Fortnite deals a blow to its competitors

Fortnite is a competitive shooter that is free to download.
Fortnite is a competitive shooter that is free to download.PHOTO: EPIC GAMES

The free-to-play battle royale game is threatening traditional game-makers

WASHINGTON • The wild success of Fortnite - Epic Games' free-to-play battle royale game - has rattled the gaming industry, proving how a business model that does not require the purchase of a big-budget title can attract a massive audience and keep players coming back.

While industry analysts are unsure whether Fortnite and games like it will permanently boost the overall pool of gamers or merely siphon off players from other titles, its staggering achievement poses a challenge to incumbent, traditional game-makers.

Last week, one of the industry's biggest gaming companies, Activision Blizzard, announced it is laying off nearly 800 workers, as the company forecasts a drop of nearly 20 per cent in revenue this year.

Despite posting the best financial results in the company's history, Activision Blizzard said it failed to meet its "full potential".

Executives cited weaker-than-expected demand and an inability to boost in-game purchases.

The company is grappling with multiple issues and Fortnite has had an impact on them, said Mr Scott Kessler, an analyst with CFRA.

He said: "People have only so much time in the day and so much money to spend.

"One thing is obvious: Legacy gaming companies have had a hard time introducing games that have substantial and sustainable development."

In a statement to The Washington Post, Activision Blizzard, which makes Call Of Duty, Overwatch and Hearthstone, said it is boosting the number of developers working on key titles by 20 per cent, returning to "the franchise focus that has fuelled our long-term success".

While the rise of Fortnite, at least in the short term, has translated to less time and money spent by some gamers on other titles, the broader impact of the game rests in its business model, said Mr Michael Pachter, an analyst at Wedbush.

He said people are spending less time on popular games, such as Call Of Duty and Electronic Arts' Battlefield, reflecting Fortnite's immediate impact and market-share cannibalisation.

However, Mr Pachter added that Fortnite has also attracted new gamers who are younger and more diverse, paving the way for future free-to-play titles that do not rely on the traditional US$60 (S$81) retail purchase of a new game.

"Is the Fortnite business model a threat to Activision Blizzard and others? The answer is yes," Mr Pachter said.

Just days before Activision Blizzard disclosed the layoffs, Electronic Arts, another major American game-maker, announced that its free-to-play battle royale game, Apex Legends, had gained an astonishing following of 25 million players only a week after its release.

Apex Legends drew 10 million gamers after just three days, Electronics Arts said, racking up new players at a record pace. It took Fortnite two weeks to achieve that benchmark.

Similar to Fortnite, Apex Legends is a competitive shooter that is free to download. The game features characters that have special abilities and forces players closer together as time elapses during a match, escalating the chances of confrontation.

One added twist is that, unlike Fortnite, characters can be resurrected after they are killed, allowing players to stay in the action throughout a match.

The game's developer, Respawn, is also banking on prominent video-game streamers to elevate Apex Legends' popularity.

In partnership with Twitch, a live-streaming platform with a massive gaming audience, Respawn has announced a tournament in Europe and North America, with prizes totalling US$200,000.

Mr Pachter highlighted other ways Electronic Arts and Apex Legends are taking cues from Fortnite, pointing to money-making add-ons such as selling access to character outfits and customised weapons and offering paid passes that let players unlock additional in-game items.

"They are copying them every step of the way and it's brilliant," he said. "Emulation is the sincerest form of flattery."

Mr Timothy O'Shea, an analyst at Jefferies, said the biggest gaming trend this year will be the acceleration of the free-to-play model.

"It becomes a lot harder if you're Activision to pony up and pay US$60 for Call Of Duty when other people are offering quality games for free," he said. "This is the final evolution of a 10-year trend transition away from these retail models selling a disc at GameStop."

While the free-to-play model might not work for every genre of video game or for every game-maker, publishers and developers who abstain may be at risk if the market tips further towards these big, free, multi-player titles, Mr O'Shea said.

"Make no mistake. The biggest games in the world will continue to be free," he said.


A version of this article appeared in the print edition of The Straits Times on February 20, 2019, with the headline 'Fortnite deals a blow to its competitors'. Print Edition | Subscribe