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Luke A. Reiner | lpr5062@psu.edu | February 19th, 2019
In late 2017, Epic Games released Fortnite, a massive online video game where 100 players are put onto one map and fight in a free-for-all or team deathmatch style to be the last ones standing. Fortnite is a free to play game, which is one of the drivers in its success. Since its release in 2017, the game has amassed more than $2.4B in revenue and well over 200 million players.
Companies such as Activision Blizzard, Electronic Arts, and Take-Two Interactive have taken a huge hit since Fortnite’s rise. Electronic Arts has suffered the worst out of the three, sliding over 40% since 2018. Activision Blizzard and Take-Two Interactive haven’t done much better, with Activision falling about the same as EA and Take-two falling 30%.
Fortnite is keeping players attention and entertained, something Activision, EA, and Take-Two are having some trouble with. In Take-Two’s case, blockbuster title “Red Dead Redemption 2” is experiencing pressure from obtaining long-term revenue potential. EA’s “Battlefield V” sold 7.3M units through the December quarter, which is over 40% less than what the previous game in the franchise debuted at, according to analysts predictions. Also, the highly anticipated “Call of Duty: Black Ops 4” title did well for the October launch, but the sales declined after and Activision is expecting weaker sales for the next game in the franchise this fall. This has negatively hit Activision with a projection of a 16% decline in net revenue for 2019. That would be the largest drop in the company’s history.
Not all the blame can be placed on Fortnite’s success, but it has hit business models. Over the last two decades, company portfolios have been reduced, such as EA’s going from 49 games in 2004, to eight for this recent fiscal year. In the current era, it is harder to get things right and ride the wave, so companies have to fully dive into the next blockbuster or sequential title in a franchise. Take-Two’s “Grand Theft Auto V” still brings in about $400M per year in revenue, so even though it is not a “game-as-a-service,” it has still found longer term success.
Recently, EA has decided to join in on the Fortnite style Battle Royale frenzy by releasing “Apex Legends,” which already has obtained 25M registered players in the first week. Fortnite took about two months to acquire a similar number. It is still to be seen whether or not “Apex Legends” will sustain the immediate success and compete with Fortnite or not. Since the first disclosure of Fortnite’s release, EA’s stock was down nearly 40%, but since has seen a 27% increase. Ultimately, the success of free-to-play games is all about getting players to pay and not just simply bringing in players to increase the numbers.
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Sources:
The Game Never Ends. Blame ‘Fortnite’ - WSJ 2/16/2019
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