Fortnite, is the most popular video game in the world, boasting of c. 80mn players per month.
Fortnite is an online video-game which was released in 2017 and developed by Epic Games. With a lofty 80mn players per month, it stands as the most popular video game in the world. While multiple game modes at play, at its core, it is a shooter-survival game for Windows, macOS, PlayStation 4, Xbox One along with Nintendo Switch, iOS and Android.
Largely leveraging on the rise of Fortnite, its maker, Epic raised $1.25bn in new funding from multiple investors valuing it at an estimated $15bn.
The investors that took part in the new funding round included KKR & Co, Iconiq Capital, Lightspeed Ventures among others. Epic already has Disney, Tencent, and Endeavour as minority shareholders. While the official valuation is not clearly known, it is estimated that the aforementioned investment round valued Epic Games at a towering $15bn. The $1.25bn raise is the largest ever private raise for a video-game company beating the previous $550mn raised by Sea Limited in 2017. Video-game company, Netmarble raised c. $2.3bn in 2017, albeit via an IPO.
[Listen in from 19.33 onwards to learn more on Fortnite and How Video Games Have Evolved]
Epic makes money through purchase of in-game items. These items include new challenges, newer weapons and other cosmetic items such as skins and emotes.
These virtual items can be purchased by an in-game currency ‘v-bucks’ which itself can be bought by real money. As such these virtual purchases are largely cosmetic and do not impact the core game-play experience. This revenue model is not unique to Epic Games or Fortnite, but a widely deployed monetization strategy among several video-games. It is estimated that Epic made over $1bn in revenues from these micro-transactions. While the game initially was launched at $40, it gained more traction only once the free-version was launched thus now largely relying on sale of in-game virtual items.
Epic’s open-source game developer tools have been used by other game developers.
In addition to publishing titles like Fortnite, Epic Games has open-source game developer tools which have been used on several other games. Furthermore, Epic’s Unreal Engine design suites have been used for plethora of games over the years under a licensing agreement as well.
Use of player data and analytics is central to Epic’s focus on lifting the overall gaming experience for all kinds of gamers.
Continuous use of real-time data is used to heighten the overall gaming experience for the gamers. The AWS-running analytics platform helps in game patches in addition to constantly improving and introducing newer features and in-game tools largely based on user engagement data. This data is central to support game designers in their creative choices while designing the game.
Clash of Clans maker was sold for $8.6bn and Candy Crush Saga maker was sold for $5.8bn.
While not comparable games, it is worthwhile to highlight that Supercell Oy, the maker of “Clash of Clans,” was sold to Tencent for $8.6 billion. Furthermore, Activision Blizzard bought “Candy Crush Saga” maker King Entertainment for $5.8 billion underlining the lofty valuations that mobile games can fetch. For perspective, publicly traded video-game giants Take-Two Interactive and Activision Blizzard carry market capitalizations of c. $15bn and c. $51bn respectively.
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