Does Sony’s investment in Epic Games shape the future of next-gen console success?
The UE5 tech demo that I spoke about in last month’s blog has set the internet on fire. With the demo launching on PS5, Sony managed to secure something of a major coup for their new console which finally launches this autumn alongside the new XBOX console. Sony’s subsequent investment of $250m USD to secure a minority stake in Epic Games, developer of Unreal, which powers so many of the games industry’s biggest titles, has certainly raised eyebrows. So, what does this mean for other consoles, specifically the that will fight for dominance in the coming months and years?
Tim Sweeney, CEO of Unreal has seemingly scotched any suggestion that the deal might somehow favour the PS5 and disadvantage to Microsoft’s hopes for its own new console XBOX Series X. ‘There’s no secret deal’ Tim Sweeney tweeted last week, further stating that ‘Serious investment discussions followed from the Unreal Engine 5 demo we showed on PlayStation 5. I guess they liked it!’.
SONY’S MINORITY STAKE IN EPIC GAMES
Any notion that this represents some kind of ‘golden handcuffs’ deal that might tie Unreal exclusively to the future of PS5 should be viewed with some scepticism. Such a strategy would be foolish for Epic who have much broader ambitions outside of the games Industry. Indeed, Epic have already confirmed that the deal will still allow them to publish to other platforms. In the grand scheme of things, Sony’s investment gives them only a relatively small minority stake compared to other investments the developer has received from games developers in recent years. Although an enormous sum of money, $250m USD currently represents only a 1.4% stake in Epic Games. By comparison, Tencent still retain a 40% stake in the developer following an investment that it made in 2012, which it acquired at the time for ‘only’ $330m USD. With Epic now valued at a whopping $17.86 billion USD, Tencent’s investment has proved to be an extremely savvy one that not only underpins the value of Epic’s Unreal engine to the games industry but hints at the Unreal’s broader potential to other sectors.
EPIC’S RISING STOCK
The rise in Epic’s stock value is a reflection of their growing ambitions (and success) for Unreal’s application outside of the games industry. With Sony’s own portfolio of entertainment assets extending to Music, Film and TV it makes perfect sense for Sony to make this investment now. As Tim Sweeney mentioned when the announcement was made “Sony and Epic have both built businesses at the intersection of creativity and technology, and we share a vision of real-time 3D social experiences leading to a convergence of gaming, film, and music.
It’s the last sentence that is most interesting. Historically, console developers have always been fiercely protective of their tech, taking a ‘walled garden’ approach to their platforms, usually resisting any form of cross-play compatibility with other hardware. Epic’s own success with the juggernaut that is ‘Fortnite’ has enabled it to push for its belief in more open platforms, paving the way for cross-play functionality between competing consoles. Indeed, Fortnite was one of the first games to allow players on a PS4 to compete with their friends experiencing the same game on an XBOX One. With 350 million registered players and still one of the biggest games on the planet nearly three years after its launch, Fortnite’s success has given Epic a huge say in how games should be played in the future. Thanks to this, other games including ‘Dauntless’, ‘Paladins’ and ‘Smite’ can also now be played as cross-platform experiences.
Sony’s investment in Epic shouldn’t be viewed as anything that will give them an immediate advantage in the upcoming ‘console wars’ that the launch of the next-gen consoles will inevitably bring. Epic’s push for cross-play should be viewed as evidence of this. Technologically agnostic, Unreal continues to be at the centre of many leading XBOX exclusive games including ‘Sea of Thieves’, ‘Everwild’ and other forthcoming games that the REALTIME team have used the games engine to create Cinematics and VFX for.
UNREAL’S LONG TERM PLANS
Instead, the investment should be viewed as a mark of the level of confidence that Sony has in shaping the future of entertainment outside the remit of games alone. With Fortnite recently hosting a ‘virtual concert’ by travis Scott that reached 27 million viewers, it’s easy to see how such an experience might positively impact its music business. Similarly, with Unreal being used more and more as a VFX tool for Film & TV, this will also be of huge interest to their Sony Pictures division. And this is just the tip of the iceberg. Asides from its ground breaking graphical capability, the tech could be used as the building blocks for a metaverse, Tim Sweeney’s dream for a shared digital space where we ‘live, work and play’ that may well turn Sweeney into a real-life James Halliday, the creator of the OASIS in Ernest Cline’s ‘Ready Player One’.
Sony’s investment probably won’t shape the outcome of who will likely succeed in the next generation of consoles, but it might well be an indication of new experiences to come.
REALTIME have experience in working with the Unreal Engine in all areas of our studio including TV VFX and Automotive. So, if you’re looking for an experienced partner who specialises in creative solutions give me a shout on [email protected]