Epic Games Raises $2B to ‘Build the Metaverse’—Will It Use Crypto or NFTs?

Epic Games, the firm behind the smash hit game Fortnite and the widely used Unreal Engine, today announced that it has raised $2 billion in funding—with ambitions to “build the metaverse.”

The funding round was split evenly between previous investor Sony and newcomer KIRKBI, the company behind The LEGO Group, with each firm investing $1 billion at a post-money valuation of $31.5 billion. Epic Games founder and CEO Tim Sweeney remains in control of the private company.

“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,” said Sweeney, in a release.

Epic Games last raised funds a year ago, announcing a $1 billion raise in April 2021 at a valuation of $28.7 billion. That round also included $200 million from Sony. Last week, The LEGO Group announced a partnership with Epic Games to build out a kid-friendly, LEGO-themed metaverse world.

What is the metaverse? It’s the vision of a future, more immersive internet in which users interact in 3D spaces using avatars. The metaverse is believed to be a revolutionary upgrade that people will use to shop, socialize, play games, and even work, and hype around the metaverse has swelled in recent months after Facebook rebranded its parent company to Meta.

However, “metaverse” is still a nebulous term. For builders in the crypto space, the metaverse signals an array of interoperable, overlapping environments built on blockchain networks, using NFTs to represent user-owned items like avatars, virtual land, apparel, and more.

But often when major tech and gaming companies announce their aspirations for the metaverse, it’s unclear whether a crypto element is included. For example, Facebook’s vision of the metaverse could be a closed ecosystem, while other announcements around the metaverse may simply be focused on tapping VR and AR technology for immersive experiences.

Epic Games has gradually built and acquired much of the technology needed to bring its metaverse vision to life. The firm’s Unreal Engine is widely used across the video game industry, as well as for film, TV, architecture, and more, plus it owns studios focused on lifelike human avatars, 3D item and environment scanning, online communication, and more.

Building on blockchain?

However, it’s unclear whether Epic Games plans to tap a blockchain network, NFTs, or cryptocurrency for its metaverse plans. The company has discussed its philosophy towards the budding metaverse in the past, and has appeared open to NFTs, but has not specifically said whether its metaverse plans will be based on blockchain.

In November, Sweeney said at a conference in Seoul that the metaverse “has the potential to become a multi-trillion-dollar part of the world economy.” He also said that it shouldn’t be owned by a single company, echoing Epic’s legal battles against Apple and Google for their respective closed, “walled garden” mobile app ecosystems.

“The metaverse is a term like the internet,” said Sweeney in Seoul. “No company can own it.”

That kind of open ethos aligns well with that of crypto builders, such as Yat Siu, co-founder and executive chairman of leading metaverse investor Animoca Brands. Siu told Decrypt last fall that he views Facebook and Tencent as “threats” to an open, interoperable metaverse, and that Animoca is “kind of in a hurry” to bring the metaverse to life before tech giants take over.

That said, the free-to-play game Fortnite—which some view as a proto-metaverse—currently has its own closed ecosystem. In-game items like character and weapon “skins” cannot be resold or used in other games, which are potential benefits of NFT-powered experiences. You can use your items to play the game on multiple platforms, but only within Fortnite.

However, Epic Games is more open to NFT-based games than its primary PC gaming marketplace rival, Steam. In October, after Steam banned the sale of games featuring NFTs or cryptocurrency integrations, the Epic Games Store announced that it would welcome such games that follow its regulations.

“Epic Games Store will welcome games that make use of blockchain tech provided they follow the relevant laws, disclose their terms, and are age-rated by an appropriate group,” Sweeney tweeted. “Though Epic’s not using crypto in our games, we welcome innovation in the areas of technology and finance.”

Sweeney spoke highly of blockchain networks in 2017, telling VentureBeat that there are “incredibly powerful ideas” brewing in the space, and that he was keen on the potential of Ethereum as a smart contract platform. However, he told Decrypt in 2019 that he was done speaking about blockchain, given the rampant speculation that followed earlier comments.

“We’ve been looking at the kinds of publicity pickup that have occurred from our past (non) announcements on cryptocurrency and decided it would be best to not do further interviews,” he said at the time. “[It’s] about the follow-on and collateral damage as a zillion-dollar industry rife with speculation and hucksterism reacts to frank answers.”

When Epic Games announced its last funding round in April 2021, Decrypt inquired about its plans to tap blockchains for the metaverse. A representative told Decrypt that the company didn’t have further comment on the subject, but pointed to an interview that Sweeney conducted with VentureBeat in January 2021.

In the interview, Sweeney discussed the need for metaverse ecosystems to be built to open standards. He described blockchain technology as “an indisputably neutral, distributed way of expressing individual ownership.” However, he suggested that current blockchain networks do not have enough throughput to handle large-scale metaverse gaming experiences.

“We’re far from any sort of blockchain technology that would achieve that,” he said. “Right now, you have a lot of serial single-threaded blockchain implementations. And what we need is a massively parallel blockchain implementation that is regionalized. So that you can have really fast interactions that are definitive and optimized for your geography.”

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