Thread by @ZhugeEX

Quick thread on Sony and Epic deal:

Sony made a strategic investment of $250 million in Epic Games to acquire a 1.4% minority stake.

The investment cements an already close relationship. Is to explore opportunities for further collaboration, primarily around entertainment.

Epic has become a major player in the interactive entertainment space with multiple strengths:

- Unreal Engine (Game Engine)
- Fortnite (Game Software)
- Epic Store (Game Distribution)
- Epic Online Services (Game Services)

2019 revenue was $4.2 billion. EBITDA was $730 million

This deal is less about exclusivity of content for either company, but a broader play from Sony Corp as a whole.

In terms of gaming, Sony and Epic have already demonstrated how they are working closely to optimise Unreal Engine for PS5 and this will no doubt continue.

Talking more broadly, Sony is fully aware of the direction Epic is heading in with Fortnite converging games, film, music and entertainment.

This is an area that Sony is also looking to explore with its various divisions and the partnership can benefit both in this case.

In terms of the investment itself, Epic has seen its valuation grow 17x in just 8 years and its current offerings (mentioned in the 2nd tweet) are the future direction of not just games, but entertainment as a whole.

Could benefit Sony more in the future and benefits Epic now.

Sony is proactive in investing / acquiring firms that can both benefit its existing operations (E.g. Insomniac acquisition for $229m) or drive future growth (E.g. Partnership with Microsoft to explore cloud based solutions for gaming with Azure.)

This is an example of the latter