Fortnite has lately emerged as the poster child for the video gaming industry, having established itself as a cultural phenomenon within the community in a very short time. Even leading entertainment outlets such as Netflix now recognize it as competition.
With c. 200 million registered players, Fortnite was the biggest earner amongst video games, making $2.7bn of revenue in 2018, as per Analyst firm SuperData. This is the highest annual earnings for any game, ever! The significance of this achievement is only escalated when one considers the fact that Fortnite is a "free to play" game and requires no initial investment from the consumer’s side.
Designed around a "games as a service" philosophy wherein games are viewed as a service rather than a product, somewhat like Hotstar which with its freemium model helps you enjoy select content free of charge, while members who pay get get access to exclusive content.
Along similar lines, Fortnite releases content on a regular basis in the form of battle-passes. The release of these passes are spread out over multiple seasons throughout the year and contain cosmetic items that alter the appearance of your character and weapon models. These cosmetics can be purchased via the in-game currency namely “V-bucks”, obviously exchangeable for real life money.
Paid vs Free
To put things into perspective, PUBG, the top earner in the premium games category earned around $1bn in revenues in 2018.
Note, premium games are those for which you need to pay an upfront cost, while free to play games are those that require no initial investment (like Fortnite).
Thereby vs. free to play games, PUBG doesn’t even make it to Top 10. Yes! There are more than 10 free to play games making more than $1bn in 2018 as compared to only one in the premium list.
It has to be noted that while PUBG is a $20 title, it is also offered as a free to play version. In fact, a substantial portion of the money PUBG earned came from its free version that was released on mobile platforms. If we take away this portion of the revenue, PUBG won’t even cross the billion dollar mark.
The success of Fortnite and other similar free to play games has attracted attention of big players within the industry. There is a moving focus towards games as a service model with a free to play "in-game economy".
A prime example of this shift would be publisher Electronic Arts’s latest release APEX Legends, one of Fortnite’s prominent competitors. The game was launched as free to play title in early February with zero publicity. Within a week of the launch, it snagged over 25million registered players. Their shares surged more than 16% - their best single-day gain in more than four years.
Yet another example would be that of publisher Valve who launched a free to play version of their popular shooter CS:GO in 2018. This shifting trend is likely to continue throughout 2019 with more and more multiplayer titles like Unreal Tournament and Total War going the free to play way.
Will It Work?
Fortnite’s success bears testimony to the fact that free to play model can work and work rather well.
For multiplayer games that make most of their revenue through in-game transactions, charging for the game upfront makes little sense as it limits accessibility for potential players who might have tried the game had it been free of cost. Think of it this way, would 200 million players have bought Fortnite if they had to pay $20 for it? Would it bring in the same amount of money as it is bringing in now?
Shifting towards a free to play model would allow publishers to reach a wider audience, which in turn will lead to increased customer engagement which in turn is bound to increase profits.
But Not Without its Challenges
Apart from the success that the free to play model brings in, it also brings with it its own set of problems. A free game like Fortnite will have more trouble keeping its player base engaged than a developer who has already charged an upfront cost. These games need to keep releasing content on a regular basis to prevent the formula from going stale. Also as the developer of a new “free to play” game, you run the risk of your game not being recognized among an ocean of similar releases. The more crowded the market gets, the more difficult it will become for the game to find an audience.
Is a company following Fortnite’s footsteps likely to enjoy the same amount of success? Not necessarily. Fortnite is a different beast in itself, it provides an environment for social interaction like none other. You can think of it as a Facebook for gaming. You log in at any time of the day, find your friends online and have a fun time with them. But this time, the fun is more interactive and that’s what keeps bringing people back for more. The cosmetic system allows users to create unique designs for their characters and show it off to the world – a bit like Instagram this time .
There have been many attempts to replicate the Fortnite formula, but until now, none has succeeded. Additionally the developer, Epic Games also puts in considerable amount of resources in the analysis of player data obtained through feedback to constantly evolve the game into something that the players want. This truly highlights their achievement in keeping their large customer base engaged since the game’s release.
The benchmarks set by Fortnite might be hard to replicate as it launched into a market which had a demand, but offered little competition. However, that’s not to take away from the fact that free to play titles can’t succeed in crowded markets. Take for example League of Legends - a free to play game launched in 2009. The game brought in around $1.4 billion in 2018 in a market crowded with similar games.
Thanks to Fortnite, gaming has gone from being a niche market to a mainstream one, with more players coming in every day, bringing in different tastes and preferences on the type of games they like to play. This provides the publishers with enough breathing room to make good money without stepping on each other's toes. Video Games taking the free to play route will have an opportunity to attract a wider audience, all the while bringing in more money.
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