How the Free Video Game ‘Fortnite’ Makes a Fortune

Since the release of Fortnite Battle Royale last summer, the video game has grown from a modest success into a global phenomenon with more than 40 million active players. At one point in March, 3.4 million people were playing Fortnite at the same time, making it by far the most popular video game currently on the market. The concept behind it is simple enough: 100 players parachute onto an island to fight until there’s only one person or team left standing. Along with its straightforward premise, analysts credit the game’s success to its revolutionary business model. Unlike many other first-person shooter games, Fortnite is free to play.

Of course, “free” games have been a dominant force in the industry for years now. But these primarily mobile titles will often let players progress through only a portion of the game until they must pay a fee to continue. Fortnite, meanwhile, grants players access to all levels and weapons from the beginning. Although the game still relies on “microtransactions” to make money, Fortnite handles them in a much different way than “pay to progress” games. Rather than buying upgraded weapons or additional levels, Fortnite’s publisher Epic Games operates a marketplace that allows players to purchase purely cosmetic upgrades. For instance, a player can buy a “skin” that makes their in-game avatar look like their favorite comic book character. Or they can spend money on specific “emotes” such as dances and other gestures.

While these “products” might seem silly to outsiders, they provide a serious source of revenue for Epic Games. According to one estimate, Fortnite earned $223 million from in-game purchases in March alone. To understand how this free title manages to bring in so much money, here’s 13-year-old Jett Sacher with a run-down of items he’s recently purchased in the game. “So I bought one dance, two skins and the battle pass,” said Sacher, who plays Fortnite for one to two hours every day. “So that’s, I spent $20 on both skins so $40 … and the dance was another $10 so $50, 60 bucks, something like that.” Millions of other users have made similar purchases in Fortnite, which has catapulted Epic Games to a valuation of $4.5 billion. Experts say the company should expect to face more competition in the near future as rivals like Activision Blizzard start developing their own “battle royal” games.

Questions:

  1. How does Fortnite’s business model differ from other “free-to-play” video games?
  2. Do you think Fortnite will continue to be a major moneymaker for Epic Games in the long term? Why or why not?

Sources: Matt Brian, “The Rise and Rise (And Rise) of ‘Fortnite,’” Engadget, March 17, 2018; Jane Lanhee Lee and Jillian Kitchener, “Free to Play, Expensive to Love: ‘Fortnite’ Changes Video Game Business,” Reuters, May 4, 2018. Photo by BagoGames.

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