Is Fortnite Quietly Hurting Video Games?
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A SuperData July 2018 report said some interesting stuff about Fortnite. Essentially, as the report spread through the usual spaces, the question of whether or not Fortnite was “cannibalizing” games was being raised. But despite that, companies such as EA are saying that Fortnite is actually good for games. So which is it? Is Fortnite, with its uncanny ability to generate billions of dollars, sucking up all the video game money and hurting the industry? Or is it pulling everyone else up with it?

Let’s go over the SuperData report first. Obviously, Fortnite is a huge success. The game has made over $1 billion in revenue in a year’s time. That’s wild. Fortnite has made so much money that its developer, Epic Games, is reinvesting $100 million into kickstarting an esports scene for the game. The company is also adjusting its asset marketplace for Unreal Engine 4 to give developers a bigger cut. They’re just giving every money away, relative to the usual split in similar marketplaces, because the company doesn’t need any more money at this point.

Now, let’s take a look at the numbers. For the second quarter of 2017. Fortnite streaming went up by 60% compared to the previous quarter. Meanwhile, games such as League of Legends, Overwatch, and Counter Strike: GO fell. The first two fell around 15-20%, while CS:GO dropped just over 50%. Now, that looks pretty bad, but SuperData noted in the report that these numbers do depend on events like tournaments, so some of the drops could be coincidental despite the overlap in audience. However, there’s another piece of data that’s a bit more alarming.

Going to quarter two for 2018, SuperData says that total digital console sales for Sony and Microsoft jumped 49% year-over-year. Quarterly sales reportedly went up 7% compared to the previous year. Seems good, right? SuperData suggests that if Fortnite is removed from the equation here, the sales actually go 6% in the opposite direction, compared to last year. That’s a pretty big difference. So the question there is, if Fortnite didn’t exist, would those disparate percentages be closer together or would that 6% decline be the active number?

It’s earnings call season, and several big, AAA companies were asked about this. EA’s Andrew Wilson states that Fortnite is a net good for the industry, suggesting that the game has expanded the overall audience for video games. People, especially younger people who were not into games before Fortnite, are now interested in other games, which Wilson believes will turn into good holiday season numbers. However, he also said that Fortnite has also impacted EA game movement, because there are only so many hours people have for games. Activision Blizzard had an interesting take on the matter, suggesting that its players always come back for the tentpole franchise releases.

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SuperData isn’t quite buying either. While EA is hoping for long-term gains from Fortnite, and Activision Blizzard looks to its usual slate of big releases to fill in the interim gaps, SuperData’s glass is half-empty. SuperData suggests that while new players have emerged and entered gaming because of Fortnite, they’re just playing Fortnite. And so are other people who used to player other games. The company refers to the gaming market as a “zero-sum” situation, and that once the Fortnite growth settles down, we’re going to see overall losses from other companies funneled into the people who stick around with Fortnite long-term. Essentially, the fad will eventually calm down, but Fortnite won’t disappear, will still be huge, and will still be a time sink that takes over what would otherwise be sales for your Call of Duty and Battlefield releases.

Video games are always changing, and there’s always something new and big waiting to happen and disrupt all the old, long-running franchises. Call of Duty can’t stay on top forever, and it won’t. In its time, the likes of Minecraft and Fortnite happened, among other things. The reality of the situation is that Fortnite is more than just a fad, and that it’s going to be sticking around for a long time, even when some chunks of the audience move on to other things. And live service games are not going to be the long-term answer for dwindling profits they were implied to be, for reasons EA’s Andrew Wilson gave above. There’s too many games that demand too much time now, and gamers are out of time. People are settling into their one, maybe two live games, and not touching others. Is this a problem, or a good opportunity for the industry to correct in a new direction? We’ll find out soon enough.

Lucas White
Lucas White

Writing Team Lead
Date: 08/15/2018

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