MSG Team's other articles

8859 Debt to Equity Ratio – Meaning, Assumptions and Interpretation

The debt to equity ratio is the most important of all capital adequacy ratios. It is seen by investors and analysts worldwide as the true measure of riskiness of the firm. This ratio is often quoted in the financials of the company as well as in discussions pertaining to the financial health of the company […]

10833 Protectionist Sentiment over Flipkart Takeover

The Wal-Mart Flipkart deal has become historic in many aspects. Firstly, this is the biggest, most valued takeover of a company in India. Also, it gives entry to Wal-Mart to enter India via the e-commerce route. Many believe that this deal will pave the way for increasing globalization by increasing the FDI limit for the […]

10972 Restricted Stock Options (RSU’s)

In the previous article, we have already studied about option pools. We now know the various advantages that they offer and why they are preferred by startup companies as a means to compensate their employees. However, some companies and investors are not happy with the concept of stock option pools. This is because they dilute […]

9526 Hedge Funds and Regulations

Technically, the term hedge fund does not exist. In fact, the term hedge fund applies to any fund which is sold to accredited private investors and does not have to follow through with the regulation process! Now, investment advisory is a highly regulated industry and there are several laws which have been passed to ensure […]

10487 Objectives of Financial Modelling

Financial modeling enables key personnel to make better decisions. These models are used for various types of decision making. Hence, one model cannot be used for all types of decision making. As a result, several different types of models have to be created. Each of these models’ requires different inputs and provides different outputs. A […]

Search with tags

  • No tags available.

The gaming industry is notorious for being full of fads. Games tend to become popular very soon. However, their popularity dwindles at a greater pace as the next attraction hits the market. This is the reason that gaming customers have been known to be fickle and inconsistent. As a result, building a multi-billion dollar in the gaming industry was thought of as being an impossible task. Epic Games has changed this perception.

Epic Games is valued at over $30 billion making it one of the most valuable organizations in the history of the gaming industry. This valuation has led to criticism from many investors who believe that such high valuations are not justified for a gaming organization. However, the stellar success of Epic Games continues to break through preconceived notions.

In this article, we will have a closer look at how Epic Games has changed the nature of the gaming industry. We will understand how Epic Games has created innovative ways to monetize the gaming industry.

How Epic Games Became Popular?

The gaming industry is one of the most fiercely competitive industries in the world. Developers all across the world continue to launch games continuously. Hence, developing a sustainable enterprise in such a market was never an easy task.

Epic Games was able to achieve this breakthrough with their revolutionary game Fortnite. Fortnite can be considered to be the most popular game of the past decade. There are more than 200 million people across the world who play Fortnite regularly. The reasons behind the success of Fortnite are many. Some of the important ones have been listed below:

  • Fortnite is one of the most updated games in the world. Epic Games has made sure that it keeps adding new modes so that gaming enthusiasts keep coming back to play the game. Epic Games has the highest retention rate amongst gaming companies. Fortnite adds new features every week. This is what has helped keep the game popular for over two years. In fact, the popularity has continued to show an upward trend over this long period of time.

  • Fortnite is also one of the first games that provide users with a similar experience across gaming platforms. The company spent a lot of money to ensure that the game has been developed in such a way that it can be played on smartphones, gaming consoles as well as low-end computing devices as well. In fact, a player can begin playing a game on one device and can continue playing on other devices. This feature is very useful to their target market which comprises of millennials who prefer to travel.

  • Epic Games has also turned gaming into a social experience. There are special versions of the game which are suited for large groups of people. In such versions, people compete against each other individually or against other groups of people. The result is that there are many social groups that play Epic Games as a way to bond with their social group. Playing Fortnite or other such games has become a time-bound ritual and this has helped sustain the popularity of Epic Games.

How Epic Games Makes Money?

Over the years, Epic Games has created several different revenue streams. These revenue streams have allowed the company to earn revenues of more than a billion dollars. Some of the ways in which Epic games makes money have been listed below:

  • Almost all of the games launched by Epic games are free to play for the user. This helps them attract a lot of users and make the game popular. Once the users start playing the game, they tend to make microtransactions on the gaming platform. These microtransactions include in-app purchases which allow users to make cosmetic changes to their gaming character. Sometimes, in-app purchases allow users to unlock certain extra features. These in-app purchases are the largest source of revenue for Epic Games.

  • Epic Games has created a gaming engine called the Unreal Engine. This engine is allowing the company to monetize its products better. The Unreal Engine is a free tool that enables developers to make video games. Once these games have been created, they can be listed on the Epic Games platform and monetized. After these games have crossed a certain revenue threshold, Epic Games gets a 5% cut on the revenue generated by the game.

  • Epic Games has also created its own gaming library. This is seen as an alternative to the Play Store or Sony’s libraries. Since Epic Games already has 250 million users, any game listed on this library gets a large amount of exposure. Also, the transaction fee charged by Epic games is much less than the competition. The competitors charge almost 30% of the revenue generated by the game. On the other hand, Epic games charges a mere 12%. As a result, more and more developers prefer to create and list their games in the Epic Games library. The end result is that the popularity of the company is increasing by leaps and bounds.

  • Epic Games has recently launched other revenue streams as well. A virtual concert has also been conducted on their platform and that allows the company to generate another revenue stream.

The bottom line is that Epic Games has completely transformed the entertainment industry. It can be used by other entrepreneurs as a case study to understand how a company can create a sustainable brand name and enterprise in a highly fragmented market.

Article Written by

MSG Team

An insightful writer passionate about sharing expertise, trends, and tips, dedicated to inspiring and informing readers through engaging and thoughtful content.

Leave a reply

Your email address will not be published. Required fields are marked *

Related Articles

Convertible Notes and Startup Funding

MSG Team

Cash Burn Rate: The Basics

MSG Team