Fortnite Can Take eSports To The Next Level
The recently-gone-viral game, Fortnite, is a prime example of successful growth hacking that can be applied to a variety of startups and it may take the eSports industry to the next level.
Fortnite is a recently released *free* game that is basically The Hunger Games, Minecraft, and a little bit of dancing all wrapped up into one. It’s a free-for-all game where 100 players are dropped onto an island and try to outlast everyone else to win. The game is available across multiple gaming consoles as well as online.
Fortnite’s style isn’t anything new, but it is redefining the business model. A similar style game (minus the world building) called PlayerUnknown’s Battleground (PUBG) blew up this past fall and introduced this format to gamers. While both games developed passionate fan bases, there are a few material differences between the games. Graphically these games are opposite: PUBG is realistic looking, while Fortnite is cartoonish. More importantly their revenue models are different. PUBG migrated to a “pay-to-play” format — typical for most games; however, Fortnite is free to play, and will continue to be free to play for years to come.
Fortnite’s free-to-play model and unique growth tactics have made it a cultural phenomenon. It pushed into the mainstream faster than rolled ice cream swept the country. Unlike those stores, Fortnite doesn’t disappoint. After some research into Fortnite’s growth, it became clear that this game is conjuring up some growth hacking magic. It recently broke all-time records with 3.4 million people simultaneously playing. To give this context, Rocket League, another immensely popular game with a dedicated online gamer base, maxed out at 220,000 simultaneous players. Chance the Rapper, aka the king of grassroots followings, even called it out. Clearly something is clicking.
The goal is to even make their parent game, Fortnite: Save the World, free to play as well. Originally, Fortnite: Battle Royale was just a teaser for the main course. The entrée was Save the World, a game that has been in production for 6+ years. When PUBG blew up in popularity, the Fortnite team tweaked some features and pushed out Battle Royale. Suffice to say, its popularity wildly exceeded their expectations. Battle Royale was free and intended to drive people to Save the World, which was also set to be free. This begs the question: how the hell did they plan to make money?
You might assume that they would eventually charge for gameplay, especially considering that was the path Rocket League took. Instead, they are adamant they will always let both Battle Royale and Save the World be free to play. While Save the World was originally intended to be a game where players had to buy additional content, Battle Royale has limited options to follow that model. The company said it won’t stoop to selling upgrades either, which eliminates most traditional paths for monetization. The company behind it, Epic Games, isn’t working for free. The game requires hundreds of thousands of lines of code and work hours to build. Their employees don’t take altruism as a salary and the more time that passes, the more money they’re bleeding.
The unknown is now about how they will monetize the Fortnite games without hurting the fanbase. The first thought is in-app purchases. The equivalent for an iPhone app is buying swipes in Tinder or Premium in Spotify. This seems to be their original plan. For the entrée (Save the World), the team was going to charge for increased access to new levels. In-app purchases are a huge industry worth roughly $30–40 billion in revenue per year. The “freemium” model has worked in the past. They may continue this model for Save the World, but how do they monetize their “teaser” game? Clearly this is more popular than the entrée will ever be. It’s hard to believe that Epic Games will make their money back selling pink “skins” on Valentine’s Day either.
One strategy would be to simply replicate Save the World and charge for increased access to new maps and skins — but will that really bring home the big bucks? Probably not. A more interesting and lucrative strategy is to make it an eSport.
We might be witnessing the rise of the first mainstream eSport, and it’s the perfect time for it. The NBA is building an official 2K league, Robert Kraft recently bought a Boston eSports team, and the Olympics committee is considering making it an Olympic sport for 2024. If you think this is getting a little out of hand, just look at the numbers. ESports is projected to be a $1.5 billion industry by 2020 with advertisements for events generating $5.20 per viewer. There are already over 300 leagues ranging from FIFA to Call of Duty. Fortnite is likely watching what PUBG is doing too. The similar style game just had its first eSports invitational event, showing it’s a viable route for Fortnite as well.
Fortnite has been coy about its plans so far; however, there are already a number of leagues popping up. Several professional gaming teams have created squads and signed players. The first shot has been fired as the baddest “Builder” in the land, Ali “Myth” Kabbani recently inked a deal.
It appears that the strategy for game monetization is evolving right before our eyes. Savvy startups are eyeing bigger prizes and forgoing sales revenue to build networks of devoted players, similar to HQ Live Trivia’s strategy. Word of mouth across niche communities is driving adoption without a need for marketing budgets — a lesson for any startup eyeing growth. Know your audience and drive it home to them first. While they may be bleeding cash now, their sights are set on a lucrative payday. If the team can bring this to primetime eSports, they’ll mark the rise of eSports into the mainstream and a new generation of investment opportunities in the space. Keep an eye out on this game and this industry.
Disclaimer: This article does not intend to provide investment advice. The companies mentioned are not currently or planning to raise funds via Slice Capital’s funding portal. Slice Capital does not view the companies mentioned as direct competitors to any of the issuers currently raising on Slice’s funding portal.
