Chances are you've heard of a video game called "Fortnite."

It's a massively popular game that is generating hundreds of millions of dollars each month in revenue. But unlike other popular online games like Activision Blizzard's "Call of Duty" franchise, "Fortnite" is free to play.

How is it that a free game is on pace to make $3.5 billion this year alone?

It all comes down to the in-game purchases made by gamers from around the world. Players exchange real cash for virtual cash known as V-Bucks. This allows players to buy upgraded skins for their characters and even unlock certain rewards. Even though these upgrades don't give players a competitive edge, that hasn't stopped gamers spending hundreds of millions of dollars a month on them.

SuperData, a research firm that specializes in video games, estimated that Epic Games' "Fortnite" generated nearly $296 million in April. Multiply that number by 12 and "Fortnite" has the possibility of generating $3.5 billion in revenue annually. Epic Games recently announced that it is jumping into the esports scene. The gaming studio said that it will be funding $100 million in esports prize pools for "Fortnite."