10 July 2018

How Fortnite shows the changing economics of video games

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 game, worries about its promotion of violence, and teachers concerned about its effect on students’ sleep. Everywhere you look, there is Fortnite.

For most however, its combination of competitive gameplay and watchability online has made it so popular to play and to stream. This has of course been helped in no small part because the game is free.

Free-to-play… for now

Free-to-play is not a new concept in the games industry. Mobile gaming pushed the model as it became clear that mobile gamers would not accept paying high prices (or any price really) for smartphone-based games. Candy Crush, Pokémon Go and Clash of Clans have since shown just how lucrative a game can be when games are free to start, but include the option of unlimited 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.

A level playing field

Fortnite has cleverly sidestepped these criticisms by offering micro-transactions that give players weapons and costumes that look different, but do not confer any actual real game advantages. This means that there is theoretically 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. 69% of Fortnite players have bought in-game purchases, with an average spend of over $85 (pretty much in line with the retail price of a ‘traditional’ boxed game). Interestingly though, 1 in 5 of those spending in-game did not realise that paying for items was not giving 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. As consumers increasingly expect free-to-play games and won’t accept major price increases in the best games (even as development costs increase), in-game transactions make sense as a further 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 key influencers and stakeholders is key for games companies to explain how their transactions work and why certain revenue models are being adopted. This can then filter down to the most passionate gamers, and through to the average gamer through gaming forums, Reddit, and prolific YouTubers, as well as the traditional games media.

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.