EPIC GAMES

Tim Sweeney started making games in his parents' basement in Potomac, Maryland when he was a teenager. He founded Potomac Computer Systems in 1991 at age 20 and shipped his first game, ZZT, as shareware.

The company became Epic MegaGames, then just Epic Games. They built Unreal Engine in the mid-1990s, released the original Unreal in 1998, and the Gears of War franchise put them on the AAA map.

But it was Fortnite — originally a cooperative survival game that pivoted to battle royale in 2017 — that turned Epic from a respected game studio into a cultural phenomenon worth $31.5 billion.

Epic makes money three ways: Fortnite (one of the highest-grossing games ever), Unreal Engine (the game engine that powers half the gaming industry plus Hollywood VFX), and the Epic Games Store (their attempt to break Steam's distribution monopoly). Fortnite alone generated over $26 billion in cumulative revenue by 2023.

Unreal Engine is licensed to developers — free to use, 5% royalty after $1 million in revenue. Epic also took on Apple in an antitrust lawsuit that shook the entire app store economy.

Fortnite (battle royale and creative platform), Unreal Engine 5 (game engine and real-time 3D creation tool), Epic Games Store (PC game distribution), Rocket League (acquired via Psyonix), Fall Guys (acquired via Mediatonic), Epic Online Services, MetaHuman Creator

Epic is playing the long game: use Fortnite revenue to subsidize Unreal Engine dominance and Epic Games Store market share. Give Unreal away free to hook developers.

Give games away free on the Store to hook players. Outspend Steam on exclusives.

Sue Apple to open up mobile distribution. The strategy is aggressive, expensive, and requires patience — basically, lose money everywhere except Fortnite until the other bets pay off.

The Apple lawsuit. Epic deliberately violated Apple's App Store rules by adding direct payment in Fortnite, got kicked off the App Store, and sued Apple in a case that went all the way to the Supreme Court.

The legal battle cost hundreds of millions and kept Fortnite off iOS for years. The result was mixed — Epic won on some antitrust points but lost on others.

Meanwhile, the Epic Games Store has struggled to turn a profit despite giving away hundreds of free games and taking only a 12% cut versus Steam's 30%.

Sony, KIRKBI (Lego family), Tencent (40% stake), KKR, BlackRock, Fidelity, Disney ($1.5B strategic investment)