It’s no secret that the video game Fortnite is huge nowadays.
The only thing larger than it may be the valuation of its developer, Epic Games.
According to a new report from Bloomberg, the value of the company is now estimated to be worth roughly $5 billion (£3.8bn) to $8 billion (£6.1bn).
Fortnite’s phenomenal popularity has been credited with boosting Epic Games’s valuation
Although the exact amount that Fortnite contributed to the company’s valuation is unknown, there’s no question it played a very prominent role, as the video game reportedly earns an average of about $2 million (£1.5m) per day on mobile devices alone.
Jefferies Financial Group Senior Vice President of Equity Research Timothy O’Shea summed up the relationship between Fortnite’s popularity and Epic Games’s valuation by simply saying: ‘Epic’s valuation has exploded alongside Fortnite’s success.’
To illustrate the company’s rapid valuation growth, the Chinese holding firm Tencent Holdings Ltd. bought 40 percent of Epic Games for $330 million (£254m) in 2012, back when the company was valued at roughly $825 million (£635m).
This means that Epic Games’s valuation has surged up to $7 billion (£5.3bn) in just six years.
Many industry analysts credit the video game’s revenue model with its outstanding financial success. Though free-to-play, its in-game store allows players to purchase special outfits, character dances and missions through a virtual currency called V-bucks, which in turn are purchased in exchange for actual money.
The limited availability of many of the game’s store items often prompts players to buy them before they’re no longer available, creating a sense of urgency – and monetary gain for Epic Games.
‘On the revenue side, they’ve done something that’s really unique, which is come up with a perception of exclusivity. If you see another player in a leopard skin and go to the store and see it’s no longer available, you think, shoot, I’ve got to move on it next time,’ said Wedbush Securities Inc. analyst Michael Pachter.
Fortnite has raked in millions from in-game store purchases of characters, missions and more
The massive growth in the video game company’s valuation has also been padded by other recent successes, such as the release of other games and updates to its Unreal Engine. The video game developer also sold its popular Gears of War video game series to Microsoft in 2014.
However, it’s still impossible to discount the role that Fortnite has played in the explosive growth of Epic Games’s valuation. The video game has reportedly made more than $1.2 billion (£923m) from in-game purchases and stands tall as by far the most popular game in the fast-growing battle royale video game genre, believed to worth a staggering $20 billion (£15.3bn) by 2019.
Currently, Fornite’s player base is estimated to consist of about 125 million people worldwide.
What is Epic Games?
Epic Games is a video game developer founded in 1991 by Tim Sweeney, originally as Potomac Computer Systems.
Originally based in Sweeney’s parent’s house in Potomac, Maryland, the company relocated to Cary, North Carolina in 1999 and rebranded itself as Epic Games.
The company develops the Unreal Engine, one of the most popular video game engines in the industry, and has also produced a number of other prominent video games in addition to Fortnite, including the action-shooter franchises Gears of War and Unreal and the Infinity Blade fighting game series.
What is Fortnite?
Fortnite is a free-to-play video game developed and published by Epic Games.
Initially released in July 2017, its phenomenally-popular battle royale mode was introduced shortly afterwards in September 2017. The game mode sees 100 players battle it out in fast-paced matches that blend action-shooter, survival and fort building gameplay.
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