Weekly News Digest #16

Epic Games raises $2B from Sony and KIRKBI

US-based games developer, publisher, and creators of Unreal Engine Epic Games has closed a $2B round at $31.5B post-money equity valuation. The funding came from Sony Group Corporation and KIRKBI, a family-owned holding behind The Lego Group — each of the investors contributed $1B. The current equity valuation of Epic Games is ~10% higher than that of the last year when the company secured a $1B round ($200m of which came from Sony) at a $28.7B valuation.

The investment announcement came a few days after Epic Games shared the news about its long-term partnership with The Lego Group. Together, the companies plan to build a family-friendly metaverse, which will be a safe place for kids to explore their creativity and shape as creators. For The Lego Group, this is the opportunity to learn from the success of Fortnite, the game which, among others, has defined today’s common idea of the metaverse. Moreover, Fortnite’s audience is famously quite young, which is yet another similarity between Epic Games and Lego.

Now, Sony has also joined the round, and will support the metaverse initiative with its technology and expertise. Being a long-standing partner and investor of Epic Games, Sony now has around a 5.5% stake in the company. As one of the key platform-holders of the gaming market, Sony clearly understands the success of Fortnite, but there is probably more than that. Unreal Engine 5 is one of the most anticipated technologies in the industry. If, as a result of this partnership, Sony could collaborate with Epic Games on developing new games on Unreal Engine 5, or get some kind of exclusive technical support, this could be a huge advantage not only for PlayStation, but also for Sony Pictures, which uses Unreal Engine for its production process. The transmedia possibilities here are thrilling as well.

This week, Epic Games has also invested an undisclosed sum in Brazil-based game development studio Aquiris. Founded in 2007, Aquiris is best known for the UGC gaming platform Wonderbox, arcade racing Horizon Chase, and Looney Tunes World of Mayhem, developed with Scopely. Alongside the investment, Epic Games’ head of third-party publishing Hector Sanchez joins Aquiris’ board of directors. This is the second deal Epic Games has announced this year. Back in Mar’22, the company acquired US-based online record store and music community Bandcamp for an undisclosed sum.

ReKTGlobal to be acquired by Infinite Reality for $470m

US-based provider of tech and services for metaverse developers Infinite Reality has entered into an agreement to acquire US-based esports company ReKTGlobal for $470m paid fully in stock. The transaction will be closed after it receives the approvals from regulatory bodies and ReKTGlobal’s shareholders.

Though Infinity Reality has a $2B valuation, which is 4x times higher than that of ReKTGlobal, the deal is more like a merger, rather than an acquisition. As a result of the deal, not only the resources but also the management will be combined between the two companies to lead Infinite Reality.

With the deal, Infinite Reality greatly increases its presence in the esports industry. Founded in 2017, ReKTGlobal helps its clients with event organization, content creation, and influencer management; and also provides digital media support, as well as marketing and fan monetization services.

Infinite Reality also gets several esports teams, including Team Rogue and Royal Ravens, as well as ReKTGlobal’s six offices across the USA, UK, and Germany. It also gets all the companies ReKTGlobal acquired over the course of the last years: marketing and media company Greenlit Content, digital media agency Fearless Media, monetization platform FullCube, and social media monetization and talent development company TalentX.

At the beginning of the year, Bloomberg reported that ReKTGlobal was in talks with special purpose acquisition company Bull Horn Holdings Corp to go public via de-SPAC transaction. However, the deal was eventually suspended. Eventually, the company chose to merge with Infinity Reality because the latter has an experienced team with relevant expertise, traction, and technology to enter the emerging metaverse market.

The deal became the second-largest esports transaction of the year after the $1B acquisition of ESL Gaming by Saudi-Arabia based company Savvy Gaming Group.

We want to thank Hiro Capital and The Games Fund for supporting this digest.

MERGERS & ACQUISITIONS

Hong Kong-based blockchain, NFT and metaverse company Animoca Brands has acquired France-based multiplatform games developer Eden Games which is mostly known for Test Drive Unlimited, and Gear Club franchises, for an undisclosed sum. Eden Games will focus on creating titles for REVV Motorsport. In addition, Animoca revealed its plans to acquire a 70% stake in France-based indie game developer Darewise for an undisclosed fee. The studio is currently working on metaverse-like blockchain online game Life Beyond.

US-based play and entertainment company Hasbro (NASDAQ: HAS) has announced the acquisition of D&D Beyond, a digital toolset and game companion for the Dungeons & Dragons game with  almost 10m registered users, from US-based fan platform Fandom. The total cost of the deal is $146.3m paid fully in cash. The acquisition will let Hasbro increase its presence in tabletop entertainment as well as grab experienced staff for the Wizards of the Coast project.

Sweden-based gaming giant Embracer Group (SSE: EMBRAC B) acquires Canada-based PC&console games developer Beamdog via its subsidiary Aspyr Media. Beamdog is known for bringing old games like Baldur’s Gate and Planescape: Torment to modern platforms. As a part of the deal, Aspyr will also acquire the studio’s first original game MythForce. Beamdog will focus on developing new original titles while continuing to bring back popular games of the past.

VENTURE FINANCING

China-based open-source game engine maker Cocos Technology has raised $50m in Series B funding. CCB Trust, GGV Capital, and Agora have participated in this round. The funding will go ​​towards improving the technology behind the open-source engine.

China-based blockchain-powered company Directive Games has raised $20m in funding. Delphi Digital and Three Arrows Capital led the round with participation from BITKRAFT Ventures, Defiance, and others. The proceeds will go towards the development of an unannounced 4X strategy game on the blockchain.

UK-based blockchain game developer First Light Games has raised $5m in Seed funding in a round co-led by Animoca Brands and Mechanism Capital, with participation from Dragonfly Capital, DeFiance Capital, and others. The funding will go towards further development of the upcoming play-to-earn mobile title Blast Royale, expanding the team, and growing the game’s community.

US-based Web3 developer and publisher Digital Insight Games has raised $7.5m in Series A round led by Hivemind Capital and Griffin Gaming Partners, with participation from Hunt Technology Ventures, and others. The funding will be used to accelerate the company’s marketing, development, and publishing capabilities.

Sweden-based tech company Coherence has raised $8m in the latest funding. The round was led by Griffin Gaming Partners with participation from others. The funding will be used toward the development of the company’s platform for low-latency multiplayer network technology for game developers.

US-based blockchain-powered company Crypto Raiders has raised $6m in the funding round co-led by DeFiance Capital and Delphi Digital, with participation from GuildFi, Merit Circle, and others. The proceeds will support the development of Crypto Raiders  blockchain RPG with NFTs.

Singapore-based monetization platform Coda Payments has raised $690m from Smash Capital, Insight Partners, and GIC. The investors have also acquired minority stake from the previous shareholders of the company. The proceeds will support cross-border payments and alternative app store initiatives.