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Epic Games, the creator of Fortnite, banked a $3 billion profit in 2018 – TechCrunch

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Epic Games had as good a year in 2018 as any company in tech. Fortnite became the world’s most popular game, growing the company’s valuation to $15 billion, but it has helped the company pile up cash, too. Epic grossed a $3 billion profit for this year fueled by the continued success of Fortnite, a source with knowledge of the business told TechCrunch.

Epic did not respond to a request for comment.

Fortnite, which is free to play but makes money selling digital items, has popularized the battle royale category — think Lord of the Flies meets Hunger Games — almost single-handedly, and it has been the standout title for the U.S.-based game publisher.

Founded way back in 1991, Epic hasn’t given revenue figures for its smash hit — which has 125 million players — but this new profit milestone, combined with other pieces of data, gives an idea of the success the company is seeing as a result of a prescient change in strategy made six years ago.

This past September, Epic commanded a valuation of nearly $15 billion, according to The Wall Street Journal, as marquee investors like KKR, Kleiner Perkins and Lightspeed piled on in a $1.25 billion round to grab a slice of the red-hot development firm. However, the investment cards haven’t always been stacked in Epic’s favor.

China’s Tencent, the maker of blockbuster chat app WeChat and a prolific games firm in its own right, became the first outside investor in Epic’s business back in 2012 when it injected $330 million in exchange for a 40 percent stake in the business.

Back then, Epic was best known for Unreal Engine, the third-party development platform that it still operates today, and top-selling titles like Gears of War.

Why would a proven company give up such a huge slice of its business? Executives believed that Epic, as it was, was living on borrowed time. They sensed a change in the way games were headed based on diminishing returns and growing budgets for console games, the increase of “live” games like League of Legends and the emerging role of smartphones.

Speaking to Polygon about the Tencent deal, Epic CEO Tim Sweeney explained that the investment money from Tencent allowed the company to go down the route of freemium games rather than big box titles. That’s a strategy Sweeney called “Epic 4.0.”

“We realized that the business really needed to change its approach quite significantly. 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,” he explained.

Tencent, Sweeney added, has provided “an enormous amount of useful advice,” while the capital enabled Epic to “make this huge leap without the immediate fear of money.”

LOS ANGELES, CA – JUNE 12: Gamers ‘Ninja’ (L) and ‘Marshmello’ compete in the Epic Games Fortnite E3 Tournament at the Banc of California Stadium on June 12, 2018 in Los Angeles, California. (Photo by Christian Petersen/Getty Images)

Epic never had a problem making money — Sweeney told Polygon the first Gear of Wars release grossed $100 million on a $12 million development budget. But with Fortnite, the company has redefined modern gaming, both by making true cross-platform experiences possible and by pulling in vast amounts of money.

As a private company, Epic keeps its financials closely guarded. But digging beyond the $3 billion figure — which, to be clear, is annual profit not revenue — there are clues as to just how big a money-spinner Fortnite is. Certainly, there’s room to wonder whether analyst predictions this summer that Fortnite would gross $2 billion this year were too conservative.

The most recent data comes from November when Sensor Tower estimates that iOS users alone were spending $1.23 million per day. That helped the game bank $37 million in the month and take its total earnings within Apple’s iOS platform to more than $385 million.

But, as mentioned, Fortnite is a cross-platform title that supports PlayStation, Xbox, Switch, PC, Mac, Android and iOS. Aggregating revenue across those platforms isn’t easy, and the only real estimate comes from earlier this year when Super Data Research concluded that the game made $318 million in May across all platforms.

That is, of course, when Fortnite was fresh on iOS, non-existent on Android and with fewer overall players.

We can deduce from Sensor Tower’s November estimate that iOS pulled in $385 million over eight months — between April and November — which is around $48 million per month on average. Android is harder to calculate since Epic skipped Google’s Play Store by distributing its own launcher. While it quickly picked up 15 million Android users within the first month, tracking that spending off-platform is a huge challenge. Some estimates predicted that Google would miss out on around $50 million in lost earnings this year because in-app purchases on Android would not cross its services.

There are a few factors to add further uncertainty.

Fortnite spending tends to spike around the release of new seasons — updated versions of the game — since users are encouraged to buy specific packages at the start. The latest, Season 7, dropped early this month with a range of tweaks for the Christmas period. Given the increased velocity at which Fortnite is picking up players and the appeal of the festive period, this could have been its biggest revenue generator to date, but there’s not yet any indicator of how it performed.

