We can all learn from Fortnite's crazy success
If you havn’t heard of Fortnite, you’ve been living under a rock for about six months now. The hugely popular battle royale game is pulling in made bank. Reportedly making $300,000,000 in the month of April, 2018 alone. Fortnite is a multiplayer game in which you can either play as a solo, duo, or in a squad of four to kill the remainder of 100 players. You can play Fortnite on almost any gaming medium including: Xbox, Playstation, PC, Iphones, and just recently became compatible with the Nintendo Switch. Where it amassed two million downloads in under two weeks. It’s no doubt that epic game’s success is nothing to question. They’ve the hottest trend of 2018 and have become very profitable from it.
Why has it been so successful?
The marketing of Fortnite is something to be impressed with and let me tell you why.
- Fortnite took a huge gamble and it paid off greatly. What gamble? They offered their game for FREE.
While they do have an actual game that requires being purchased, the battle royale mode that everyone plays is completely free to play. So what makes Fortnite money? Their use of purchasable items within the application.
This removes the entry barrier for players. They don’t have to fork over $60 in the beginning by purchasing a new game. Instead, they can join, get addicted to the game, and then start paying for items in the game – but only the game content they want.
Why is paying for only the game content they want is so important
Lets dive a little deeper. Why is this business model so successful for Fortnite? Because it’s proven successful time and time again in other markets. Let’s take another huge company: Netflix. You likely already know what Netflix is, but if you don’t, it’s a subscription service that pretty much removes the need for cable. You can stream only the content you want – whenever you want.
While you do have access to all the content on the service, it feels like you’re only paying for the content you want. They isn’t a huge bundle that you have to pay a lot for – no extra $10 for that HBO subscription you never watch on cable and you can access it anywhere you have internet.
Five years ago, Netflix was a stock valued at $31. Today, they’re almost thirteen times that amount. With an annual profit of around $560,000,000 I think it’s safe to say that Netflix has figured out the subscription service model.
Netflix has gotten so big, that you may of seen in the news recently for a bidding war between Comcast and Disney for 21st century Fox.
But what’s this have to do with Netflix? It’s thought the winner of this bidding war is going to be the only company big enough to rival Netflix’s subscription service. This is because with the winning bid, the victor will receive an additional 30% stake in the streaming service Hulu. Making them an actual contender to rival Netflix. That’s right, Netflix has gotten so big that it’s forcing companies like Comcast and Disney to open up their pocket books to just try to compete with them.
But Fortnite doesn’t have a subscription?
Yes, this is true. But they do – it’s just conveniently disguised. On top of offering the in game purchases of cosmetic character items, they offer a feature of the ‘battle pass.’
This allows players to compete in challenges in the game they’re already playing and fit in more with the rest of the community who spends the $10 to get one. Yup, you guessed it – it only lasts for a ‘season’ so you’ll have to buy another one in about two months to fit in with the community and compete in challenges.
(Brief side note to investors on this page)
Slightly off topic, but if Netflix’s success over the last five years impresses you, you need to be paying special attention to the counterpart of Netflix right now: Spotify. Spotify recently went public – about two months from the time of writing this article.
Like Netflix, Spotify is a subscription based service in which members pay monthly. Something that I think is going to continue to become the ‘new thing’ in the marketplace. While there has been concerns about Spotify not paying enough per stream to artists, I’m personally investing in this stock while I have the chance to.
Fortnite’s Success – Everyone should Shift towards Subscriptions
It’s apparent to me that the shift is becoming more and more of subscription based services. Who wants to own anything anymore? Why not rent it for the time you want it, get exactly what you want in that time in your life, and move on to the next venture. While that may be a little deep for a video game – let’s look at other markets and businesses that are seeing the same trend.
The Housing Market
The argument of whether it’s better to rent or own has been going on for as long as private property has existed. On one side, the expenses of a property can add up – and you have to pay those as a landlord. However, by renting you’re paying someone else to not have to worry about a mortgage and costly fixes along with the freedom of being able to move whenever. This makes many argue that renting is better than owning.
