Connect with us

Gaming

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

Published

on

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.

Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Gaming

It’s the battle of the alien symbiotes in Venom: Let There Be Carnage trailer

Published

on

Tom Hardy returns to the big screen as the lethal protector Venom, taking on Woody Harrelson’s villainous Cletus Kasady/Carnage, in Sony’s forthcoming film Venom: Let There Be Carnage.

Tom Hardy (Mad Max: Fury Road) returns as intrepid reporter Eddie Brock, infected with a parasitic alien symbiote that gives him super powers, in Venom: There Will be Carnage. Directed by motion-capture icon Andy Serkis, it’s the sequel to 2018’s box-office smash, Venom. After being delayed for nearly a year due to the ongoing pandemic, Sony just dropped the official trailer, in which Brock/Venom must battle serial killer Cletus Kasady (Woody Harrelson, Zombieland), infected with another alien symbiote dubbed Carnage.

(Some spoilers for first film below.)

A Venom film was in development at New Line Cinema back in 1997, although the project didn’t really get off the ground until Sony acquired the rights to the character, as well as Spider-Man. Sony initially planned for Venom and Spider-Man to inhabit a shared universe, given their history in the comics. (Spider-Man was Venom’s first host, before moving on to Brock, and the character gradually evolved from villain to more of an antihero.) The disappointing box office performance of 2014’s The Amazing Spider-Man 2 changed those plans, and Venom was re-conceived as a standalone film, with Tom Hardy signing on as the star and Zombieland director Ruben Fleischer agreeing to direct.

That first film served as an origin story for our antihero. A bioengineering firm called the Life Foundation discovered a comet covered with symbiotic lifeforms and brought four samples back to Earth. Brock’s then-fiancée, Anne Weying (Michelle Williams, Fosse/Verdon), shows him classified documents revealing that the foundation is conducting human/symbiote experiments. The symbiotes need oxygen-breathing hosts to survive, but they invariably end up killing those hosts.

Hot on the story, Brock breaks into the research lab and ends up infected with one of the symbiotes, named Venom. Venom reveals that the symbiotes are intent on taking over Earth by possessing/devouring all humans, but Brock ultimately strikes up a bargain with Venom, and they decide to protect Earth instead. Together, they take on Life Foundation CEO Carlton Drake (Riz Ahmed, Sound of Metal), infected with a symbiote called Riot.

Venom was released in October 2018 and was roundly panned by critics, several of whom specifically bemoaned the lack of a Spider-Man connection. Audiences, however, begged to differ. Venom racked up $856 million globally and was the seventh-highest grossing film of the year. Hardy had already committed to two sequels, and a midcredits sequence featured Harrelson’s Cletus Kasady taunting Brock (who is interviewing Kasady for a story) from his cell. Kasady vows to escape and bring “carnage,” leaving little doubt as to the villain’s identity in a sequel.

Audiences particularly responded to the burgeoning relationship between Brock and Venom, who remained secretly bonded at the film’s end as a kind of hybrid vigilante. One scene in particular—Venom giving Brock a lingering French kiss while transferring from Anne’s body back to Brock’s—launched a thousand ships for “Symbrock.” Sony embraced the fan response by marketing the home release with ads playing up romantic-comedy overtones.

The trailer for Venom: Let There Be Carnage plays up more of a bromance/odd-couple angle, opening with Brock and Venom preparing breakfast—with mixed results—as Venom raspily sings along to “Let’s Call the Whole Thing Off.” Brock’s friendly neighborhood convenience store owner, Mrs. Chen (Peggy Lu, Always Be My Maybe), is back to provide comic relief, Williams reprises her role as Anne Weying, and Naomie Harris (Skyfall, Moonlight) plays a secondary villain named Shriek—because even serial killers like Kasady need a love interest, and this one can manipulate sound.

Other than Kasady’s escape and emergence as Carnage, the trailer gives little away as to the actual plot, although there do seem to be elements from the Maximum Carnage storyline. Chances are, if you enjoyed the first Venom film, you’ll like the sequel, too.

Venom: Let There Be Carnage opens exclusively in theaters on September 24, 2021.

Listing image by YouTube/Sony

Continue Reading

Gaming

Sony says PS5 could be difficult to find into 2022

Published

on

Enlarge / This Sony engineer can get a PS5, but millions of others can’t, thanks to short supplies that are likely to continue.

Sony thinks demand could continue to outstrip supply of the PlayStation 5 into 2022. That’s according to a Bloomberg report citing a number of unnamed analysts who listened in on an explanatory call following Sony’s recent earnings report.

“I don’t think demand is calming down this year, and even if we secure a lot more devices and produce many more units of the PlayStation 5 next year, our supply wouldn’t be able to catch up with demand,” Sony CFO Hiroki Totoki reportedly said.

Sony has been warning for months that worldwide shortages of semiconductors and other components have made it hard to increase production for the PS5. But this is the most direct sign that those shortages will extend past this year and into the next.

Sony President and CEO Jim Ryan said in February that he expected PS5 supplies would “get better every month throughout 2021,” leading to “really decent numbers indeed” by the second half of this year. But Totoki amended that statement in April to say that it’s “not likely” Sony could “drastically increase the supply” before the company’s fiscal year ends in March 2022.

Supply problems aside, demand for the PS5 seems to be matching that of the early days of the PS4, which has sold over 115 million units to date. The PS5’s 7.8 million sales through March and 14.8 million additional projected sales in the current fiscal year are broadly in line with sales of the PlayStation 4 at the same point in its life cycle.

But while the PS4 was in short supply in the early months of 2014, by August of that year, Wired was citing the lack of retail PS4 shortages as one reason behind the system’s unexpected success at the time. In other words, the difference between shelves full of PS4s and shelves empty of PS5s is due to the supply, not demand, levels between the two systems.

Totoki reportedly told analysts that he “can’t imagine demand dropping easily” for the PS5, and that situation would continue to put pressure on Sony to increase supplies in any way it can. But with the company already taking a loss on every system sold, spending more money to secure scarce chips over competitors could be difficult (if it’s possible at all).

Put it all together, and you have a situation that could mirror that of the Nintendo Wii, which remained hard to find on store shelves for well over a year after its late-2006 release. That situation got so bad that former Nintendo of America President Reggie Fils-Aime had to actively deny that there was a conspiracy to keep Wii supplies artificially low.

Today, of course, Nintendo is facing the same semiconductor shortages as Sony in trying to keep up with demand for the Switch, as are many carmakers. All told, it looks like the “big scramble” for silicon chips is set to continue for a while.

Continue Reading

Gaming

New book Press Reset investigates the high human cost of game development

Published

on

Enlarge / Jason Schreier’s latest deep dive on the game industry is out on May 11 at all major booksellers.

Grand Central Publishing

Games industry journalist Jason Schreier has left his mark over the years by digging up behind-the-scenes dirt at sites like Kotaku and Bloomberg, but he may be best known for Blood, Sweat, and Pixels. This 2017 book broke down like a Schreier’s “greatest hits” collection: Every chapter followed a particular game and its lead studio through a wild “triple-A” period in the late ’00s and early ’10s.

If you’ve read BSP or any of Schreier’s other investigative stories, you’ll likely notice common threads at modern game studios, no matter which genre or specific company is involved. The first brilliant stroke of his newest book, Press Reset: Ruin and Recovery in the Game Industry, is to take that concept a step further. Individual games and studios get an occasional spotlight, but this time, Schreier often follows individual developer résumés to answer a few huge industry questions.

Continue Reading

Trending