More broadly, Fortnite has undoubtedly lost out on revenue in China, which froze new game licenses nine months ago, thereby preventing any publishers from monetizing new titles over that period.

Tencent, which publishes Fortnite in China, did release the game in the country but it hasn’t been able to draw revenue from it yet. The Chinese government announced last week that it is close to approving its first batch of new titles, but it isn’t clear which games are included and when the process will be done.

Already, the effects have been felt.

Games are forecast to generate nearly $40 billion in revenue in China this year, according to market researcher Newzoo. However, the industry saw its slowest growth over the last 10 years as it grew 5.4 percent year-over-year during the first half of 2018, according to a report by Beijing-based research firm GPC and China’s official gaming association CNG.

Fortnite and PUBG — another battle royale title backed by Tencent — have perhaps suffered the most since they are universally popular worldwide but unable to monetize in China. It seems almost certain that those two titles will receive a major marketing push if, as and when they receive the license and, if Epic can keep the game competitive as Sweeney believed it could back in 2012, then it could go on and make even more money in 2019.

Epic Games is taking on Steam with its own digital game store, which includes higher take-home revenue rates for developers.

But Epic isn’t relying solely on Fortnite.

A more low-key but significant launch this month was the opening of the Epic Games store, which is aimed squarely at Steam, the leader in digital game sales.

While Fortnite is its most prolific release, Epic also makes money from other games, Unreal Engine and a recently launched online game store that rivals Steam. Epic’s big differentiator for the store is that it gives developers 88 percent of their revenue, as opposed to Value — the firm behind Steam — which keeps 30 percent, although it has added varying rates for more successful titles. Customers are promised a free title every two weeks.

Either way, Epic is betting that it can do a lot more than Fortnite, which could mean that its profit margin will be even higher come this time next year.

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Finch trailer is carefully tailored to push all the right warm, fuzzy buttons

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Apple TV+ has dropped the official trailer for Finch, its forthcoming sci-fi film starring Tom Hanks as a robotics engineer who survives an apocalyptic solar flare, then goes on a trek to mountain safety with his trusty dog and robot sidekick. That is so Tom Hanks, amirite? Yes, this is a real movie, not a gag. Based on the trailer—carefully tailored to push all the requisite emotional buttons—the film looks like a strange mix of Castaway, Wall-E, and Chappie. In the right hands, that unlikely mix just might work.

The title was BIOS when the film was originally announced in 2017. The global pandemic put the planned 2020 theatrical release on hold indefinitely, and Universal Pictures eventually sold the rights to Apple TV, which changed the title to Finch. There are reasons to be cautiously optimistic. The film is directed by Miguel Sapochnik, the mastermind behind several big, battle-centric episodes of Game of Thrones, including “Hardhome,” “The Battle of the Bastards,” “The Long Night,” and the hugely controversial (because of a favorite character’s heel turn) “The Bells.” The spec script by Craig Luck and Ivor Powell made 2017’s “Black List” of favorite unproduced screenplays. And you’ve got the world’s most likable everyman (Hanks) in the lead role.

Per the official synopsis:

Tom Hanks stars as Finch, a robotics engineer and one of the few survivors of a cataclysmic solar event that has left the world a wasteland. But Finch, who has been living in an underground bunker for a decade, has built a world of his own that he shares with his dog, Goodyear. He creates a robot, played by Caleb Landry Jones, to watch over Goodyear when he no longer can. As the trio embarks on a perilous journey into a desolate American West, Finch strives to show his creation, who names himself Jeff, the joy and wonder of what it means to be alive. Their road trip is paved with both challenges and humor, as it’s as difficult for Finch to goad Jeff and Goodyear to get along as it is for him to manage the dangers of the new world.

We hear Finch in a voiceover ruminating on just how quickly the world turned into an inhospitable hellscape: “Goodbye crops and food, goodbye everything.” We see him retreat to his underground bunker and befriend Goodyear, who is clearly a Very Good Boi (and a much livelier companion than Wilson the volleyball in Castaway). Finch is delighted when he succeeds in building a robot that clearly states its mission: “Robot must protect dog.” But when an approaching storm threatens to wipe out their enclave, the trio embarks on the aforementioned road trip, hoping to reach the mountains, where apparently they will be safe—or as safe as one can be under the circumstances. Count on at least a couple of gut-wrenching moments to play on our heart-strings before it’s over.

