Sony has invested in Epic in 2020 and 2021. After this investment, the total investment will reach 1.45 billion US dollars.
Sony Group has decided to make a third investment in US-based Epic Games, best known for its hit online game Fortnite.New investment of 1 billion US dollars, a total of 4.9% of its investment. Based on the games of Epic Games, which has more than 300 million users, it will build the foundation of the Internet virtual space “Metaverse”. Sony seeks to become a platform provider in the entertainment sector like the US IT giant.
The funding could be completed as early as May. Sony has invested in Epic in 2020 and 2021. After this investment, the total investment will reach 1.45 billion US dollars.
The investment this time is different from the previous one. The investment amount is huge, reaching 4 to 5 times that of the past two times. Excluding the acquisition of companies, the investment amount this time is the highest in Sony’s history. From the perspective of the purpose of investment, it was relatively abstract, such as “strengthening cooperation aimed at providing new entertainment experiences”, but this time, the company’s chairman and president Kenichiro Yoshida made it clear that “to further deepen cooperation in the field of Metaverse” .
According to Emergen Research, a Canadian research firm, by 2028, the market size of the Metaverse will increase to 17 times that of 2020, reaching $828.9 billion. Yoshida also stated that the Metaverse will be built as “a space where Sony developers and users share time”, positioning it as an indispensable area for future growth.
Epic Games not only develops games in-house, but also provides CG (computer graphics) production technology to the outside world. Sony is also good at CG production in the field of software development for the game console “PlayStation”, and believes that combining the technologies of the two companies can have an advantage in technologies such as spatial reproduction required by the Metaverse.
Yoshida said, “As a major premise of the Metaverse, people need to be brought together. And games become the motivation for people to come together.” Epic’s “Fortnite” is a “billion-dollar game” with more than 350 million users worldwide. In addition to games, concerts by famous singers will be held, and it has begun to function as a multi-purpose space.
Sony has put forward a long-term vision to increase the number of users it reaches directly to 1 billion people through games, movies and music sales. It is planned to make independent content such as games as the core to win users in the Metaverse.
At the same time, competition is fierce. In January, Microsoft in the United States focused on the expansion of the Metaverse and announced that it would spend $68.7 billion to acquire Activision Blizzard, an American game company.Japan’s Bandai Namco Holdings has launched a corporate venture capital investment with the Metaverse field as its main investment target.
For Sony, the gaming business is the main cash cow. According to the financial report for fiscal year 2021 (as of March 2022), the operating profit of the game and network services business is expected to be 345 billion yen. It is the largest among the six major businesses, accounting for about 30% of the total. The success or failure of the Metaverse strategy will have a major impact on Sony’s overall profitability in the future.
Sony has always wanted to be a platform provider in entertainment beyond games. For the PS4, which was launched in 2013, the idea of making it the core of music and video distribution was also proposed, but it ended in failure.
The “billion-level games” with more than 100 million users have become the foundation for building the Metaverse. Sony’s large-scale investment in Epic Games can be said to be a layout for the challenge of becoming a platform provider again.
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