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JULY 10, 2018 //     

How Fortnite shows the changing economics of video games

By Andrew Rogers

It’s no understatement to say that the video game, Fortnite, has become a global phenomenon. Even those that don’t actively play the ridiculously popular Battle Royale game will have seen front-page stories about children who supposedly 
can’t stop playing the gameworries about its promotion of violence, and teachers concerned about its effect on students’ sleep. Everywhere you look, there is Fortnite. Its popularity is driven by a combination of competitive gameplay, watchability and it’s totally free to play.

Free-to-play is not a new concept in the games industry. As it became clear that mobile gamers wouldn’t pay high prices (or any price really) for smartphone-based games it was adopted by default. Candy Crush, Pokémon Go and Clash of Clans have shown how lucrative a game can be using the freemium model with unlimited optional micro-transactions.

However, micro-transactions have faced criticism recently that they made games frustrating and boring to play – a criticism aimed at the recent Harry Potter mobile game – or they give such big advantages in-game that playing competitively online for free is a waste of time.

Fortnite: A level playing field?

Fortnite sidestepped these criticisms by offering micro-transactions that give players weapons and costumes that look different but don’t confer any real game advantages. This means theoretically there’s a level playing field between a brand-new player and one who has bought everything on offer. There is one less barrier to entry for new players to jump into online play. Unsurprising then that the launch of the Nintendo Switch version of the game was downloaded 2 million times in under 24 hours.

Does this strategy work though? New research carried out by LendEDU says that it absolutely does. On Fortnite, 69% of players have bought in-game purchases. The average spend is just over $85, in line with the retail price of a ‘traditional’ boxed game. Interestingly, 1 in 5 of those spending didn’t realise that paying for items didn’t give them an advantage during play.

The need for a clear communications strategy

Crucially though this all highlights the need for clear and transparent messaging when it comes to in-game transactions. Free-to-play games are the standard and consumers won’t accept price increases in the best games. So faced with rising development costs, it makes sense to turn to in-game transactions as a revenue stream. However, gamers want to feel that these transactions are clearly explained. EA’s recent problems with Loot Boxes have shown what happens when a muddled communication strategy makes an entire game toxic.

Engaging with influencers and stakeholders is key for games companies. Transparency on how transactions work and why certain revenue models are adopted engenders loyalty. This filters down from the most passionate gamers, to average gamers and then to gaming forums like Reddit and YouTube.

There is, after all, a fine line between being the next Fortnite and being the next Harry Potter: Hogwarts Mystery. Get it right, and you’re a global phenomenon. Get it wrong, and it can be Game Over.


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