Legendary to acquire Epic Games

Talks underway for 'Gears of War' developer

Legendary may be getting Epic.

Private equity-backed film financier Legendary Pictures is in negotiations to acquire Epic Games, the North Carolina-based developer of videogames including “Gears of War.”

Multiple sources close to the companies confirmed that talks are under way, though execs at both Legendary and Epic declined to comment.

News comes less than two weeks after Legendary topper Thomas Tull resigned from the board of Brash Entertainment, the licensing-focused vidgame publisher he co-founded (Daily Variety, Oct. 13). Talks to buy Epic indicate that Tull remains interested in the videogame space even after leaving Brash out of frustration with its performance.

If the deal is consummated, Legendary would be the first film financing company to start investing money in videogames. Several studios, including Warner Bros., where Legendary is based, have recently started spending their own money on games.

Tull has undoubtedly gotten to know Epic since Legendary came aboard to co-finance New Line’s “Gears of War” movie earlier this year.

“Gears” is Epic’s most successful game. It has sold more than 5 million units since its 2006 release; a sequel, slated for next month, is expected to perform even better. Company’s other successful franchise is “Unreal Tournament.”

Beyond its own titles, however, Epic, is best known in the videogame industry for Unreal Engine, a piece of backend technology that’s widely used by different developers.

Licensing income from Unreal Engine is one of Epic’s primary sources of revenue and would make it a much more reliable income provider for Legendary than other videogame developers that are entirely hit-dependent.

(Michael Fleming contributed to this report.)