Fortnite, a video game released without much fanfare last July, is now arguably the most popular diversion in the world; a cultural juggernaut on a par with Star Wars, or Minecraft – though one now also attracting players with a $100m prize fund. Playgrounds jostle as children showboat dance moves copied from the game, while parents tip from mournful anxiety about screentime quotas, to blessed relief that here is a game that encourages teamwork, compromise and communication between their otherwise monosyllabic adolescents.

Fortnite borrows the premise of the Japanese novel Battle Royale and The Hunger Games, in which contestants are sent to an island where they must scavenge and fight until only one remains. In Fortnite you are dropped along with 99 other players from a flying bus, and parachute on to a candy-coloured island. Every few minutes a lethal electrical storm draws closer, herding survivors toward a final standoff.

As in life, character is destiny: the meek will cower in a bush as those around them pick each other off, before furtively scurrying from hut to hillock. The bolshie will fly directly to the most populated towns and engage in thrilling races to be the first to find a gun and a pocketful of bullets. The homemaker will harvest wood from trees and build a base, sometimes into the clouds, from where they can peek, snipe and fend off invaders. Over the 20 minutes that each game lasts, 100 small stories of bravery and cowardice, skill and haplessness accumulate and intersect. Matches are equal parts exhilarating, unexpected and, for all but the victor, usually indescribably maddening.

Fornite’s business model is quietly revolutionary – making money from selling digital costumes, or 'skins', to players

While Fortnite’s style and rhythm are unique, the template is not. It closely follows PlayerUnknown’s Battlegrounds (PUBG), a game that dominated the PC game charts last year. In September, its producer Chang Han Kim stated that his studio was “concerned” about Fortnite’s similarities, and that his team intended to explore legal action. By March, however, there was only legal inaction, and Fortnite had, among the world’s children at least, overtaken Battlegrounds as the game of the moment.

This success is due to a variety of factors. For one, Epic Games is one of the industry’s oldest outfits, experienced in building and maintaining online competitive video games since the dawn of the internet. While PUBG’s updates have been slow and unexciting, Fortnite’s updates launch with military-grade regularity and have introduced a flurry of new items and wild, one-off game modes (50 v 50, Sniper rifles only). The game’s aesthetic, which is bright, colourful and decidedly un-bloody, has helped convince parents that this is a world of harmless, cartoonish violence. PUBG, by contrast, is brown and gory.

Then in March the musician Drake, the rapper Travis Scott and the American football player JuJu Smith-Schuster joined professional video game streamer Tyler “Ninja” Blevins in a Fortnite squad. Footage of their play session, broadcast on the live-streaming service Twitch, broke the record for the most-viewed episode on the internet. The Washington Post reported that at one point more than 630,000 viewers were logged on to the match, which also trended on Twitter.

In America, where the word “fortnight” is not in usage, unsavvy social media users started posting about a new phenomenon called “fork knife” (a term then adopted, titteringly, by some players). In playgrounds, word of the game has spread virally, not only through excited recaps of the previous night’s matches, but also, extraordinarily, via the Floss, a dance move that originated on YouTube in 2014 but was popularised by Fortnite. (The game allows players to aggressively perform a variety of dance moves at one another, either as a form of bonding or antagonism.)

Fortnite’s business model is quietly revolutionary. The studio makes money not from point-of-sale (it’s free to download) but from selling digital costumes, known as skins, to the players. Each day a new wardrobe is put up for sale on the game’s storefront, for a few pounds apiece. Players can dress their digital avatar as a ninja, a medieval knight, an Olympic skier, or a skeleton, to name but a few, and in this way stand out from the crowd. The men and women who design these costumes have become some of the most important members of Fortnite’s development team: it is through their fashion work that the game makes its money.

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This art of virtual costuming is rapidly changing the medium’s business model. In 2015 the Los Angeles game developer Riot, one of the first companies to adopt the model, reputedly made almost $2bn from selling digital clothes for its game League of Legends. More developers are following suit as they seek to produce a game that becomes a “service” to which players return each day, rather than a one-time experience like a film or TV box set. By offering their game for free, studios hope to quickly build an online community, which is then monetised by digital fashion. Epic refused to comment on how many Fortnite outfits it has sold, stating only that as of February the game had “more than 45 million players”.

Now the game is poised to become a sport. While, in the early months, professional players, Twitch streamers and YouTubers ignored the game, viewing it as too childish for their audiences, that has now changed. Blevins is reportedly making $500,000 a month from streaming the game, while daily videos posted by Ali-A, one of the most popular British YouTubers, routinely pass 2 million views in 24 hours.

Epic remains coy about figures, but the dramatic scale of the game’s success was hinted at last Monday when the company announced a $100m prize pool for Fortnite tournaments over the next year. While other developers rush to create their own Battle Royales, it seems increasingly likely that Fortnite will be the last man standing.