Fortnite, A Free Game, Made $9 Billion In Two Years

from the competing-with-free dept

For years -- years! -- Techdirt has been a place that has argued that offering a product or service for free, where that made sense, could actually be a fantastic business model. While there are lots of examples of that sort of thing these days, you have to understand that this concept was met with derision and scorn by all kinds of industry folks big and small. Some said anyone offering something for free had no clue how to run a business. Others even more absurdly claimed that there was literally no way to compete with "free."

Well, the video game industry has long claimed to have a "free" problem when it comes to piracy. The problem with combining those claims with claims that you can't compete with that sort of thing is that the success stories are there and you don't exactly have to look hard for them. Back in 2018, we talked about Fortnite, a free game that makes its money in all other sorts of ways. And by "its money" I mean that it was making $300 million per month. But then there were claims that all of this was some flash in a pan rather than anything sustainable. The problem with that is that, thanks to the trial just kicking off between Apple and Epic, internal Epic documents indicate that Fortnite made the company $9 billion over the course of two years.

Today, the trial between Epic and Apple finally began after nearly nine months of legal filings and pre-trial hearings. During the court proceedings, new documents surfaced providing more data on how these companies operate. For example, we now know that Fortnite made $9,165,000,000 in two years.

That huge number comes from a financial board presentation report that Epic created in January 2020. In this document, Epic stated Fortnite made just over $5.4 billion dollars in 2018. The following year, the popular battle royale game pulled in $3.7 billion.

This is not someone competing with free; this is someone dominating piracy into total irrelevance. As Kotaku points out, it's worth comparing these numbers to numbers spent elsewhere in the entertainment industry. Microsoft bought Bethesda for $7.5 billion, less than what this one game made. And, yes, Fortnite is one of the most wildly successful games of all time. But that isn't really the point. The point is that there are business models that make "free" work and this is the shining example of that being done.

Any whining from the industry about how this one example isn't fair is just that: whining. It's on business leaders to innovate into new business models that work in the modern era. Epic has figured out how to do that. And not just with Fortnite, either. We already discussed how Epic is using free video game giveaways in the Epic Store to build up the adoption of that platform. Despite the losses the company incurred with this practice, Epic appears to be super happy about it all.

There needs to be more of this, even as similar business models appear to be picking up speed. More success for the industry by adopting a model where piracy is simply taken out of the equation.

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Filed Under: business models, competing with free, copyright, fortnite, free, piracy, video games


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  • icon
    That Anonymous Coward (profile), 6 May 2021 @ 2:10pm

    Apple doesn't want to compete with free, they just want 30% of what free brings in.

    reply to this | link to this | view in chronology ]

  • identicon
    Bobvious, 6 May 2021 @ 3:23pm

    Waiting for the cognitive dissonance from competitors

    This business model seems like your typical loss leader- get someone in the door with a "discounted" retail price on an attractive item, and hopefully they'll buy something more profitable while they're in here. Which seems to be working very well here.

    I mean that's why printers are so expensive and their ink is so cheap, right?

    Now obviously Fortnite's "competitors" will claim that even drug dealers will give you a "free first hit", so won't someone please think of the competitors, I mean, children, and introduce legislation to prevent this kind of buggy-whip-manufacturer-harming business innovation.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 6 May 2021 @ 6:15pm

      Re: Waiting for the cognitive dissonance from competitors

      Frostbite can be played without additional cost so long as you have a compatible device and internet. The game therefore described as “free” because it is free to use the software.

      Even assuming the physical printer was free, without additional payment (ink) i can not use it. The printer is not free to use.

      This is a simple, basic idea. And while there are a ton of issues with even the cleanest “free-to-play” of “freemium” model, given the effect FOMO can have on cosmetic purchases, if you can’t understand the difference between “this doesn’t work unless you keep paying me money” and “this is fully operational for free, but you can support development by purchasing an inconsequential change to appearances”, you do not have enough understanding to begin to have that discussion.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 6 May 2021 @ 10:46pm

        Re: Re: Waiting for the cognitive dissonance from competitors

        Frostbite

        Want to know how people can tell that you're furiously typing out morally outraged responses on your mobile phone? (Side note: You might not have actually been furious when typing out the above reply, but such typos were the bread and butter of MyNameHere while in his John Smith persona. You might not actually be him. But not proofreading your responses is generally not a good look, my guy...)

        Even assuming the physical printer was free, without additional payment (ink) i can not use it. The printer is not free to use.