The trailer also hints at other human survivors, possibly hostile, “hiding in the shadows.” The limited cast list appears to confirm this: Samira Wiley plays a survivor named Weaver, while Laura Harrier and Skeet Ulrich play characters named Linda and Sam, respectively.

Finch debuts November 5, 2021, on Apple TV+.

Official trailer for Apple TV+’s Finch.

Listing image by Apple TV+

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Valve moves Dota 2 International to Romania, adds mask-and-vax rules

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Valve announced this week that its prestigious Dota 2 tournament The International will require all attendees to be fully masked and vaccinated for entry.

As noted on the Dota 2 site, anyone attending the October competition at the National Arena in Bucharest, Romania, must be at least 10 days out from their final vaccination, and attendees will need to present proof of inoculation (which must be in either English or Romanian) along with a photo ID to gain access to the event grounds and tournament arena. All attendees must also wear a mask and proof-of-vaccination wristband along with their registration badges. Additional safety protocols will be put into place throughout the tournament.

Now in its tenth year, The International gathers together the best Dota 2 teams from around the globe to compete for a multi-million dollar prize pool.  But over the past year, Valve has not had an easy time with COVID-related restrictions for its annual tournament. The company’s initial plans to hold The International 10 in Stockholm were scrapped earlier this summer after the Swedish Sports Federation decided not to include esports in its officially recognized body—a move that meant anyone traveling for the tournament would be denied an entry visa.

Valve’s subsequent requests for the Swedish government to intervene were denied, with the company announcing the move to Romania in July. (2020’s tournament, which was also planned to be held in Stockholm, was indefinitely delayed in April 2020 over safety concerns amidst the global pandemic.)

The move to make The International a fully-vaccinated, fully-masked tournament is just the latest in a growing trend of gaming events tightening up COVID restrictions. For instance, this summer’s PAX West in Seattle required attendees to present either proof-of-vaccination or a negative PCR test for entry, as well as wearing a vaccination-proof wristband along with their registration badges.

The International 10’s group stage, which doesn’t appear to be open to the public, will be held October 7-10, while the main stage tournament event (the only stage Valve is selling tickets for) will be split between two midweeks running from October 12-15. The finals are scheduled to be held on October 16 and 17. Tickets for the main stage will go on sale September 22, and those are sold in three separate two-day bundles.

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RIP Sir Clive Sinclair, creator of UK’s famed ZX Spectrum gaming computer

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Enlarge / Sir Clive Sinclair holding the world’s smallest television screen when it was created by Sinclair Radionics in 1977.

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Sir Clive Sinclair, the namesake of a British electronics manufacturer who helped pioneer Europe’s microcomputing boom, is dead at the age of 81.

His company, Sinclair Radionics, is arguably best known around the world for 1982’s ZX Spectrum, an early example of a computer capable of multi-color, real-time graphics. The device dominated the UK and other European territories in the early 1980s. This computer was a major processing step up from black-and-white Spectrum computers like ZX80 and ZX81, and it debuted in a configuration priced as low as £125. American readers probably best know this platform thanks to popular and ambitious ZX Spectrum games from the little developer Ultimate: Play The Game. That company eventually rebranded itself as Rareware and turned into a ’90s powerhouse on Nintendo consoles.

Yet before his name became interminably linked to gaming history, Sinclair’s rise to running his own electronics manufacturing company largely resembles the stories of American electronics pioneers who began as garage hobbyists. A BBC documentary, Clive Sinclair: The Pace Setters, chronicles the inventor’s rise, which began with him selling one-at-a-time radio kits via mail order in the 1960s.

As the documentary is region-locked, many readers will have to settle on this BBC text version of its highlights, which follows Sinclair’s rise as a maker of British pocket calculators and portable TVs before redirecting his efforts to personal computers. During this time, an effort to get the British government to back Sinclair as a formally supported PC maker, especially as the government began bullishly promoting computer access in homes and schools, fell apart. Instead, rival computer manufacturer Curry became a “BBC Micro” partner. Sinclair and Spectrum fired back with the more powerful ZX Spectrum, which went on to sell over 5 million units. Sadly, the rest of his career didn’t reach the same heights, and it was largely marked by botched efforts to launch electric modes of transport, including the famous failure that was the pod-like C5 “car.”

For a charming Clive-on-Clive conversation, check out this 1990 interview with longtime British TV host Clive Anderson (Whose Line Is It Anyway?), complete with the two men looking at and talking about various Spectrum inventions over the years—including, incredibly, Sinclair’s failed C5.

Sir Clive Sinclair talks about his product history in 1990.

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