Fortnite makes around $4bn a year in revenue, it is the fourth most played PC game in the world. Epic Games is estimated to have made $6bn in revenue in 2025. But somehow it is spending more than it’s making. Midway through his note, Sweeney tacitly alludes to the fact that one of the company’s biggest costs has been its expensive legal actions against Google and Apple. Not much those developers could have done about that.
OK, I know it’s about the games industry, but teenage resentfulness or what?
But they’ve revenue! How can they lose money?
I’ve been writing about games for 30 years and it has always struck me that the wrong people are running the industry. But now, the stakes are so much higher on each shoddy, short-term bet. Famously, in 1983, the US games industry almost destroyed itself when too many manufacturers and software companies flooded the market with consoles and games that were merely weaker copies of what Atari was doing. Since then I’ve seen trends rise and plummet – arcade-style racing and fighting games, guitar games, toys-to-life games, pet sims, life sims, stealth games, massively multiplayer online games, gangster games, open world adventure games … One or two successful titles, then a glut, then the audience moves on and jobs evaporate.
That’s just how markets work, Matey. In everything.
I urgently need to retrain as a Fortnite lawyer.
How the hell can they be spending more than $6 billion pa?
Staff, offices, utilities, servers, advertising, okay.
But if lawyers are a major cost (they can’t be really) what are they billing? $500 million? Ha ha ha no fucking way.
Guardian bloke hasn’t understood what is being said. Even though he linked to the article and has been writing about games for 30 years. Legal fees? Piss all.
As the linked article quotes the CEO of Fortnite: “And, there’s a lost revenue component associated with Apple blocking Fortnite from the iOS App Store for these last four years. It’s hard to say what that would be, because it’s talking about what this alternative reality scenario would be. But it might well be a billion dollars of lost revenue in four years of Fortnite being off the iOS App Store.”
And they’re not losing $6bn. They’re just making a loss. And the biggest reason is simply that people are playing Fortnite less. They have one other money maker which is Rocket League, but Fortnite was the biggie.
Gaming stocks are some of the most high risk stocks because it’s rock star economics. If you come up with Minecraft, you’re a billionaire but most people are doing it for a hobby or living off noodles.
Precisely.
By dedicating 2 hours daily to this online job, I brought in $16,453 last month. It’s incredibly simple to start and doesn’t require any specific skills, making it perfect for anyone. For a student like me, this has been the ultimate solution to balancing my studies and finances…
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For More… Rb.gy/axcdam
True, but if they’ve really got $6bn of revenue, and are still making a loss, they must be spending at least $6bn and $1.
(or have spent and are amortising / writing off? Perhaps that’s the issue – massive past development costs that they capitalised? Don’t know without seeing the accounts)
Quite possibly. It sounds extraordinary to me but at the scale of these games there’s a lot of hardware, game versions, language versions etc etc.
Tesco won’t stock your potatoes, so what, there’s Sainsbury’s, Morrisons, Aldi, Asda, Netto, Lidl, Co-op, Iceland, KwikSave….. and even sale direct.
The difference is that if you want to sell an iPhone game, you have to use Apple’s store. There’s no other option. It’s not like PC where you can get games from Steam, Epic, GoG, or even just post an installer on a website.
I’ve rewritten iPhone apps into web for a couple of companies. It wasn’t costing them anything being on the app store as their app was free. It was the lack of freedom. If they wanted to do an update it had to be approved. And Apple would sometimes come back demanding changes, as if the software that your customers want is any of their business.
If I was to build a game it would be for PC, then if it took off do the migration work (not that tricky with the modern tools). Treat iPhone sales as a nice-to-have.
Their Epic game store has a ‘free games” feature. Every week there’s a couple of games given away, you just have to claim them.
I imagine the developers are getting money from Epic for these free copies. Perhaps not the full retail price, but something.
The recent TV series Arcane was funded by them. It’s really very good, but since it was streamed on Netflix (I think it’s also available elsewhere) I don’t know how much revenue it generated. The cost to make it is rumored to be in the $250 million range.
I suspect there are other large expenditures that I don’t know about. E.g., “fourth most played PC game in the world”, involves a certain amount of server and network expenditure.
