Epic Games

Have you recently noticed kids making weird dance moves anywhere and everywhere – on the bus, on the street, in shopping malls? Called emotes, they are the latest craze, thanks to the huge success of Fortnite Battle Royale – a computer game by Epic Games that has (seemingly) taken over the world, both digital and physical. Fortnite runs in “seasons”, and the fifth installment is imminent, with gamers on tenterhooks to launch themselves into a new world on Thursday, July 12 at 09:00 BST.

“It’s only a couple days of this season left, and I still need to get some challenges done,” my ten-year-old son tells me. Just like the rest of his class, he plays Fortnite. He watches Fortnite videos on YouTube. He is constantly emoting. It’s been months – and Fortnite is all he and his friends talk about.


Adults, however, are just as enthusiastic Fortnite fans; during the Football World Cup, goal scorers like England’s Deli Alli and France’s Antoine Griezmann celebrated their feats with Fortnite emotes.

The secret of Fortnite’s astounding success, however, is not just rooted in its emotes or gameplay. An even more important factor is the business model powering Fortnite. At the core the game is free; it’s also a multiplayer game that “is a social experience at heart, encouraging friends to play together”, says Timothy O’Shea from analyst firm Jefferies.

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Playing together, in turn, is made easy because Fortnite is designed to be available to as many gamers as possible; the game works on most platforms – not only Xbox, Nintendo Switch and PlayStation, but also PC, Mac and iOS. An Android version is due out later this year. This gives the game extremely broad reach.

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“Giving away content for free is the key to generating the massive audiences,” says O’Shea, but it required “deep engagement to unlock long-lasting monetisation”. And here, Epic has cracked the model for introducing microtransactions into a game, says O’Shea. Epic makes money by running Fortnite in seasons, with each introducing new in-game “rewards” that can be unlocked – but only if gamers buy a “battle pass”, which is expected to cost just under £8 (or $10).

While these items and skills may be hard fought for, they are totally cosmetic; Epic stresses that none of the rewards gives players a competitive advantage. “This means all gamers are on a level playing field,” says Piers Harding-Rolls, the head of games research at IHS Markit.

Nick Chester, a spokesperson for Epic Games, refused to be drawn on the business model or development plans for Fortnite, saying simply that “we prefer to let the game speak for itself, and for players (and what they are doing) to speak on its behalf”.

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So what to expect in Fortnite Season 5?

The eagerly anticipated Season 5 has the tag line “Worlds Collide” and is rumored to have a time traveling theme; strange items like an old-fashioned stagecoach have suddenly appeared in Fortnite’s virtual world, while a crack in the sky is supposedly a rift in time and space.


James McQuivey, an analyst at Forrester, thinks that one likely change will see gameplay moving to a new venue - think Angry Birds moving into the Star Wars universe, or Assassins Creed heading to London. There are also rumours that Fortnite become more collaborative. “That might mean giving each player an opportunity to ally with specific factions - tribalism is always good for business,” he says.

Epic Games

Epic could also introduce a third element, he says, such as a new force entering the game’s universe, which would add a new level of challenges and randomness. One option could be a horde of robots with unpredictable behavior that escalates as the season unfolds. The Fortnite rumour mill is extremely busy.

Last cartoon man standing

Fortnite Battle Royale is a fight to the death. The winner is the last avatar standing. The ghoulish concept, however, is made kid-friendly by Epic’s decision to make the game not gory but cartoonish, which makes it also palatable to younger players, says Harding-Rolls. It also makes Fortnite just as much fun to watch as it is to play; as a result, Fortnite is setting viewing records on video and streaming platforms such as Twitch and YouTube.



That said, despite being free, the game isn’t free, really, and that’s at the heart of Fortnite’s successful business model. Popular mobile games like Clash of Clans and Candy Crush Saga force eager users to pay if they want to progress at pace, says Mark Mulligan of Midia Research, which “created tiers of haves and have nots”. But as payments in Fortnite don’t affect gameplay, they are entirely about identity and self-expression.

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“It does not even have a trophy cabinet where players can show off their purchases. Instead the purchases – such as skins, emotes and dances – are simply a way of gamers expressing themselves in a digital environment. It is a masterclass in creating value in entirely virtual contexts,” he adds.

Piers points to another pay-for service, the Battle Pass Premium, which is a relatively inexpensive upgrade that gives gamers the chance to own premium rewards in-game through the season of play. With a high conversion rate for Battle Pass Premium, even if a majority of gamers don’t go on to spend more on premium tier in-game items, this raises the ARPU [Average Revenue Per User] enough to generate significant revenue and margins, he adds.

Where did the Pokémon go?

Before Fortnite started taking over the world, a popular pastime for gamers was to walk around in the real world to hunt digital creatures, courtesy of the Augmented Reality game Pokémon Go. It’s popularity faded as fast as it began – so could Fortnite suffer the same fate? Harding-Rolls says that Epic has got to grips with the need to release regular content updates – successfully maintaining gamer engagement.

The streaming platforms, seasons and special events – such as a recent rocket launch, which caused the crack in the sky of the Fortnite world – are also aimed to help the game last longer. Inevitably, says Mulligan, Epic Games will have to come up with a successor to Fortnite: “Thus far, the mobile games companies have generally not managed to deliver follow-up hits, other than weaker derivatives of previous formats,” he says. “This is what sets apart the long-established console gaming companies such as EA from the likes of Rovio” of Angry Birds fame.

To build Fortnite’s popularity, Epic is pushing hard into e-sports and announced recently a record prize pot of $100m. E-sports are now huge business, says Dom Tait at Ovum. The consultancy recently valued the global e-sports market for 2017 at $733 million, and predicts that this will grow to $1.9 billion in 2022.


“Making Fortnite a permanent member of the e-sports circuit will mean subsidiary benefits from sponsorship and media rights,” says Tait. E-sports tournament organizer Riot might expect eight-figure deals for its biggest competitions, he says, while Twitch recently spent $90m for a two-year deal to screen matches in the Overwatch League.

The heavy investment in e-sports prize money “reflects the current earning power of the game, the evolution of a longer-term user engagement strategy, the need to make waves in the esports market to attempt to break into a scene dominated by a few top titles, and is also linked to Epic and Tencent’s strategy for China, where an esports strategy is very important to drive interest in a hugely competitive landscape,” says Harding-Rolls.

Fortnite has become a global cultural phenomenon. It has not only captured the imagination of teenage gamers, but become a cultural touchstone that goes above and beyond the typical playground craze. If you wonder why, don’t look further than Fortnite’s rather clever and lucrative business model.