        For that matter, neither do computers. And the same goes for CDs that require appropriate hardware to use. But that hasn't stopped the whole "if you can buy a computer you can buy a CD" argument used by RIAA-branded artists since the early 2000s. So... is your point "nothing is free"? But if nothing is free, and Fortnite and its competitors are equally "not free"... how does this make Fortnite's competitors look good by comparison, exactly?

        if you can’t understand the difference between “this doesn’t work unless you keep paying me money” and “this is fully operational for free, but you can support development by purchasing an inconsequential change to appearances”, you do not have enough understanding to begin to have that discussion

        This... just sounds like you're mad that Fortnite hit on the formula Team Fortress 2 used to before it became a glorified version of Gmod.

        reply to this | link to this | view in chronology ]

        • icon
          PaulT (profile), 6 May 2021 @ 11:37pm

          Re: Re: Re: Waiting for the cognitive dissonance from competitor

          Why would you spend an entire paragraph trying to mock someone when even you're admitting it's an obvious autocorrect error?

          reply to this | link to this | view in chronology ]

  • icon
    Koby (profile), 6 May 2021 @ 3:32pm

    Competition Wins Again

    40 years ago, video games looked rather primitive compared to what we can experience today. Not just in terms of graphics, or audio, or even gameplay features, but also the terms of pricing. It is my understanding that there was a crash of the video game market back in 1983, which was blamed on a slew of low quality games. Buyers became disinterested after paying good money for bad products. Today, consumers can experience some games before they pay for it, thereby avoiding the problem. It's a clear win for purchasers, thanks to intense competition.

    reply to this | link to this | view in chronology ]

    • icon
      Stephen T. Stone (profile), 6 May 2021 @ 7:51pm

      there was a crash of the video game market back in 1983, which was blamed on a slew of low quality games

      While the glut of crapware back in that era was real and was a factor in the Great Crash of ’83, the crash happened for a number of reasons, the first of which listed below is the most prominent:

      • Atari being greedy fucks that didn’t credit workers, couldn’t compete with superior products on other consoles, and lost shitloads of money on garbage releases such as E.T. and the Atari 2600 port of Pac-Man (and yes, those stories about the landfill are 100% true)

      • Those other consoles crowding the market, which left those consoles unable to make the same kind of inroads with consumers as Atari (which still enjoyed market dominance) and left retailers unable to move those consoles (and their associated games) once the market tanked

      • Certain big-name games releasing on numerous systems and looking near-identical on each one — a fact to which an infamous ad featuring Q*bert can attest

      • The inability of consumers to discern quality products from shit products, which they generally didn’t get until after the NES revitalized the industry in the U.S. and kickstarted the rise of gaming magazines such as Video Games and Computer Entertainment, Electronic Gaming Monthly, GamePro, and (of course) Nintendo Power

      • Home computers having both better games than what was available on consoles (including more accurate ports of arcade hits) and productivity programs (e.g., word processors) that weren’t available on consoles

      The videogame industry inside of the U.S. suffered the most from the Great Crash. But everywhere else barely noticed, especially since PC games were coming into their own across the world (including the States). Arcades were still doing will enough to stay alive, too. While Nintendo did revitalize the U.S. part of the industry in 1985 with the help of a Robotic Operating Buddy and a plumber stomping on turtles and eating mushrooms, the industry as a whole never stood a chance of completely dying because of the Great Crash.

      reply to this | link to this | view in chronology ]

      • icon
        PaulT (profile), 6 May 2021 @ 11:36pm

        Re:

        Yeah, I'm always intrigued to hear of the crash, since I don't recall any of that happening in the UK. But, I didn't own a console as a kid and it would have been around 1983 when I bought my first ZX Spectrum, so maybe I just wasn't paying enough attention at the time. It definitely didn't make an impact on the local availability of arcade machines to me, though.

        "garbage releases such as E.T. and the Atari 2600 port of Pac-Man"

        I think that it wasn't so much the quality of those games that mattered, but the processes that led to them. They were both rushed cash-ins on products popular elsewhere, both made by a single person in an industry that paid them little to no respect at the time, and they manufactured a ridiculous number of cartridges over what could reasonably be expected to sell (I've heard that there were more E.T. cartridges than consoles!)

        That seems to be what spelled Atari's doom, it's not simply that there were some bad games, it's that they were such obvious cheap cash-ins, and their management seemed to lack any business sense at that time.

