Games also makes money through Fortnite merchandise, including apparel and toys, among other items.
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Fortnite Removed from AppStore and Google Play Store
Following Fortnite’s great success, Apple and Google still demanded a 30% cut on the revenue generated by the Fortnite game through in-app purchases.
Tim didn’t find the 30% cut equitable, hence, in 2019, the company created Epic Game Store through which gamers could download and purchase Fortnite, among other games.
For this reason, Apple removed Fortnite from the AppStore, beginning a legal battle between the two. Apple won the battle in upholding its store policies.
Fortnite might not be available on AppStore, but gamers can still play the latest version of Fortnite via Xbox Cloud Gaming without a Game Pass subscription.
In January 2023, the Epic Games CEO announced that Fortnite would return to iPhone though he shared little information. Another source reported that while Fortnite was highly likely to return to iOS in 2023, it would not be through Apple’s PlayStore.
Polygon.com further reported that Fortnite would be playable through Apple’s Safari browser via Nvidia’s GeForce. There also would be an Android version, playable through GeForce Now.
Epic Games also battled with Google on store policies, considering it first released the Fortnite game as a third-party app on Android.
However, Epic eventually agreed to host the game on Google Play Store since Google warns its users of possible security issues and malware when using it.
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Tencent Acquisition
In June 2012, Tencent, a Chinese internet and gaming company, acquired a minority stake of approximately 48.4% in Epic Games.
According to the acquisition deal, Epic Games would continue to operate independently but gave Tencent the right to nominate directors for the board.
Tencent wasn’t very vocal about the incurred cost of acquisition, but most websites published the figure as $330 million.
The Tencent acquisition came after the company reorganized its operations with a subsidiary focusing more on eCommerce and six other investment groups.
One of Tencent’s game-related investments was Riot Games. It was reported that the growing popularity of the Legend of League helped Tencent solidify its game portfolio in China and increase its revenue internationally.
Months after the acquisition, high-profile individuals left Epic Games. The Gears of War producer, Rod Fergusson, went to work with Irrational Games.
In October 2012, Cliff Bleszinski exited Epic Games. In December, the then Epic Games president, Mike Capps, announced that he would retire and transition to an advisory role within the Epic board.
However, this massive exit did not deter Epic Games from continuing with its goal of delivering games as its service. However, the shift significantly affected the shifting of Unreal Engine from three to four.
The massive exit also fueled Epic Games to venture into other projects, including the 2014 Unreal tournament and Paragon, a free-to-play multiplayer game that was launched in 2016 for PlayStation 4 and Microsoft Windows.
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Funding from Investors
In October 2018, Epic announced that it had acquired the largest-ever financing for a video game company. Epic Games stated that it received $1.25 billion in funding from investors to reinforce its position as a leader in real-time 3D technology.
While at this time, the company was valued at $15 billion according to Wall Street Journal and many other sources, it remained adamant about going public on its valuation or promising the public to ever go public about its worth in the future.
By the last quarter of 2022, CrunchBase reported that Epic Games had raised a total of $6.4 billion over 13 rounds of funding. The latest funding round happened on August 12, 2022.
CrunchBase further expounds that 41 investors fund the company, the most recent being Sony and Stableton Financial.
The company has also invested in metaverse infrastructure developer Hadean in a $30 million round of funding, and it is expected that the company will have a significant impact on Hadean’s future.
On May 11, 2023, Epic Games invested in the Spring Hill Company, acquiring a minority stake valued at about $725 million. Lebron James and Maverick Carter own the Spring Hill Company.
Epic Games has also acquired 19 organizations, the latest being Aquiris, dated April 19, 2023.
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Epic Games User Statistics
Epic Games is home to a growing community of publishers, developers, and creators. 2023 started well for Epic Games and Epic Games Stores. The company states that currently, there are more than 230 million Epic Games Store PC users.
The numbers have significantly grown, considering Epic Games only had 36 million users in 2021. Epic Games also has a total of 723 million cross-platform accounts. By the end of 2022, daily active users peaked at 34.3 million and monthly active users at 68 million.
In 2022, publishers and developers brought about 626 PC titles to Epic Games Store, bringing the titles to 1,548. Players spent about $355 million on third-party applications.
When summed up with Epic Games games, players spent $820 million in 2022, down by 2% from 2021.
2022 was also vital for the company’s Free Games Program. Epic partnered with various developers and publishers to create 99 free games worth $2,240 for game lovers.
Epic Games Store is a video game distribution service introduced in 2018. According to Backlinko, the store already has more than 180 million PC users with an active monthly user base of 56 million.
The store contains more than 470 game titles, and in 2020 alone, gamers spent $700 million on these games. Epic Games Store recorded 5.7 billion hours of playtime in the same year, and gamers claimed 749 free games.
Fortnite is one of the most loved games on the Epic Games Store. The game was launched in 2017, and just one month after its launch, it had acquired about one million registered users. By the end of 2017, the number had increased to 30 million players.
A month into 2018, the number rose to about 45 million, as explodingtopics.com records.
As of 2020, other popular games on Epic Store included Satisfactory, Rogue Company, Godfall, GTA 5, Assassins Creed Valhalla, Borderland 3, Tony Hawk’s Pro Skater 1 and 2, and Rocket League.
Fortnite has over 350 million registered players. The game is not as popular as it used to be, but it hasn’t lost its glory among most gamers. Registered gamers have increased by almost 11.6 times since August 2017.
In March 2019, the number of registered players on Fortnite was 250 million. By May 2020, the number had risen to over 350 million.
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How Does Epic Games Store Work?
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Epic Games is a developer and distributor of games, which is widely known for the success of its own Epic Games Store and Fortnite. It operates similarly to Valve’s Steam service, allowing you to play and purchase games online.
The platform is essential but offers exclusive access to first and third-party games and Unreal Engine. It does not charge for a subscription, so you can choose which game you wish to download at any given time.
Epic Games Store features a clean and straightforward interface. Once you create an account, you can select a display name that other gamers will know you by. You can use your nickname in the future, but only once a fortnight.
You can share your username with friends and get to play together some of your favorite games on the store. You can directly purchase a game from Epic Games Store or redeem a game code bought from a third-party developer.
Epic Games Store is slightly different from other games stores as it only allows you to gift a game to other players if you share your username and password, which is risky. The store is still in its infancy, so expect limited features, but it keeps improving.
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Is Epic Games Store Worth it?
Epic Games puts in a lot of time and money to ensure that Epic Store is a safe space to purchase your favorite games.
It is an excellent platform for developers, as it takes a relatively lower cut than other game stores like Steam. To this point, the store still has free games that you can download.
Free games might appear fishy at first glance, but it is essential to note that Epic Games pays developers behind the scenes, and the free games are only meant to lure gamers on the platform, who spend even more.
Fortnite has earned Epic Store vast amounts of money, enough to make things work long-term.
While it might not replace Steam for now, as it is impossible to tell the future, Epic Store is steadily positioning itself as a worthy competitor to keep Steam from being a monopoly.
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