Tech companies like the FAANG group (Facebook, Amazon, Apple, Netflix, and Google) are constantly making headlines. Whether it be new product releases, congressional hearings, or security concerns, most investors know to watch for these companies. However, outside of that circle, there are several other tech companies making huge waves — and profits — in the sector. One company, Epic Games, took in an estimated three billion dollars this year thanks to its massively popular video game Fortnite. While many people have heard of the game, some are surprised to learn that it costs nothing to play.
Fortnite Battle Royale, a third-person online multiplayer shooter, has become a hit with teen and young adult players. According to one report from Tech Crunch, Epic Games makes money off the game by “selling digital items” through the game’s virtual currency, known as V-Bucks. Players can purchase V-bucks with real cash, and use their digital V-bucks to buy unique character skins, outfits, and emotes (celebration dances), according to PC Games N.
Tech Crunch reports that Epic Games, aided by a $330 million investment from Tencent, a China-based tech company, has been pioneering this model of game release since at least 2012. In contrast, many large game developers tend to release their product in a similar fashion as movie releases, charging up to $60 for the game when bought new. Epic, however, noticed that their competitor’s games morphed over time so that the online multiplayer aspect of the titles began attracting more players. By releasing their content for free but offering in-game purchases, Epic was able to lure in customers quickly and now boasts more than 200 million players, according to one report from NBC.
“We realized that the business really needed to change its approach quite significantly,” said Epic Games CEO Tim Sweeney while speaking to Tech Crunch. “We were seeing some of the best games in the industry being built and operated as live games over time rather than big retail releases. We recognized that the ideal role for Epic in the industry is to drive that, and so we began the transition of being a fairly narrow console developer focused on Xbox to being a multi-platform game developer and self publisher, and indie on a larger scale.”
Currently, Epic Games is privately held, but Tencent Holdings, which controls 40 percent of Epic Games, is publicly traded. Fortnite is presently available across multiple devices including “PlayStation, Xbox, Switch, PC, Mac, Android and iOS,” according to Tech Crunch. In 2019, NBC report’s that Epic Games may begin hosting Fortnite tournaments with massive cash prizes. As the game sinks deeper into the cultural landscape, its likely Fortnite will continue to gain popularity.