What Are the Takeaways from Fortnite’s Billion Dollar Success?

September 4, 2018

On Thursday, August 30, Bank of America Merrill Lynch announced that it lowered its stock evaluation for both Electronic Arts and Activision Blizzard from “buy” to “neutral.” This announcement was made for two reasons: crowded holiday slate of upcoming games and…

Fortnite.

Think about that. The Fortnite juggernaut has become so big that it is affecting the stock process of other gaming companies. How did this happen?

Photo Credit: IGN

Fortnite launched in July 2017 as Fortnite: Save the World. Originally, the title was a team of four players defending themselves from zombies. The game included objectives, such as building forts, saving survivors, and collecting resources. The game cost $40.

After seeing the success of PlayerUnknown’s Battlegrounds, Fortnite developer Epic Games decided that a battle royale format (where groups of players fight one another until a single player remains) could be incorporated into the current version of Fortnite. This second game, Fortnite Battle Royale, was released in September 2017. The original plan was to release this game as an add-on to the $40 Save the World game. However, that thinking changed, and Fortnite Battle Royale was released as a free-to-play game.

By August 2017, one million players were playing Fortnite: Save the World. Two weeks after Fortnite Battle Royale’s release, 10 million people were playing the title. As of June 2018, more than 125 million people play the game across multiple platforms, including mobile.

There are many reasons for Fortnite’s success. Foremost, it’s a very fun game to play, which is something that goes beyond the gameplay itself. For a match that is ostensibly about murdering everyone you come in contact with, it’s surprisingly lighthearted – something that (most) parents wouldn’t mind their child playing. You’re flown on a bus supported by a giant balloon to an island full of Easter eggs and surprises. On that front, Epic Games does not rest. The developer is continually updating the game, adding events, and modifying the map. Also, all the players can dance, it’s kind of infectious (so much so, that many dances have moved from the game to the real world as celebrations by professional athletes).

Photo Credit: NoahJAFK

Still, it cannot be overlooked how important the decision was to release the game as free-to-play.

It’s hard to say why the decision was made, but it could have something to do with Epic’s experience with their Unreal Engine. The Unreal Engine is one of the primary operating systems that developers use to build their games. Initially, Epic charged developers to use their software. However, it really became successful when Epic made the Unreal Engine free and instead collected a royalty on sales from games built using the software.

Having Fortnite be free-to-play is sort of like collecting royalties. Instead of players paying an upfront fee, they have the option of buying in-game skins (player customizations), dance moves, and special missions. Many of these are limited-time items.

“On the revenue side, they’ve done something that’s really unique, which is come up with a perception of exclusivity,” Michael Pachter, an analyst at Wedbush Securities, said to AdAge. “If you see another player in a leopard skin and go to the store and see it’s no longer available, you think, Shoot, I’ve got to move on it next time.”

The gamble (if, in fact, it was one) worked. From the time of its release to May 2018, Fortnite earned $1.2 billion. For 2018, it is estimated that Fortnite will earn $2 billion.

That income has enabled Epic to fund its own esports push around the game with $100 million in tournament prizes for the 2018-2019 season. The competition will be open to all players, with no teams or franchises involved.

Photo Credit: The Verge

Free-to-pay games are nothing new to the video game industry, but their explosive success is. Conventional wisdom is that a game that sells for $5 is going to make more than a game that sells for $0. Yet thanks to in-game transactions that is no longer true. Candy Crush, Pokémon Go, Angry Birds 2: basically, if your mother has heard about it, it’s a free-to-play game that’s raking in the cash.

Late in 2017, another developer (one that just had its stock downgraded from “buy” thanks to Fortnite) changed a major release to free-to-play. While the move didn’t result in the massive success of Fortnite, it did bring a beloved franchise back from the brink of extinction.

Released in 1988, the game StarCraft (and its expansion, Brood War) would develop a massive following that would go on to make it one of the first video games to form huge tournaments and competitions around its gameplay (especially in North Korea, but elsewhere, as well).

When StarCraft II came out in 2010 (designed with competitions in mind), everyone assumed the next big esport had arrived. And for a while, it had. Then, for whatever reason (and there are several theories), the players of and audience for StarCraft II dwindled significantly.

So, late in 2017, Blizzard made the decision to make the first campaign, Wings of Liberty, and online player-vs-player matches free-to-play. It was a smart move, one that brought relevancy back to an old game (the 2010 Wings of Liberty was seven years old at the time and the most recent expansion, Legacy of the Void, had come out two years earlier).

Photo Credit: Sound Cloud

“We spent a lot of time thinking about the right way to do this,” Tim Morten, lead producer of StarCraft II, said to Polygon. “It was very important to us that this be accomplished in a way that feels good to our current player base and also attractive to new players or lapsed players who haven’t played since Wings of Liberty.”

The free-to-play model stayed the same – no in-game currency or microtransactions were added.

“We’re just taking existing content that used to cost money and making it available for free,” said Morten.

Slowly, an audience has returned. Certainly, not the size of the original 2010 release or the heights of Brood War, but people are playing StarCraft II again. It’s popping up at esports competitions, and some retired players are returning to the scene.

Once seen as a sign of a game in trouble, both of these examples illustrate how free-to-play can be beneficial to both new games and old. Developers need to realize that for a free-to-play game to be successful, it needs to be honest. Players are willing to accept microtransactions as long as they don’t impact gameplay. Free-to-play games where you reach a point where it is impossible to progress without paying for an upgrade or buying new units will quickly be deleted.

The free-to-play model is not a guarantee of success, but it does seem to be the way the industry is heading. Developers who find ways to make in-game transactions feel like a benefit, without being essential, will be the ones who see a community grow around their game.