Fortnite is nothing short of a modern phenomenon.
In the space of a year, Fortnite has become one of the most talked about games ever, with everyone one from rapper Drake and NBA stars, to your children or younger sibling obsessed with it. One topic which tends to come up whenever the uninitiated have conversations about Fortnite is how, despite being completely free to download onto virtually any platform, it has managed to make billions of dollars. However, the question we will be examining is: Is Fortnite making so much money despite being free or because it is free?
What is Fortnite?
Created in 2017 by Epic Games, Fortnite is an online, free-to-play, battle royale which mixes elements of a first-person shooter with the unbridled architectural freedom of a sandbox game. A total of 100 players land on an island and have to use their creativity and skill to stay alive as the game progresses, with the last player standing winning.
However, none of the above is extraordinarily unique to Fortnite as its visuals, gameplay and features have all been iterated in different games in the past. From its cartoonish, brightly colored graphics reminiscent of the Saints Row video game series, to its first-person shooter style comparable to the likes of Call of Duty. Even its sandbox features such as the ability to build virtually anything have been compared to Minecraft. Two features significantly differentiate Fortnite from any other game before it: Its ability to mix all these different styles seamlessly into one game and the fact that it is functionally completely free.
But loads of games are free, right?
There are two elements of Fortnite's "free-ness" that differentiate it from other games. The first is the fact that game itself is free to download on any console, computer, or virtually anything with a screen and access to the internet. The other, much more unique feature is that it is impossible to buy your way to a better performance. You can't buy or play your way to a better gun, better armor or anything else that would improve your gameplay. Whether you started playing yesterday or you are the world's best player, if you enter the same map, you will always be on equal footing, at least as far as your avatar's capabilities are concerned.
Then how does it make so much money?
This is the part of Fortnite's model which makes people scratch their heads. There have been free games or "freemium" games as they are commonly called for years, with their popularity exploding since the advent of the smartphone, but they use a different model from Fortnite. Freemium games come across as free but end up drawing their money by offering you those types of aforementioned upgrades which Fortnite does not. If you spend money you either gain access to better materials, weapons, armor or, most commonly, you can pay to save yourself time, skipping long waits by shelling out some form of a virtual, in-game currency (usually bought with very real currency). At a certain level with freemium games, these incentives become so powerful (such as waiting two days for lives to restore or a structure to built) that gamers either have to abandon it or pay.
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This does not mean that Fortnite doesn’t have its own form of ingame currency. You spend "V-bucks" in the game and while you might not be able to buy a better gun or stronger armor, you can buy a snazzy new costume or new dance moves or even a fancy new glider (even if functionally identical). However, it is all cosmetic, nothing you buy will ever improve your actual performance, it will only ever just make you look, well…cooler.
Then seriously…how does Fortnite make money?
That is exactly how. Some gamers have shelled out hundreds of dollars on no more than this, the ability to look a bit cooler than their fellow players. And it is not an anomaly; a recent survey of players by LendEDU revealed that nearly 69% of players had made an in-game purchase averaging almost $85 each. Once you factor in the fact that, as of June 2018, Fortnite had more than 125 million active users – that’s an unconscionable amount of money. It made $1bn between January and May of 2018 and in May alone the game made $318m! it quickly surpassed the former record holder, Pokemon Go, and is now the highest grossing free-to-play game ever.
That’s millions upon millions of dollars being spent on dance moves and meaningless costumes. the question is not how is Fortnite making so much money but…
Why is Fortnite making so much money?
There are a number of theories that come into play when trying to analyze this question. The most obvious is, since it was free and managed to catch quite a viral wave upon its initial release, it has been fortunate to just build a massive, uniquely addicted user base of players. Even if each active player spent only $1 a month on their avatar, it would still end up earning near unprecedented amounts of profits. However, as mentioned, most people spend much more than a dollar a month on their account.
Another possible reason is simply the culture which has formed around the game. If you are found playing in a standard skin on Fortnite, it won't be long before you hear the insult "no-skin" being yelled at you. No-skin is an updated iteration of the classic "n00b" insult; it indicates you're a rookie who is so new to the game that you are still rocking the basic features. Or that you are poor and, as we know, kids can be mean.
Is that really it?
People not wanting to be called a rookie just doesn’t seem to account for the unprecedented amounts of money Fortnite is making. However, the YouTube philosophy channel "Wisecracked" have a more nuanced theory as to why Fortnite has managed to make so much money and its speaks to human phycology and the fundamental nature of our entire economy.
They compare the Fortnite phenomenon to an economic theory first proposed by Thorstein Veblen called "conspicuous consumption". This theory essentially points to something we are all very aware of today; people do not buy things purely for utility; people buy things to feel and appear special.
Wisecrack makes the argument that Fortnite doesn't make money despite being free, it makes its billions because it is free. It has such a large base of players who are incapable of differentiating themselves with their more powerful guns so since they can't differentiate themselves through performative means, they resort to the only thing open to them which are all purely cosmetic.
However, there is no reason to think that the majority of Fortnite players are wealthy, which makes the above behavior strange. Veblen accounts for this with a factor called "pecuniary emulation". While many of the players might not be rich, they do want to escape their reality and part of that is by appearing to be rich. Therefore, their purchasing of skins and other essentially useless features is part of their escapism. However, some of the Fortnite users will, in fact, be richer than the average and will want to separate themselves even further from this faux class, therefore buying even more, newer stuff propelling the cycle.
This could be considered the gamification of Veblen's economic theory because, along with all those behavioral quirks inherent to all of us, Fortnite also uses the same flashy lights and time-sensitive offers every other game does to elicit urgency in gamers and provide dopamine hits when acted upon.
Is the future Fortnite?
Whatever the reason, Fortnite is undeniably very successful. So successful in fact that Epic Games has recently upped the money it pays to digital creators (individuals who create animations, texture, music and other in-game features). Previously, it is a 70-30 split with Epic taking 30% of profits when items were bought on platforms like Steam. Now, it is an unprecedented 88% share to the creators. And they are making the change retroactive, meaning if you have been creating features for the game from its release, you can expect quite a bonus soon.
The question is, how will other game companies learn and emulate Fortnite? Is this a unique phenomenon which was a combination of luck and timing? Or has Fortnite changed the economics of games forever and will this replace the default freemium model most mobile games have used for the last decade? Only time will tell.