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Post written by:

Laurent Michaud

Consultant, Telecom Business Unit / Digital Economic Development & Creative Industries

The developer Epic Games, who gave the gaming world the widely used Unreal Engine and the game Unreal Tournament, its most famous game until recently, is currently enjoying massive success with its game Fortnite.

Fortnite is a third-person multiplayer multiplatform shooter (PC, console, smartphone) and has generated over 1 billion USD for its developer since launching in October 2017 to May 2018, with 296 million USD in April alone and 130 million USD in profit. By mid-2018, the game was making 2 million USD in revenue per day on iOS alone.

The amount of these revenues is all the more astonishing as the game is free. Its revenues come from micro-transactions or purchase of extra cosmetic content. A survey carried out by LendEDU between 30 May and 5 June among a thousand Americans revealed that 68.8% of Fortnite players claim to have already spent money on in-game purchases. The average amount spent is 84.7 USD.

According to SuperData estimates, Fortnite could generate 2 billion USD in 2018. Epic Games could be valued between 5 to 8 billion USD.

The game’s success is no fluke. The studio developed the title over many years. Its gameplay evolved, inspired by the best Battle Royale types of game already available on the market (especially H1Z1 and PUBG), In addition to it being a Free-to-play game, there are other reasons for its success.

  • Its graphics are very cartoon-like, unlike hyperrealism, which is more expensive and less inclusive. Parents of young children are reassured by graphics that closely resemble cartoons.
  • The gameplay is very polished: it’s a multiplayer PvP (player vs player), which is fun and both cooperative and competitive.
  • The in-app purchases do not create unfairness among players. In other words, the game isn’t “pay to win”, which is where the transactions give a player an advantage, so whoever spends the most becomes the best.
  • The game is multiplatform (PC, consoles, smartphones, tablets).
  • The matches are short (about 15 minutes).
  • It is quick and easy to pick up, and the matches are fun to watch.

In addition, 40% of the capital of Epic Games is owned by Tencent, which invested 330 million USD in the US company in 2013. Tencent is currently injecting 15 million USD to distribute Fortnite in China. The Chinese video game giant already owns the distribution rights for Fortnite’s competitor, PUBG.

Fortnite has left other “Battle Royale” games in its wake, and now this genre is the most watched on video streaming platforms (Twitch, YouTube Gaming). In May 2018, Internet users watched 700 million hours of this genre, including 83% for Fortnite alone, compared with 275 million hours spent watching MOBAs.

After its enormous success, Epic Games is now rolling out a eSports strategy. It will be based on an audience of 125 million registered players and about 40 million active players every month. Epic Games, which has remained rather tight-lipped, announced three fundamental details of its strategy:

  • The studio will provide a 100 million USD prize pool for winners of the inaugural 2018-2019 season.
  • It plans on organising a world cup in 2019.
  • It is organising an eight-week series of tournaments starting in summer 2018. The prize pool available for winners will be 8 million USD.

With this level of investment, Epic Games is aiming to establish itself in competitive video gaming very quickly and to generate much higher revenues from advertising, sponsorship, ticketing and merchandise than it has been doing. For comparison, League of Legends (Riot Games),
Counter Strike: Global Offensive (Valve Corp.) and Dota 2 (Valve Corp.) had the biggest prize pools in 2017, with 12.0 19.2 and 38.1 million USD in cash prizes respectively.