Fortnite developed by Epic Games is available in three modes. Save the World follows a premium model, where the game is sold, starting at $14.99- Battle Royale follows a free-to-play model, available for free. Still, gamers can buy things or customize characters with its digital currency (V-Bucks), and Creative Mode. As reported by Variety, Fortnite made $1.8 billion in 2019 and $2.4 billion in 2018.
The gaming industry, part of the entertainment industry, is comprised of three main types of players. From game engines, which help developers build their games. To publishing gaming houses. And gaming consoles. While the prevailing business model for decades has been that of selling the console at cost, and make money on games. Digital games changed the way games are distributed and sold, and it opened up the way to free-to-play models.
PCs: before 2018, the primary storefront for games on PC was Steam run by a company called Valve. In 2018, Epic Games, owner of Fortnite, launched its storefront. From there also Fortnite is distributed on PCs.
Mobile/tablets: Fortnite can also be downloaded through the Apple store on iPhones and iPad and the Google Play Store for other Android devices. Those are the leading digital marketplaces.
Gaming consoles: the main gaming consoles where Fortnite can be distributed there are PlayStation and Xbox. While those consoles enable Fortnite’s downloads, its experience might be limited by the locked-in experience created by gaming consoles.
Breaking down Fortnite modes and revenue models
Depending on the three modes of gaming on Fortnite, there is also a separate revenue model for each mode:
Save the World, premium model: built as a player vs environment game, is structured as a mission-based game. Contrary to the Battle Royal mode, which is the one that enabled Fortnite success, Save the World is available at $14.99.
Battle Royale, free-to-play model: built as a Player versus Player, or PvP, game mode this free-to-play game sparked virality and made Fortnite the success it is today. This game mode enabled up to 100 players, to play in several formats, alone, in duos, squads, and more. The built-in group dynamics, and the fact it was freely available, helped sparkle the Epic Games’ ecosystem.
Creative mode: in the Creative mode, players gain access to a private island, where they can design the whole thing as they want and invite others. This mode is pretty interesting as it enables not only gamers but also creators or aspiring so to build their own gaming environment.
Breaking down how V-Bucks work
The V-Bucks, the currency used on Fortnite (Source: epicgames.com).
V-Bucks are an in-game currency used in Fortnite, which can be used to purchase things like outfits, pickaxes, wraps, emotes and Battle Passes. This is the primary revenue generation strategy of Fortnite.
Opening locked-in gaming console: how the popularity of Fortnite unlocked closed platforms
Fortnite Battle Royale became a cross-platform game. As gaming console companies like Sony, didn’t enable gamers on PS4 to team up to play, Sony. Yet Fortnite’s popularity made those gaming console companies adapt. And finally Fortnite became a cross-platform game, where players from several consoles can team up and play.
That is the power of one of the most popular games of our times.
Key takeaways
Epic Games distributionmodel was shaped over the years and it leveraged on making a part/or gaming mode (like Fortnite’s Battle Royale) for free, to leverage on a separate distribution channel (like PCs) that goes beyond the locked-in logic of gaming consoles, manufactured by two key players (Sony and Microsoft).
The free-to-play gaming mode, where players could also team up, sparked its virality, enabled Fortnite to become a streaming sensation, and in turn build the sort of gaming ecosystem that made it a success.
Epic Games was valued over $17 billion by August 2020, and it comprised three primary revenue streams: Unreal Engine Licensing and Publishing Royalties, Games like Fortnite, with primary a free-to-play model, and its storefront.
EA Sports is among the largest gaming publishers, with a hybrid strategy of fully-owned games and licensed games distributed with a cross-platform approach. FIFA is the game that most contributes to its revenues and live services (Ultimate Team in particular) are the largest revenue contributors to EA revenues.
The gaming industry, part of the entertainment industry, is comprised of three main types of players. From game engines, which help developers build their games. To publishing gaming houses. And gaming consoles. While the prevailing business model for decades has been that of selling the console at cost, and make money on games. Digital games changed the way games are distributed and sold, and it opened up the way to free-to-play models.
Roblox is an online gaming platform where users can create avatars and explore various gaming experiences. Each experience will be monetized based on how its developer has structured the game. For instance, free games allow users to spend the platform’s currency, called Robux, to get specific enhancements or purchase items like clothing accessories for the avatars, simulated gestures from the Roblox Avatar Marketplace. Therefore, Roblox makes money by earning a commission on each transaction and through its internal ad network.
Tencent is a Chinese multinational conglomerate founded in 1998 by Ma Huateng, Zhang Zhidong, and Xu Chenye. Among its various global subsidiaries are companies in the online services, music, and artificial intelligence industries. But it is perhaps best known for its interest in the video game sector – both as a game developer for the Chinese market and the acquirer of several established gaming companies. Tencent is a vast company with a stake in more than 600 companies. Following is a look at some of the companies and subsidiaries it has a majority stake in.
Epic Games is a gaming company, that develops, publishes, and distributes games. It comprises the Unreal Engine, making money through licensing agreements with developers and creators. Its games (like Fortnite) mostly follow a free-to-play model on PC and an in-app purchase model on the digitalmarketplace. And its storefront Epic Games Store, taking a 12% cut on games’ sales.
A free-to-play is a model that became particularly popular in gaming. Free-to-play is also commonly referred to as free-to-start. For instance, companies like Epic Games have launched popular games like Fortnite’s Battle Royale, which had ingrained a free-to-play model. This is a model that become extremely popular in the digital age of gaming.
The play-to-earn model is a business model allowing gamers to farm or collect cryptocurrency and NFTs that can be sold on the market. This model has become a standard already in the “crypto gaming industry,” where the blockchain-based games enable token economics to kick in as an incentives mechanism at scale for users to play and be engaged.
Candy Crush Saga is a match-three puzzle video game developed and published by King, a company specializing in social network-based games. Businessman Riccardo Zacconi co-founded King in 2003 after selling a subscription dating service he had also founded several years previous. The initial source of income for King was advertising revenue, but this strategy was abandoned in 2013. Today, Candy Crush Saga uses the freemium model (free to play) of revenue generation.
Gennaro is the creator of FourWeekMBA, which reached about three million business students, executives, and aspiring entrepreneurs in 2021 alone | He is also Head of Enterprise Sales for a high-tech startup, which he helped grow at a double-digit rate since the onset | In 2012 Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
