Epic Games had  in 2018 as good a year as any tech company. Fortnite became the most popular game in the world. The company's valuation rose to $ 15 billion. Epic achieved $ 3 billion in revenue for the year, fueled by the continuing success of Fortnite (19459005), a source of business knowledge, to TechCrunch.
Epic did not respond to a request for comment.
Fortnite, meaning free to play, but earning money selling digital items, has almost single-handedly popularized the category Battle Royale – 19459008 – Lord of the Flies meets Hunger Games – and it was the standout one Title for US-based game publisher
Epic, founded in 1
Last September, according to the Wall Street Journal, Epic had a valuation of nearly $ 15 billion as a marquee investor like KKR, Kleiner Perkins, and Lightspeed pocketed a piece of the glowing one in a round of $ 1.25 billion Snap development company. However, the investment cards were not always stacked in favor of Epic.
China's Tencent, the maker of the blockbuster chat app WeChat and a stand-alone game company, was the first external investor in Epic's business in 2012, earning $ 330 million for a 40 percent stake in the company.
At that time, Epic was mainly known for Unreal Engine (19459005), the third-party development platform that still operates it, and best-selling titles Gears of War.
Why should a proven company give up so much of its business? The executives believed that Epic, as it was, lived off the loan. They sensed a shift in the way games grew, based on declining revenues and growing console game budgets, the proliferation of "live" games such as League of Legends and the emerging role of smartphones.
Speaking Epic CEO Tim Sweeney said Tencent's investment allowed the company to go the way of the freemium games instead of the big boxing titles. This is a strategy that Sweeney calls "Epic 4.0."
"We realized that the company really needed to change its approach significantly. We have seen that some of the best games in the industry have been built and operated as live games over time, rather than as large retail releases. We've recognized that epic's role in the industry is to drive this forward, and so we began moving from a pretty tight console developer focused on Xbox to a multi-platform game developer and publisher and one He explained.
Tencent, Sweeney added, "provided a tremendous amount of useful advice," while the capital Epic made it possible "to make that huge leap without immediate fear of money."
Epic never had a money-making problem – Sweeney told Polygon that the first Gear of Wars release raised $ 100 million on a $ 12 million development budget But with Fortnite, the company has redefined both by enabling cross-platform experiences and taking in vast amounts of money.
As a private company, Epic keeps a close eye on its finances. But digging beyond the $ 3 billion figure – which is clear, is an annual gain and not revenue – it does indicate how big the Fortnite money spinner is. Surely, there is room to wonder if analysts' forecasts this summer that Fortnite would spend $ 2 billion this year are too conservative.
The latest data is from November, when Sensor Tower estimates that iOS users alone spend $ 1.23 million a day. That helped the casino $ 37 million a month and increased the total revenue from Apple's iOS platform to over $ 385 million.
As mentioned earlier, Fortnite is a cross-platform title, the PlayStation, Xbox, Switch, PC, Mac, Android and iOS. Aggregating revenue across these platforms is not easy, and the only real estimate comes from the beginning of this year, when Super Data Research concluded that the game brought in $ 318 million on all platforms on iOS in May on iOS not on Android and with fewer players in total.
We can estimate from the [November 2009] from Sensor Tower in November that iOS has contracted $ 385 million over eight months between April and November, averaging about $ 48 million per month , Android is harder to calculate because Epic skipped Google's Play Store by distributing its own launcher. While it quickly found 15 million Android users within the first month, tracking out-of-platform spend is a big challenge. Some estimates predicted that Google would miss around $ 50 million in lost revenue this year because in-app purchases on Android would not cross its services.
There are several factors that add further uncertainty.
Fornite's spending tends to spike around the release of new seasons – updated versions of the game – as users are encouraged to buy certain packages at the beginning. The last season, 7th, coincided with a series of optimizations for the Christmas season earlier this month. Indicate the increased speed with which Fortnite picks up players, and the attractiveness of the holidays, this may have been the biggest source of revenue yet, but there is no indication of its performance yet.
Fortnite has undoubtedly suffered losses in revenue in China, freezing new licenses for the game nine months ago. This prevented publishers from monetizing new titles during this period.
Tencent, which released Fortnite in China, however, released the game in the country It was still unable to draw revenue from it. The Chinese government announced last week that it will be close to approving its first new title, but it is not clear which games are included and when the process will be completed.
The effects were already noticeable.
According to market researchers Newzoo, China's games are expected to generate nearly $ 40 billion in revenue this year. According to a report by Beijing-based research firm GPC and China's official gambling association CNG, the industry has experienced slow growth over the last decade as it rose 5.4 percent yoy in the first half of 2018.
] Fortnite and PUBG – another Tencent-sponsored Battle Royale title – may have suffered the most because they are popular globally but can not monetize in China. It's almost certain that these two titles will get a big marketing boost when, how and when they get the license, and if Epic can keep the game competitive, as Sweeney could believe in 2012, then it could go further afield in 2019.
But Epic does not rely solely on Fortnite.
However, a major launch this month was the launch of the Epic Game Store, which is aimed directly at Steam, the leader in digital games.
While Fortnite is the most prolific release, Epic also earns with other games, Unreal Engine and a recently launched online game store that competes with Steam. Epic's biggest differentiator for the store is that developers can earn 88 percent of their revenue, unlike Value – the company behind Steam – who owns 30 percent, even though they added different prices for more successful titles. Customers are promised a free title every two weeks.
Epic believes that it can do a lot more than Fortnite, which could mean that its profit margin will be even higher next year.