On July 27, 2019, Fortnite celebrated its second birthday by hosting a huge extravaganza, fittingly dubbed as the Fortnite World Cup, and gave away millions of dollars in prizes. (By some reports, the business gave away over $30 million in prizes). Kyle”Bugha” Giersdorf, a 16-year-old from Pottsgrove, Pennsylvania won $3 million and the bragging rights of getting Fortnite’s first World Cup champion.
Fortnite is a free-to-play video game series at a post-apocalyptic, zombie-infested world. It was created by Tim Sweeney and released through Epic Games Inc. at July 2017. Fortnite has been a huge success, even though the game’s format is not entirely unique; there’s a prevalence of shooter-type games from the industry. There are variations to its free-to-play business model, but everyone can play with a fully functional game free of cost.
Fortnite’s publisher, Epic Games, is currently engaged in a legal battle with both Apple and Google over the terms of both companies’ app shops, and continues to be pulled from the Apple App Store and Google Play Store. More details are below in the “Key Challenges” section.
This free-to-play business model set Fortnite apart from its peers and has turned out to be among the reasons for its achievement. In its first 10 weeks, it gathered an audience of 125 million gamers and netted $1.2 billion in revenue. As soon as the Fortnite App launched on iPhone on April 1, 2018, it allegedly made $2 million per day from gamers on Apple Inc.’s (AAPL) iOS. While other games have netted $1 billion in the first year after their launch, Fortnite was the very first game to create such a massive amount of revenue as a match that is offered at no cost by its programmer.
KEY TAKEAWAYS
- Fortnite is a free-to-play video game set in a post-apocalyptic, zombie-infested world that was created by Tim Sweeney and released through Epic Games Inc. in July 2017.
- In 2019, Fortnite brought in revenues of $1.8 billion.
- While most console releases make money from selling a hard copy or digital version of the game itself, Fortnite’s revenue comes entirely out of microtransactions.
- In 2019, Fortnite brought in revenues of $1.8 billion, based on information reported by SuperData Research, a Nielsen Company. As of March 2019, the CEO of Epic Games, Tim Sweeney, reported that there were 250 million Fortnite players.
Fortnite’s Business Model
There are two games that fall beneath the Fortnite umbrella: Fortnite: Battle Royale, and a newer variant of the game, called Fortnite: Save the planet, which was released in a paid-for early access version in July 2017. Even though a free-to-play variant was rumoured, it’s yet to become accessible. Back in Fortnite: Battle Royale, 100 players fall onto a storm-torn island and survive, fight, or construct their way via a shrinking map in order to be the last one standing.
Fortnite is a multi-platform video sport, therefore it can be performed on computers, mobile telephones, or consoles, such as Sony’s (SNE) PS4, Microsoft’s (MSFT) Xbox One, and Nintendo’s (NTDOY) Shift device. The sport is played, watched, and spoke about obsessively by teens, actors, and athletes alike, that’s the type of marketing muscle that allows Fortnite to make money, despite being free to perform with.
While many popular shooting games, for example Activision Blizzard’s (ATVI) Call of Duty franchise, try to mimic fact with graphic violence, even Fortnite sets itself apart with its inclination towards comic mischief and customizable whimsy. While gamers are competing for the coveted”Victory Royale,” they’re also given the choice to team up with another in the”Save the World” version of the game.
Fortnite fans not only can play together, but they’re also able to watch together. On March 14, 2018, a match of Fortnite attracted 630,000 concurrent viewers on Twitch TV, Amazon’s YouTube-like support for seeing competitive gaming streams, shattering the previous record of 388,000. Within an October 2019 occasion hosted by Fortnite, there have been over 7 million concurrent viewers across Twitch, Twitter, and YouTube.
How Can Fortnite Make Money?
Ranked by February 2020 earnings, Fortnite was the fourth-highest grossing video game on consoles, based on SuperData Research. Thus, what is the secret behind Fortnite’s achievement? How have they managed to make money by giving their product away free-of-charge? While most console releases make money from selling a hard copy or digital version of the game itself, Fortnite’s revenue comes completely out of microtransactions.
The monetization takes place when the player wants to acquire developments, dubbed”costumes” and”skins,” which they have to buy. While consumers can continue to play Fortnite for free, a great majority of players pay for all these ancillary products which generate vast sums of earnings for Epic Games. The game also contains a special feature called the”Fight Pass,” which costs about $9.50 for a quarterly subscription.
