Epic Games
CORRECTION: A previous version of this report incorrectly characterized “Fortnite” as a first-person-shooter game. The story has been corrected.
“Fortnite: Battle Royale” has unlocked the secret to creating a perfect videogame in 2018.
The free-to-play title from privately held Epic Games Inc. has become the most financially successful free game on consoles of all time, according to SuperData. It is said to be raking in $2 million a day from players on Apple Inc.’s iOS less than three weeks after its April 1 launch on that platform, and in March the game brought in $233 million across all platforms.
Beyond enjoying a cash windfall, it’s something of a cultural phenomenon: The seemingly overnight rise of the title has captured the attention of professional athletes, who say it is a frequent locker-room topic, and has even been used by a high-school student to secure a date to the prom, part of a social experience that has made the game a meeting place for players.
Tencent Holdings Inc.–backed Epic, which declined to make executives available for this article, figured out or stumbled across a basic recipe for success in 2018: A videogame needs a strong social experience, must be palatable for spectators, and has to be made available across multiple platforms, for free.
At its most basic level, “Fortnite” is a multiplayer third-person-shooter game for mobile devices, personal computers and gaming consoles. The most popular feature pits about 100 players against one another in a fight-to-the-death match on an ever-shrinking map, which is known in industry jargon as a “battle royale” game.
It’s not the first popular game of its kind: Privately held Bluehole Studio Inc. released “PlayerUnknown’s Battlegrounds” in early 2017 for an earlier and still popular success in the genre. But “PUBG,” as the game is commonly known, has now been surpassed in popularity by “Fortnite.”
“It isn’t the first battle royale game, but ‘Fortnite’ is truly brilliant,” Benchmark Co. analyst Michael Hickey said. “Anyone who tries to copy it will fail. All of the other [gaming companies] will try and iterate on battle royale games [but] won’t try and replicate ‘Fortnite.’ That would be suicide.”
Fortnite’s rise to prominence has happened so quickly that heavy hitters in the industry, such as Take-Two Interactive Inc. , Activision Blizzard Inc. and Electronic Arts Inc. , haven’t brought anything in the way of competition to the table — yet.
One potential reason is that the secret sauce of “Fortnite” comprises several moving parts. Perhaps the most plain is the existing audience of millions of players of first-or third-person-shooter-type games, many of which are produced by the gaming industry giants. Games in Activision’s “Call of Duty” series often sell more than 20 million units, and competing titles in the genre such as the EA-published “Battlefield” or Take-Two’s “Grand Theft Auto” series also sell well.
“I think the ‘battle royale’ mode appeals to anyone who has played or enjoys shooter titles, which is going to be your typical ‘Call of Duty,’ ‘Overwatch’ consumer,” Piper Jaffray analyst Michael Olson said. “Every year, Activision sells more than 20 million copies of ‘Call of Duty,’ just on console and on PC. There is an audience for battle royale games in the tens of millions.”
Fornite’s revenue comes entirely from microtransactions. The key for the game’s longevity is that players can’t buy anything that will affect the actual game mechanics, which has proven disastrous in the past. Players can only buy cosmetic upgrades, and they appear willing to do so at a rate of tens of millions of dollars a month.
“The business model works very well for microtransactions,” Hickey said. “Monetization of ‘Fortnite’ is off the charts.”
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Beyond the game mechanics, “Fortnite” has also attracted crowds because of the social aspects the game incorporates. On the Amazon.com Inc.–owned Twitch, a YouTube–like service for watching streams of competitive videogames, “Fortnite” attracted more than 10 million viewers, surpassing “PlayerUnknown’s Battlegrounds” in early February.
“It’s very viewable,” Hickey said in a phone interview. “The streamers have been all over this and are having a lot of success. Streamability equals marketability, and you don’t have to be a player to enjoy it.”
It’s also picked up a massive following among 12- to 14-year-olds, Hickey said, because play sessions are short and a massive community has developed around the title.
In the copycat-heavy videogame industry, “Fortnite’s” head start cannot fully inoculate it against competing releases by the bigger players in the industry. Olson said “Fortnite” is likely to be a topic that will come up during the earnings calls of Activision, Electronic Arts and Take-Two this quarter, as well as at the large videogame conference E3 in June, though there haven’t been any formal announcements.
What’s likely to happen in some cases is that the large developers will build a battle royale mode into their already successful shooter products such as “Call of Duty.”
“With existing games that are extremely popular, it’s likely they will incorporate battle royale mode instead of looking to acquire a new studio,” Olson said.
Olson is not anticipating much of an impact for EA or Take-Two from the fast rise of “Fortnite” and “Battlegrounds.” Activision could see an impact on its sales because many of its most popular titles are shooters or in the action genre.
“Fortnite” could ultimately become a positive instead of a negative for Activision and other publishers’ shooters, though, because it’s drawn new players into a genre that previously didn’t really exist at a large scale, struggling to expand beyond a core audience.
“There is a need in the space for innovation in the shooter genre,” said BTIG analyst Brandon Ross, adding that the battle royale mode has demonstrated that there is clear demand from nongamers as well as more casual gamers. “There were people who wanted to be a part of what was going on in gaming,” he said, and “just needed the barriers to entry to be removed.”