Fortnite is one of the most popular games in recent years. It is a combination of a first-person shooter and a building game. In June, the game had 125 million registered players and created over 1.2 billion in revenue from in-game purchases. (Palmeri et. Al 2018) The average Fortnite player spends $58.25 on the game. (Gershgorn 2018) However, Fortnite’s business model based on version pricing of a product is not very innovative.
The remarkable thing is the extent to which Fortnite utilizes versioning to manage its network effects. When network effects are in place, the network’s value depends on the amount of other users in the network. The value is the willingness to pay for network participation. In this case the product is offered for free and revenue is generated by micro-transactions on virtual cosmetics such as avatar skins and emoticons. The incentive to join the online community is provided in the form of a well designed game. But the options for interacting with that community are quite limited.
Epic games, the developer, maximizes accessibility for new players. Anyone who owns a smartphone, Xbox, Playstation or pc, can install and play the game for free. Also, in-game purchases (monetary or with in-game currency) have no influence on a player’s competitive capabilities and thus the outcome of the game. (fortnite 2018) This step away from the “pay-or-spend-hours-of-time to win” reduces the negative network effect of unequal changes at victory due to the amount of time spent in-game. New players have no competitive disadvantage to seasoned players.
Revenue is solely generated by cosmetics sales, which only become valuable if there is a community to appreciate them. Fortnite focused its pricing model on the needs that arise within a community and the ability to satisfy those needs: Meeting people, communicating with them and having a good time with them. The game offers limited possibilities for direct communication between other players. Therefor a player has two options for making contact with the online community: Introducing and expressing oneself by memes, skins and emoticons; The majority of which have to be purchased, thus generating revenue. Or inviting friends from already existing social groups, with whom alternative methods of communication are easily established; Thereby actively contributing to the growth of the network. If a player does not do either of these, the gaming experience can be a lot more individual and anonymous.
The developers of Fortnite understand the added value of online gaming communities and use this to manage the created network effects. Anyone is encouraged to experience their game. But the free to play experience comes in consequence of loneliness.
Gershgorn, D. (2018) Fortnite is free, but the average player spends $58 on it. Quartz.com retrieved from https://qz.com/1315120/the-average-fortnite-battle-royale-player-spends-more-than-55-on-it/
Palmeri, C., Pendleton, D. (2018) Fortnite Mania Fuels Epic Growth to $8.5 Billion. Bloomberg. retrieved from https://www.bloomberg.com/news/features/2018-07-24/fortnite-phenomenon-turns-epic-game-developer-into-billionaire
Hi Timothy, do you think that introducing pay-to-win items in the shop would ever be a good idea for a game like Fortnite?