        "yes, those stories about the landfill are 100% true"

        There's a documentary called Atari: Game Over, where they film an excavation of a site where some of the cartridges were buried.

        reply to this | link to this | view in chronology ]

        • icon
          Stephen T. Stone (profile), 7 May 2021 @ 4:53am

          I've heard that there were more E.T. cartridges than consoles

          Yep, Atari expected that game to be a console-seller. That thousands of copies ended up in a landfill alongside broken consoles (among other things) should tell you how well that plan worked.

          (Full disclosure: I owned a copy of E.T. once.)

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 7 May 2021 @ 6:29am

            Re:

            Yep, Atari expected that game to be a console-seller. That thousands of copies ended up in a landfill alongside broken consoles (among other things) should tell you how well that plan worked.

            Fun fact. There are asm patches out there that fix E.T.'s bugs, and even the AVGN actually gave it a favorable review.

            The issue with E.T. was that it was one of the first examples of the quality to expect from the modern video game industry.* Back when E.T. was released consumers at large hadn't really dealt with such a terrible release yet. Let alone on a regular basis. E.T. violated their expectations for a game release and the sales figures reflected that. (Good luck with getting that outcome today...) If E.T. had been released today, it would have been given favorable reviews. Not great, but a 68-77% score on metacritic wouldn't be out of the question. People just had vastly different expectations back then.

            *:That is an insult to E.T. At least you can finish the game. There are plenty of cash grabs today that don't even boot out of the box without mandatory day one patches. Let alone 30-40 years from it's launch....

            Yeah, I'm always intrigued to hear of the crash, since I don't recall any of that happening in the UK.

            The great video game "industry" crash of the 80s is a US centric thing. The rest of the world was, like everything else, not in the US' picture. Don't let it bother you too much. The main issue was the pure level of crap that was being flooded onto the US market. Both products and business practices that would not have flown or were hard to export to other countries at the time. Hence, the US was pretty much the only market truly hit with a crash.

            Today, consumers can experience some games before they pay for it, thereby avoiding the problem. It's a clear win for purchasers, thanks to intense competition.

            That was industry standard back during the crash. Shareware and demos were a thing for almost every major developer and even startups. Today, they've started to bring some of that back. Most notably on Nintendo's systems, but it's nowhere near what it used to be. Freeimum games don't qualify here either as the entire point is that the download is free but the actual intended method of gameplay costs money. Demos and shareware tended to be fully functional within the limits of their trial, and a single one-time payment permanently unlocked the rest. Unless you count piracy prior to purchase a valid "trial". There really isn't a wide amount of industry support for try-before-you-buy today.

            reply to this | link to this | view in chronology ]

      • icon
        Bloof (profile), 7 May 2021 @ 5:23am

        Re:

        Atari buying licenses left and right didn't help, expecting one or two programmers to make a usable game on five year old hardware in a few weeks without any thought of the game being fun or good.

        reply to this | link to this | view in chronology ]

    • icon
      Bloof (profile), 7 May 2021 @ 1:40am

      Re: Competition Wins Again

      Just ignore how these 'free' games are jam packed with a million little microtransactioms and gambling mechanics designed to prey on childen. 'Hey kids, want that cool costume your friend has? Money please! You might also be able to win it from a sparkly, flashy loot box for less money, but probably won't. Don't worry, your parents won't mind just one lootbox... Or the next you buy without asking, and the next, and the next...'

      Kids are emptying their parents bank accounts on these transactions, becoming addicts that the industry sneeringly refers to as 'whales', but it's fine, it's all just a harmless, fun free game.

      reply to this | link to this | view in chronology ]

      • icon
        Samuel Abram (profile), 7 May 2021 @ 5:30am

        Re: Re: Competition Wins Again

        I don't mind the microtransactions as much as other people; costumes are aesthetic and don't buy you an advantage, so I'm okay with it.

        The lootboxes/gambling is extremely problematic, though, and if there's one place where I think video games should be regulated it's that aspect.

        reply to this | link to this | view in chronology ]

        • icon
          Bloof (profile), 7 May 2021 @ 8:34am

          Re: Re: Re: Competition Wins Again

          If the game is targeted at kids, the costume dlc becomes problematic as there's intense peer pressure to buy rather than use any of the default skins. Kids have been subjected to online bullying for not being able to keep up with their peers, whose parents buy them season passes and give them money to blow on these things, I've known kids of friends who've stolen to fund buying 'optional' fortnight add ons because of pressure from friends and the game itself to spend spend spend!

          If it were one or two packs, yeah, fine, but it's endless.

          reply to this | link to this | view in chronology ]

  • icon
    Darkness Of Course (profile), 6 May 2021 @ 3:50pm

    But the store ...

    The story of Epic's rise is interesting. Their store, less so. To the point it made me think of Malvina Reynolds, "The New Restaurant".