Yeah, the Epic Store loses money. They’re trying to build a rival to Steam, and I don’t think it’s working.
“the wrong people are running the industry”
How can you write about games for 30 years and not understand that that is complete and utter bollocks?
It’s a free market. It’s a market with very few startup costs and is also about the least regulated industry there is. It’s also something people really want to do, so there’s a glut of games and lots of not very well paid people in it.
“One or two successful titles, then a glut, then the audience moves on and jobs evaporate.”
No, they don’t “move on”. The problem is too much competition. It’s the same thing as movies, that something goes unexpectedly big and now everyone throws money at stuff like it. But what people actually loved was a really great fresh thing.
If you want to try and make money in gaming (but you probably won’t), it’s original concepts and gameplay that are more likely to work. They also cost a lot less. Competing with the current competition means spending tons on music, graphics, marketing. World of Goo was made by a couple of guys over 2 years and it sold 1.3 million copies. Lemmings was 8 people and ended up selling 15m copies. Besiege is made by a team of 10 based on the south coast and it sold 4 million copies. Someone thought “I know what would be fun… a game where you have to make giant catapults and trebuchets and smash stuff up” and no-one else was doing that. It’s not a huge game, and they don’t charge a high price (£2.50 currently in the Steam sale) but they’re the only people doing it.
I know nothing about gaming but I guess there might be an “exploitation” genre as in film, where people make cheap knock-offs of the big hit all shot within 6 weeks on a shoestring budget?
It’s possible but I’m struggling to think of many. The problem is that trying to make a knock off Sniper Elite 5 means you’ll be competing with Sniper Elite 3 (£2.50).
What a lot of game companies do is to take a basic form and put a twist on it. Like Sniper Elite is partly a shooter, but you also have to sometimes avoid detection. You can’t shoot Hans at the guard post as you’ll wake all ze Germans, so you have to use a knife. There’s engines to help make these games and lots of “assets” you can buy for them. So if you want a molotov cocktail in the game, you pay a bloke £10, and then integrate it.
He should learn to code.
What are games?
I’m inclined to ask the same question. I found Asteroids intensely boring after the first 5 minutes & that’s my only experience of video gaming. On the other, hand I don’t participate in anything competitive that doesn’t produce a monetary reward. So that just leaves poker. I can’t see why winning is important so I’m not going to participate in anything where ones ranking is the object.
So that just leaves poker
Liquor up front, poker in the rear
Mass market entertainment is influenced by trends? Companies chase successful things because they think they can make money? This is world class insight. He should start a blog.
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“It should be MEEEEEEEEEEEEEEEE”
Among those laid off by Epic Games this week, there will be hundreds of people who dreamed their whole lives of this job – they may have made personal sacrifices, moved away from loved ones, incurred huge student debts.
Well that was foolish of them, wasn’t it? Game development is a shit job and has been for decades. It’s an industry notorious for chewing up enthusiastic young developers, making them work 90 hours a week during regular crunch times, and then firing them at the drop of a share price.
And if a Jeet doesn’t steal your job, Claude will.
The guys who did it early on made good money because it was technically hard. Making 3D Monster Maze run on a 48K Spectrum with a Z80A CPU took coding in assembler, knowing all sorts of memory tricks.
If you want to build a 3d game today, you have massive CPUs, massive memory and storage. You can build games in Unity 3D with C#. You’ve got events you can subscribe to (e.g. collisions), and massive libraries. It’s still something that takes skill but nothing like the same difficulty.
The rare skill today is thinking of something original in gameplay. Figuring out the next Minecraft or Katamari Damacy, not the coding of it.
Na na na na na na na na na Katamari Damacy
I am certain everyone involved in that game was on shrooms.
My friend, it’s often difficult to tell the difference between hardcore psychedelic drug use and Japanese culture
The Dream of the Fisherman’s Wife *cough*
I’ll never eat calamari again
Even more impressively, 3D Monster Maze was 16K ZX81
God you’re right, it was!
How in the world does a lawsuit eat up a significant percentage of 4-6 *billion* dollars of revenue?