New sources assume that Epic made around 3 billion US dollars in profit in 2018. Most of that surely came from Fortnite. Interestingly, the strategy for this was laid out back in 2012. That year, Epic initiated a radical change in company culture with money from China.
Where does the number come from? The tech magazine TechCrunch learned from a source that Epic made 3 billion US dollars in profit in 2018.
This is even higher than the 2 billion US dollars that experts had estimated for the profit in 2018.
Currently, the company is valued at 15 billion US dollars, after more investors jumped in at record prices in September 2018.
How does Fortnite make money? Fortnite is essentially a free title. However, through microtransactions, it sells skins, other cosmetic items, and the Battle Pass.
Especially when a new season starts (through the Battle Pass) or when a new event begins, like now during Christmas, Epic apparently makes enormous sums. These sums have increased throughout the year, as Fortnite has been released on more and more platforms.
TechCrunch assumes that Christmas could now be the biggest cash bringer for Epic.
2012 was the turning point for the company
How did the change come about? In 2012, things looked very different for Epic. Back then, the Chinese giant Tencent invested 330 million US dollars in the company and received 40% of the shares in return.
At that time, many wondered why Epic allowed this investment despite a good situation.
The head of Epic, Tim Sweeney, explained that they needed the money for Epic 4.0, for a new strategy.
The company believed it was running out of time. The old business model as a developer of “Gears of War” and the Unreal Engine was seen as being on the decline.
This is how Epic assessed the situation in 2012: The heads of Epic sensed a change in the gaming industry. They believed:
- Console games would become increasingly expensive but yield less and less profit
- They also foreseen the rise of smartphones
- They noticed the growing success of live games like League of Legends (games as a service)
These were the new goals: Sweeney used Tencent’s millions to take Epic in a new direction:
- They no longer wanted to create major release titles for retail
- But rather live games that would continuously develop
- Additionally, Epic wanted to publish the games themselves, not work for others anymore
- Epic should no longer be a studio developing for a limited market (the Xbox), but deliver for all platforms
The partner Tencent proved to be immensely valuable with advice and the capital that allowed Epic to go its own way without worrying about money, Sweeney said later to the US site Polygon.
This was the crucial point: However, Fortnite, the result of the strategy, was not a hit in the summer of 2017. As a PvE game, “Save the World” did not work.
The enormous profit in 2018 came from “Fortnite: Battle Royale.” Epic had developed this mode in the fall of 2017 in just a few weeks.
In doing so, they were inspired by the then hit PlayerUnknown’s Battlegrounds, which was only released for PC.
Thanks to the strategy change in 2012, Epic was then able to maximize profits from the success of Fortnite: Battle Royale.
Fortnite was already available on PC, PS4, and Xbox One; then it also came to Nintendo Switch, Android, and iOS devices. Epic published the game itself and was able to increase its own profits to the incredible sum of 3 billion US dollars.
Techcrunch even believes that these profits could rise even higher in 2019. Because currently, Fortnite’s way to China is blocked after a political rethink regarding video games occurred there. However, this path could soon reopen, as China has resumed the licensing of new games.
In China, Fortnite will then be distributed by Tencent.
