Epic Games raises $2B to develop its metaverse efforts

Dive Brief:

After a $1 billion funding round last year, Fortnite creator Epic Games has raised $2 billion from Sony Group Corporation and Kirkbi, the investment company behind The Lego Group, the company announced on Monday. Both firms invested $1 billion each.
The funding will support Epic Games' efforts to build the metaverse, per the announcement.
The investment brings the company's post-money equity valuation to $31.5 billion. It is subject to customary closing conditions, including regulatory approvals.

Dive Insight:

The multibillion-dollar investment follows an April 2021 funding round of $1 billion from Sony Group Corporation and other investors.

This time around, Kenichiro Yoshida, chairman, president and CEO of Sony Group Corporation, said in a statement that Epic Games' expertise, alongside Sony's technology, will benefit Sony's creation of digital fan experiences in sports and its "virtual productions."

"As we reimagine the future of entertainment and play we need partners who share our vision. We have found this in our partnership with Sony and Kirkbi," Epic Games CEO Tim Sweeney said in a statement. "This investment will accelerate our work to build the metaverse and create spaces where players can have fun with friends, brands can build creative and immersive experiences and creators can build a community and thrive."

Earlier this month, The Lego Group partnered with Epic Games to develop a safe metaverse environment for children. The space will cater to kids of all ages and gives Lego an entry to the metaverse without relying on platforms popular among older users like Decentraland and Roblox.

"Kids enjoy playing in digital and physical worlds and move seamlessly between the two," Niels Christiansen, CEO of The Lego Group, said in a statement at the time of the announcement. "We believe there is huge potential for them to develop life-long skills such as creativity, collaboration and communication through digital experiences. But we have a responsibility to make them safe, inspiring and beneficial for all."

As Epic Games concentrates on building out the metaverse, retail brands are eager to experiment with the concept, too. Last month, brands like DKNY, Tommy Hilfiger and Esteé Lauder participated in Metaverse Fashion Week hosted by the virtual social platform Decentraland. Meanwhile, brands and retailers like Forever 21, Nike and Gucci are experimenting with Roblox, which is popular among tweens.

However, it's unclear exactly how brands should engage with the metaverse and whether it's guaranteed to bring in younger consumers. In a February report, Gartner discouraged companies from investing in one specific element of the metaverse because adoption of its technology is early and disconnected.

A recent survey from Piper Sandler found that nearly half of teenagers are unsure of or not interested in the metaverse, and only 5% of the teens who own a virtual reality device use it daily. Experts also warn that brands may not be able to shield themselves from objectionable content in the metaverse.