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Epic's Mike Capps on opening the door to Tencent and its 'unparalleled expertise' in China


Epic Games announced yesterday it sold a minority interest in the company to China's Tencent Holdings. It was the first time in 21 years the Unreal Engine creator and Gears of War and Infinity Blade developer accepted outside investment.

"We've always taken pride in being an independent developer of fun games and cutting-edge technology," Epic Games president Mike Capps said in prepared statements about why the company took a major investment deal after such a long time. "We want to assure our players and licensees that this transaction only brings more to the table in terms of what we can offer them."

"Epic has worked with Tencent for years through our Unreal Engine licensing relationship," Capps added. "They have fantastic inroads into attractive markets and platforms, and Epic has been carefully weighing its options for the next generation of games for quite some time. We can learn a lot from Tencent, and strategically aligning with them was an easy decision."

Capps explained that Epic will maintain all intellectual property rights and maintain the Unreal Engine licensing business. He wouldn't comment if this is just the prelude to a full buyout. Capps makes no secret of Tencent being a long-term partner, but notes Epic enjoys its independence.

Even if a full buyout were to occur in the next few years – speculated to require over a billion dollars – it's unclear if Tencent would mess with Epic's secret sauce. Feedback we've received from those close to Tencent's Riot Games, developers of the very lucrative League of Legends, is that the parent company has kept a hands-off approach due to the company's success. Such relationships do rarely exist in this industry, with Blizzard being the poster child for leniency by a parent company.

Epic and Tencent's current relationship is about the Chinese company navigating its new partner through lucrative opportunities in a new land, an experience Epic has had some mixed results in working before the deal.

"As more of China's population is becoming connected to the internet, Tencent's business is growing in all of these areas," said Capps.

Capps sees plenty of opportunity in China, with Epic's Unreal Engine powering mobile, browser-based games, MMOs, and more.

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