Battle Pass creates the majority of Fortnite’s revenue. The quarterly fee gives the purchasing player exclusive use of the game’s system updates–like changes to the map and character attributes –which a free player does not get. Furthermore, it allows the player to purchase the game additions for a more affordable price than if they had been to purchase them individually.
In addition, Fortnite players also have the choice of spending money on in-game money, known as”V-Bucks,” that can be employed to make in-game purchases. Even though there are special bargains that allow players to buy higher quantities of the in-game money, the exchange rate is approximately one U.S. buck to 100 V-Bucks.
Players can’t use V-Bucks to purchase whatever will actually affect their performance in this sport. Rather, the money is used to purchase cosmetic skins, skins, and pre-released game styles, which range from 200 to 2,000 V-Bucks (or $2 to $20). Many accessories in the Fortnite shop can be found on a limited-time basis, prompting players to buy coveted items until they vanish from the virtual shop.
The creators of Fortnite have managed to leverage the idea of exclusivity and unite it with an enjoyable user experience that integrates a social element. This has been shown to be a winning combination. Playing with Fortnite free of charge could be fun for a while, but for most users, whatever sense of achievement they get from just playing the game may fade. By purchasing costumes, skins, Fight Passes, and V-Bucks, players can enhance their user experience.
This appears to add to their sense of accomplishment and compels them to keep on playing. As an instance, once a participant buys a Battle Pass, and is subjected to the extra perquisites that it offers, they are not likely to go back to enjoying the free version. Aside from the psychological rewards of experiencing something that is exclusive, the possibility of releasing more content for their avatar appears to produce enjoyment, and users are prepared to continue paying for this.
Has Free-to-Play Impacted the Gambling Industry?
Fortnite turned into a nationwide and global phenomenon so fast that business leaders, for example Take-Two Interactive Inc. (TTWO), and Electronic Arts Inc. (EA), have not been in a position to offer much in the means of competition.
For its game,”Call of Duty: Black Ops 4,” the company Blizzard Activision announced the development of a Fortnite-style match style. Even though the video game giant seemed to be following in Fortnite’s footsteps, it stuck to a recognizable business model. Call of Duty was priced at $59.99 and offered in-game buys. This suggests that many in the analyst community attribute Fortnite’s success to its revolutionary game style rather than its business model.
So, as long as Fortnite continues to be innovative, then it must continue to experience achievement. However, what happens if that spark of creativity wears out? Imagine if the launch of new skins, new dances, and new attributes does not translate to the anticipated amount of microtransactions which are the foundation of Fortnite’s profitability? Epic Games seems to be careful of such an outcome, and it has made attempts to diversify the Fortnite experience in order to keep ahead of its competition.
Key Challenges
Although Fortnite has been incredibly popular over the past couple of years, there is evidence that the occurrence is fading somewhat. Especially, viewership for competitive Fortnite games has diminished. In addition, data for the highest-earning games in the month of June 2019, released by Superdata, reveals a significant drop in Fortnite’s gains concerning both its past performance as well as its rivals.
The key challenge for any item is to continue to keep its existing customer base, while also hoping to attract new clients. In the gaming business, this is especially true given the erratic nature of the players, mostly younger with limited attention spans. The consensus appears to be that Fortnite lacks variety, particularly when in comparison to its most important competitors.
While it has slipped, Fortnite is still considered to be a cash cow for Epic Games. Whether it has been a consistent moneymaker moving forward will largely depend on whether it could be successful in adapting to a fast changing marketplace. Epic Games hasn’t indicated it will embrace a more conventional business model.
A significant fight started between Apple and Fortnite’s founder, Epic Games, beginning on August 13, 2020 when Epic Games released a version of Fortnite on the Apple App Store that enabled users to make in-game buys without giving Apple the 30 percent Apple generally takes from micro-transactions. Apple pulled Fortnite in the App Store and Epic Games sued Apple exactly the exact same day, stating Apple’s payment method violated antitrust legislation. Later on that same day, Google pulled Fortnite in the Google Play Store and Epic Games responded with a similar suit. Fortnite is still available on Android devices, just not through the Google Play Store. Apple’s control over its program store had been under investigation by European authorities, the U.S. Justice Department, and U.S. state attorneys general.12 On August 28, Apple prevented Epic Games from creating or upgrading apps on Apple platforms by suspending Epic’s programmer account, and on September 8, 2020, filed a breach of contract lawsuit against Epic Games.
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