Fortnite Phenomenon Turns Epic Game Developer Into Billionaire

Tim Sweeney made Fortnite a phenomenon by doing something that sounds crazy: He gave it away. That strategy has made him a billionaire, according to Bloomberg.

Fortnite’s popularity isn’t surprising. Its revenues are. Between the release of the current version in September and the end of May, Fortnite brought in more than $1.2 billion, according to SuperData Research. As of early June, it has been played by 125 million people. That’s powered a revenue surge at Epic Games, the company Sweeney created in his parents’ basement 27 years ago. Fortnite alone is on track to generate $2 billion this year, making the gamemaker worth $5 billion to $8 billion, according to the Bloomberg Billionaires Index.

Instead of shelling out upwards of $40 for the game, players buy online V-bucks, a virtual currency they can exchange during play for outfits, called skins, celebratory dances or special missions that can cost as much as $20 each. Many accessories in the Fortnite shop are available on a limited basis, prompting players to buy before coveted items disappear from virtual shelves. All that commerce translates into some of the highest rates of revenue-per-user in the industry and operating margins north of 50 percent, according to analysts.

Based on the trading multiples of peers Electronic Arts and Activision Blizzard, Epic could be worth as much as $14 billion, though potential buyers would demand a discount due to questions over whether Fortnite could sustain revenue growth. Even if sales were to fall to $1 billion a year, half of its current estimate, the company could still reasonably command $7.5 billion in a sale. That’s a bonanza for Sweeney and Chinese internet behemoth Tencent, which bought 40 percent of Epic in 2012 at an $825 million valuation.

While most games hit peak popularity shortly after launch, Fortnite was still drawing millions of new users six months on, thanks to a broadly appealing aesthetic that’s more comic mischief than graphic violence. Celebrity fans such as rapper Drake and the Los Angeles Lakers’ Josh Hart have pushed it further into mainstream consciousness. French soccer star Antoine Griezmann celebrated a goal in the World Cup final this month by performing the game’s “Take-the-L“ dance.

Fortnite also started as a paid product. Launched in July 2017 as a $40 version where players built forts to defend themselves against zombie hordes, the game really took off after Epic made it free and added the multi-combatant style of play. Its success surprised even Epic.