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Sony (SNE) Ups the Game With Stake Purchase in Epic Games

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Sony Corporation invested $250 million for a minority stake in Epic Games. Headquartered in Cary, NC, Epic Games is a leading entertainment company that provides 3D engine technology. It operates Fortnite, the world’s largest game with more than 350 million accounts and 2.5 billion friend connections.

The deal, subject to customary closing conditions, will enable Sony and Epic to stretch their collaboration across Sony’s portfolio of entertainment assets and Epic’s digital ecosystem. The move strengthens their mutual goal to promote the state-of-the-art in technology, entertainment and online services. Irrefutably, this association makes Sony a prominent empire in the gaming industry.

Sony and Epic have worked together for years. Their relationship took the spotlight in May when Epic showcased the Unreal Engine 5 graphics on the PlayStation 5. This transaction is important for Sony because it needs partners in the impending console combat. Later this year, Sony plans to launch the PlayStation 5, its first major game console release since 2013, in competition with Microsoft’s (MSFT - Free Report) Xbox Series X.

That said, the latest deal does not mean Epic titles will now be exclusive to Sony consoles, as the studio will still be able to publish games on other platforms. Sony looks forward to collaborating with Epic across all of its assets in entertainment. The Japan-based company has subsidiaries such as Sony Pictures and Sony Music that it might want to tie closer to its PlayStation division’s games using Epic’s expertise.

In May, Sony announced several changes to the Sony Group’s organizational structure to evolve individual businesses and leverage the diversity of its business portfolio. Effective Apr 1, 2021, the current Sony Corporation will change its name to Sony Group Corporation. The company is concentrating on the premium segment of the branded products market to maximize growth. It has achieved sales growth in the Imaging & Sensing Solutions and Music segments. It enhanced profitability in the Electronics Products & Solutions segment.

Due to uncertainties stemming from the COVID-19 pandemic, Sony has been unable to determine its future earnings. The company expects aggregate operating income for fiscal 2020 to be at least 30% lower than the level achieved in the previous fiscal.

Sony’s shares have returned 19% compared with 19.2% growth of the industry in the past three months.



Sony currently carries a Zacks Rank #3 (Hold).

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T-Mobile has a trailing four-quarter positive earnings surprise of 19.4%, on average.

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