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The Fortnite phenomenon: How to make millions of dollars from video games

Forget about “Candy Crush” or “Pok√©mon GO”. “Fortnite” is the new global phenomenon, obsessively played by children, rock stars, professional athletes or middle-aged accountants. But is this the beginning of the end?


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It’s hard to believe that his parents will continue to poke fun at him for spending too much time in front of the monitor, captive in video games. After all, Kyle “Bugha” Giersdorf is the first world champion at “Fortnite” and has brought home the biggest individual prize so far for a $ 3 million eSports competition.

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For comparison, the total amount of prizes from the recently concluded edition of the Tour de France – the world’s largest annual sports event, with 12 million spectators on the street and a history of over 100 years – was 2,291,700 euros, from which the winner, Colombian Egan Bernal, returned 500,000 euros.

Announced in February, the World Cup at “Fortnite” immediately attracted newspaper headlines and fans’ attention with its $ 30 million prize pool. The qualifications started in April and over 40 million players fought for a place in the finals held at the end of last month at Arthur Ashe Stadium, Queens, New York, the largest tennis stadium in the world, with a capacity of 23,771. of places.

Broadcast live on different (new) media channels, the supreme confrontation among the 100 finalists was followed by over two million viewers. At the end, the four best “Fortnite” players of the moment became millionaires. The oldest of them is 24 years old.

HE HAD ONLY ONE

Video games keep an eye on us for more than four decades, and the first official competition recognized as such took place in October 1972, at Stanford University. Spacewar was then played, a game that faced two opponents caught in a confrontation with spaceships, and the big prize awarded to the winner was a one-year subscription to Rolling Stone magazine.

Meanwhile, electronic sports have become a rapidly growing industry and a competitive calendar that attracts hundreds of millions of viewers every year.

The global economy of e-sports – which means everything from media rights, advertising, sponsorship, merchandising and ticket sales – reached $ 906 million last year, up from $ 665 million in 2017. By 2021, it would follow to grow to $ 1.7 billion, compared to a global video game market that would generate $ 180 billion in total revenue in the same year, according to Newzoo, a research company specializing in the video / eSports segment.

On the other side of the arena, electronic sports in 2017 had a global audience of 385 million people – 191 million enthusiasts and 194 million casual viewers -, an audience that would grow to 557 million people in the following two years. Throughout this ocean, “Fortnite” is the drop with 250 million players that brought its developer, Epic Games, $ 2.4 billion in revenue in 2018.

Combining elements from titles such as “Minecraft“, “PlayerUnknown’s Battlegrounds” or “Overwatch”, “Fortnite” is an apparently disarmingly simple game: up to 100 players are parachuted on a storm-ravaged island where they have to fight each other. until there is only one survivor. Think of (and) a variety of “Highlander” combined with “The Hunger Games”. The average duration of a game is about 20 minutes and the rules leave no room for interpretation: stay alive, and if something moves, shoot it.

THE VICTIMS OF THE MODEL

The game is free and available on all platforms, from consoles and mobile devices, to Macs and PCs. Where did the money come from? From clothes for avatars, cosmetics and dances. Exactly, dances! Needless to say, nothing you buy gives you a competitive advantage. But at least you look like a leopard print or a Christmas-themed sweater.

However, to spice up the game, those interested can pay for special missions that turn “Fortnite” into something completely different. The model is not new. In 2015, for example, American game developer Riot, one of the first companies to adopt this system, made nearly $ 2 billion in digital clothing sales for its “League of Legends” game.

Something that is truly unique

“From a revenue point of view, the makers of Fortnite have done something that is truly unique, offering a sense of exclusivity,” says Michael Pachter, an analyst at Wedbush Securities Inc., a privately held financial services and investment company. in Los Angeles.

Pachter adds that many of the accessories in the virtual store are in limited editions, and players are stepping up to buy them as soon as they are put up for sale.

Turning users into users of an application is a business as serious as it is difficult. Market analysis speaks, for example, of an average conversion rate of 2% for app users for iOS and Android platforms. In the case of “Fortnite”, in contrast, 68% of players bought virtual goods, spending an average of almost $ 85. For 37% of them, “Fortnite” was the first game they made such purchases.

FALL IN THE DEBT

All this frenzy translates into one of the highest rates of revenue per user in the industry and within an operating margin of about 50%, according to analysts. Enough for Epic Games’ market valuation to explode with the success of Fortnite. In July 2018, its value was estimated at $ 8 billion and would increase to $ 15 billion over the next two months.

Launched in July 2017, in a version that cost $ 40 and where players had to build forts to defend themselves from hordes of zombies, “Fortnite” exploded only after Epic made it free and added a module to it. live multiplayer game.

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