    Tag line, But the food was terrible.

    In Epic's case, But their store is terrible.

    http://www.malvinareynolds.com/mr118.htm

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 7 May 2021 @ 3:40am

    There's 1000s of free games on phones buy game X,
    They make money selling skins or costumes etc gershin impact is the biggest mmo in years its free they make money by selling addons new characters but you can play it without buying anything whales will spend 100s of dollars buying in game items
    At this point it's a proven model
    Many ebooks are free book 2 and 3 cost money
    Fortnite is like Minecraft it's a meta game
    People buy things like batman skins marvel characters
    Being free means there's always new players to ay against
    Many online games fail cos there's not enough players to play against
    The biggest Call of duty game Warzone is free
    You are paying in a way with your time
    You provide targets for the pubstompers to fight
    On the Web the most sought after currency is attention
    Since there's almost an endless amount of games to play
    Online games need 1000s of players to survive
    Apps like discord measure their worth in no of users
    Online games have a network effect
    When your friends play game X you are more likely to play it
    It's well known free is a good business model for many
    apps and games
    Most podcast s are free
    You pay by listening to ads
    Radio and TV started of being free before cable TV was invented
    You can't pirate a free online game

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 7 May 2021 @ 7:09am

    It's impressive how EPIC managed to provide the gaming industry with a very solid product in Unreal Engine, which is behind many great games they take a cut of, but that wasn't enough for Tim.

    At east they have a decent return policy, unlike battle.net.

    reply to this | link to this | view in chronology ]

  • icon
    n00bdragon (profile), 7 May 2021 @ 9:30am

    Fortnite isn't a video game. It's an advertisement for digital costumes. I'm as anti-DRM as they come but saying that Fortnite is an example of why piracy doesn't matter is just sinking your own argument with bad logic.

    The idea that the entire video game industry is shifting to a model where exploiting small children and people with addiction problems is the standard order of the day keeps me up at night. I hope no game developer reads this article and honestly thinks "Gee, piracy makes selling actual games so difficult. I should just make a digital casino instead."

    reply to this | link to this | view in chronology ]

    • icon
      nerdrage (profile), 7 May 2021 @ 10:02am

      Re: you wanna really lose sleep?

      I've been tracking the sports industry and how it's going to transition from dying cable/broadcast to streaming and I'm getting more and more convinced that they're going to "solve" the problem of overly greedy sports leagues (the reason Netflix won't touch sports) by adding a new revenue stream of gambling.

      reply to this | link to this | view in chronology ]

  • icon
    nerdrage (profile), 7 May 2021 @ 10:00am

    there's no free lunch

    Of course free is a great business model, just look at YouTube, Facebook, Twitter and Google. But of course these aren't really "free." They're ad-based which makes the user the product, not the customer. The customer is the advertiser.

    I've played free to play games, and still do, but it's obvious now being free kinda screws things up when some people will pay real world money for enhancements to give them an edge. I refuse to do this on principal. Any fool can buy their way thru a game. I beat their asses anyway hah. I can tell who they are because they have items that are unobtainable through gameplay.

    In the end, I only really trust products that ask me to pay them and don't show me ads. It's nice to have the payment upfront and not hidden.

    reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 7 May 2021 @ 11:02am

      Re: there's no free lunch

      "but it's obvious now being free kinda screws things up when some people will pay real world money for enhancements to give them an edge"

      There's plenty of business models out there, but the play to win model is the one that really sucks. But, it's not just free to play in that case - the real bad guys are the ones that sell you a $60 game then has loot boxes. Fortunately, many countries are cracking down on that as the gambling it is. If your game has items you can't get without paying, it's an immediate delete for me, there's no way that developer isn't nerfing unprofitable players and trying to push everyone to pay. I'm one of the people who cancelled the preorder of Star Wars Battlefront 2 after they announced play to win loot crates and have never gone back.

      I don't have a massive problem with cosmetic microtransactions since most people are capable of self control, but how do you ultimately regulate that? Peer pressure and fashion aren't something that's easily regulated, though easy to exploit.

      "In the end, I only really trust products that ask me to pay them and don't show me ads"

      Sadly, the reason why so many games go free to play, especially on mobile, is because so many people would rather go through the rigmarole of getting free loot and occasionally cracking to make a purchase, than they would pay $5 for the thing upfront. At least there's subscription services trying to bridge the gap, but it's hard to judge whether developers are going for the easy cash or just going to where they will actually break even.

      reply to this | link to this | view in chronology ]


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