Epic Games
“Fortnite” was more important than cryptocurrencies during the most recent earnings season, if judged by how many times each came up during company calls with analysts, according to a MarketWatch analysis.
Executives and analysts at tech giants as well as others within the benchmark S&P 500 index mentioned the online game 54 times, compared with talking about cryptocurrency and bitcoin , which executives mentioned 45 times, according to a MarketWatch analysis of transcripts in FactSet.
MarketWatch included companies in the S&P 500 as well as a range of tech-focused index funds, and a group of other tech stocks that went public recently in its analysis. Aside from bitcoin, MarketWatch also included Ethereum , Ripple , Litecoin and Monero in its search for references to cryptocurrency in earnings transcripts.
Including “Fortnite” competitor “PlayerUnknown’s Battlegrounds” and the term “battle royale” — the term for the survivor-like genre both games are a part of — increases the number of mentions in earnings calls to 95.
“Fortnite’s” outsize success was enough to cause a number of analysts and investors to pay close attention: Epic Games Inc., which produced “Fortnite,” banked $296 million in sales from the game across the console, PC and mobile categories, up from $223 million in March, according to Superdata. April saw the launch of “Fortnite” on Apple Inc.’s iOS mobile platform, which reportedly brings in $2 million a day. Tencent Holdings Inc. owns a 40% stake in Epic.
Aside from the earnings calls hosted by videogame publishers and even a chip maker, “Fortnite” made it onto call transcripts on notable outliers including Snap Inc. and Hasbro Inc. .
Here is what executives said about ‘Fortnite’
On Tencent’s earnings call, executives said that Fortnite has over 40 million monthly active users, and is the “most watched” game on Amazon.com Inc.’s Twitch, a videogame streaming platform. Tencent also has a deal with Bluehole Inc., which makes “Battlegrounds” and is reportedly eyeing a stake in the South Korea–based company.
Game giants such as Activision Blizzard Inc. , Electronic Arts Inc. and Take-Two Interactive Software Inc. received the lions share of analyst questions about “Fortnite,” though only Activision said it had seen “some near-term impact” from the battle royale genre as a whole — not “Fortnite” specifically.
The consensus from EA and Take-Two executives was that “Fortnite” was a good thing for the industry: Because of the game’s wild success, new people who have never been exposed to gaming are getting interested, in part because of “Fortnite’s” free-to-play approach (the company makes money on cosmetic upgrades and season passes).
“We think it brings new players into the market, and it just shows what a robust industry that we operate in,” Take-Two Chief Executive Strauss Zelnick told analysts on the March-quarter earnings call. “Naturally, we would like to have all the hits. I don’t think that’s necessarily a realistic goal.”
“It’s pretty hard to determine what competitive landscape effects are, however, because entertainment properties compete with each other, with themselves, and with nothing at all. So entertainment is nice to have, not a must-have good. So it’s impossible to determine whether a particular title have an impact, although I think we’ve all observed that ‘Fortnite’ has created a lot of activity around it.”
When “Fortnite” came up on the Snap earnings call, Chief Strategy Officer Imran Khan told analysts that while his 8-year-old son enjoys the game, he wasn’t able to predict whether it’s affecting spending on Snap’s platform.
Toy maker Hasbro CEO Brian Goldner also said that his company hadn’t seen an impact from “Fortnite,” — yet. “We really like ‘Fortnite,’ ” he said on the earnings call. “It’s a really fun game. ... I would say we haven’t really seen an impact with respect to that game.”
Nvidia Corp.’s business straddles cryptocurrencies and gaming: Cryptocurrency miners discovered that its GPU chips were suited to solving the complex equations needed to unlock more virtual currency. The company’s GPUs are widely sought after by professional esports players and PC gamers for games such as “Fortnite,” too. And the cryptocurrency demand has driven GPU prices up substantially due to shortages, frustrating gamers, though there have been some signs of a stabilization.
In response to an analyst question about “Fortnite’s” success, Nvidia CEO Jen-Hsun Huang told analysts, “The success of ‘Fortnite’ and [Player Unknown’s ‘Battlegrounds’] are just beyond comprehension, really. Those two games are a combination of ‘Hunger Games’ and ‘Survivor’ and has just captured imaginations of gamers all over the world. And we saw the uptick and we saw the demand on GPUs from all over the world.”
The company reported $5.51 billion in 2017 gaming revenue and is expected to bank $7.1 billion this year, according to FactSet.
Cryptocurrency
Despite the fact that gaming GPUs are suited for cryptocurrency operations, Nvidia has moved its cryptocurrency revenue from gaming to the original-equipment-manufacturer segment. Executives said that the company banked $289 million from cryptocurrency in the first quarter.
“Every gamer has a supercomputer in their PC,” Huang said. “And GeForce [GPUs] is so broadly distributed, it’s available everywhere. And so GeForce is really a good candidate for any new cryptocurrency or any new cryptography algorithm that comes along.”
Executives from financial firms also brought up or answered questions about cryptocurrency during earnings calls.
Nasdaq Inc. CEO Adena Friedman said the company was evaluating whether there was a derivative product based on cryptocurrencies that might work but would not talk about the company’s plans in detail.
Mastercard Inc. Chief Financial Officer Martina Hund-Mejean told analysts on the company’s March-quarter earnings call that the company is seeing a decline in transaction volume because “a number” of banks have decided they will not allow Americans to fund cryptocurrency wallets with credit cards.
Several other chip companies including Xilinx Inc. and Micron Technology Inc. also said cryptocurrency continued to contribute to the bottom line via hardware sales.
Square Inc. racked up the most mentions of bitcoin on its earnings call, but most were toed to discussion of the San Francisco–based company’s risk-management strategy toward the digital currency.