TCEHY Tencent Holdings Ltd (PK)

By Sarah E. Needleman and Katie Roof 

Epic Games Inc., the creator of the smash-hit videogame "Fortnite," is valued at almost $15 billion as part of a major new investment round, according to people familiar with the matter.

The company Friday said it received an investment of about $1.25 billion. Epic didn't say whether it raised new capital or whether earlier holders sold existing shares. At least some of the investment is coming from sales of shares by existing holders, the people said.

Epic had no further comment on the investment.

The new investors include traditional venture-capital firms KKR, Kleiner Perkins, and Lightspeed Venture Partners, as well aXiomatic, which owns the competitive-videogaming organization Team Liquid. Epic already counts China's Tencent Holdings Ltd. and Walt Disney Co. as investors.

"Fortnite" vaulted to the top of the more than $100 billion industry by putting a cartoonish spin on the classic shooter genre. In its "Battle Royale" mode, 100 players compete to be the last team or player standing, instead of players endlessly roaming a battlefield offing each other.

Epic released the mode free, but makes money by selling virtual costumes and dance moves for the game's characters. The company has raked in more than $1 billion in revenue from these so-called microtransactions over the past year, according to estimates from SuperData.

The game's popularity has fueled a cottage industry of videogame tutors and knock-off modes in new games from bigger rivals such as Activision Blizzard Inc. In its earnings report this week, Microsoft Corp. name-checked "Fortnite" as a contributor to strong earnings in its gaming division.

"Fortnite" had attracted more than 125 million players as of July, according to Epic. After conquering basements and living rooms, the company is eyeing a deeper move into competitive gaming, known as esports. Epic recently pledged $100 million in "Fortnite" tournament prizes.

"They have built a sustainable business," said Jefferies analyst Tim O'Shea. While "Fortnite" is no longer "as hot as it was in the summer, [Epic is] still doing really well. No doubt people will be playing this game for years to come."

Write to Sarah E. Needleman at sarah.needleman@wsj.com and Katie Roof at katie.roof@wsj.com

(END) Dow Jones Newswires

October 26, 2018 14:51 ET (18:51 GMT)

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