But where’s the proof? It’s reported that more people are renting right now than every before. In fact, it’s at the highest point in fifty years. Okay, more people are renting, but who cares? Let’s look at another market before getting into that.
Air bnb and Uber
You know both of these companies. But what do they have in common? They offer an alternative to owning. They provide a service which satisfies a need at a given time, without any commitment.
Uber has a gross revenue of $37,000,000,000 – Which they would of retained more in 2017 if it hadn’t been for scandals and payouts
The thing that blows business people away whenever it comes to these massive numbers, is that none of these companies, Epic Games, Uber, Air bnb, own any substantial assets. Funny enough, they kind of ‘rent’ the things they use to make money, other people’s assets.
Why has it been so successful?
2. Fortnite brought people together.
But there’s plenty of things that bring people together right? Dinner at a restaurant brings people together? Sure, but not at the level of Fortnite.
By offering it on every device that can connect to the internet, they removed all entry barriers for people to play. And whenever one friend in a group joins, they want to play other game modes than just the solo gameplay. Hence, they begin sparking interest to their friends of the game.
Things are social now. And if your business model doesn’t represent this, then you’re missing out on a huge chunk of profits. But let’s not just look at Fortnite for this, let’s again look across the board.
Fortnite proves the market is social – And businesses should be too.
Let’s look at Wells Fargo for a second. It’s hard to be certain, but Wells Fargo is accepted as the largest bank in the United States. But Wells Fargo had a fear very recently. That a little app called Venmo would take over the friend to friend money exchange market. And it did. Why? Because it was social, it connected people and did one thing very well – give money to your friends.
This social aspect of this application brought fear to the largest bank in America. think about that for a second. So much, that Zelle was immediately introduced and millions were spent on advertising it to try to compete with Venmo.
2. Social Media
This one isn’t a shock to anyone, so I won’t spend very long here. Let’s just go over some earning numbers of some of the most social platforms on Earth.
Facebook made $40,000,000,000 in ad revenue in 2017. Even if it was kind of shady with the methods. However, I’m still in the mindset of preferring my ads to be catered to me. Hate me for it, but anything I share on a website about my interests and likes, I enjoy the high tech, specifically tailored, website experience – ads and all.
Snapchat had a revenue of around $830,000,000 in 2017 although they still aren’t profitable at the time of writing this, but that’s a different story. Honestly, SNAP has figured out the social aspect, but in my opinion has lost touch with their user base. (This is one reason why I won’t invest in SNAP).
With Instagram stories overtaking SNAP’s market, I believe we’ll see SNAP continue to enter panic mode and continue to make dramatic changes to their platform – hoping something sticks with their community.
Instagram is projected to make a revenue of $10,000,000,000 in 2019. This crazy amount is only set to climb higher and higher with their ever increasing user base.
There’s countless other platforms which have a social aspect to them, including already mentioned air bnb, Uber, Netflix, and more. The market is becoming a social playground. If your friends are doing it – you should be too.
Why has it been so successful?
3. Fortnite Fails quickly.
I read a book a bit ago that I feel emphasizes this point perfectly. The book was “Do More Faster” by Techstars.
In this, they describe something that I now live by. They asked CEO’s why a smaller company is always a threat to huge Goliath companies. The answer? Small companies can fail much more quickly than a huge company. But why is failing quickly a good thing?
Failing quickly allows a company to get something that is very important – user feedback. Fortnite has mastered this. With weekly additions, new items and game modes, constant alterations to the gameplay, and so much more. Fortnite fails quickly – and they make the game better because of this.
It’s strange to think of Fortnite as a ‘small company’ but in a sense, that’s what they are. They’re one battle royale, with one map, and only cosmetic differences among players. This allows them to fail quickly and make the game better.
There’s a lot to learn from Fortnite and this just scratches the surface of all their success. But they have undoubtedly linked together so many important aspects of how business is changing. Adapt or die. Follow Fortnite’s lead and your business should be fine.