The company behind the Fortnite video game has been valued at almost $15bn (£11.7bn) after receiving a $1.25bn cash injection led by the private equity firm KKR.

The game, which has been described as a cross between The Hunger Games and Minecraft, has proved hugely popular since its release last year by Epic Games.

The game is free to download, making money by charging players for costumes and other embellishments in virtual in-game currency.

Fortnite, which in “battle royale” mode involves 100 characters fighting for survival on a dystopian island, has been played by more than 125 million people, making it the world’s most popular video game. It has also sparked controversy, however, with parents complaining of violent themes and teachers saying it distracts children from their homework.

The value of Epic, which is based in North Carolina and counts China’s Tencent Holdings and Walt Disney among its early investors, has soared from an estimate of $4.5bn in May. It was valued at just $660m in 2012 when Tencent bought a 48% stake.

The company is run by its founder and chief executive, Tim Sweeney, who set it up in his parents’ basement in Maryland in 1991.

Two rival video game makers, Activision Blizzard, the creator of Call of Duty, and Take-Two Interactive, which makes Grand Theft Auto, lost billions of dollars in market value this year as investors worried about the impact of Fortnite, particularly its ability to get extra cash from players for in-game purchases. Fortnite operates a currency called V-Bucks.

A new wardrobe is put up for sale on the game’s storefront each day, with garments costing a few pounds apiece. Players can dress their digital avatar as a ninja, a medieval knight, an Olympic skier, or a skeleton, for example, o stand out from the crowd.

Sweeney has said the company “wants to have a direct relationship with our customers on all platforms where possible ... Physical storefronts and middlemen distributors are no longer required.”