Epic Games' total worth skyrockets after big Fortnite investment - Dexerto
Business

Epic Games’ total worth skyrockets after big Fortnite investment

Published: 30/Oct/2018 14:49 Updated: 30/Oct/2018 14:58

by Calum Patterson

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The success of Fortnite has now made its creator Epic Games one of the most valuable game and software development studios in the world.

The studio, which also made early entries in the Gears of War series and Unreal tournament, started work on Fortnite: Save the World in 2012, released in early access in July 2017.

But, it was the battle royale mode, released in early access in September 2017 that took the game, and the studio to new unprecedented heights.

In 2012, when development of Fortnite: Save the World was in early stages, Epic Games was worth $660 million, now, six years later it has been given a valuation of $15 billion.

The increased valuation comes after a round of funding from private equity firm KKR, which raised over $1.25 billion to contribute to more esports events.

The growth of Epic Games has made its CEO and founder Time Sweeney a billionaire, after Fortnite hit $1 billion in total revenue from in game purchases by July 2018.

Fortnite’s “Daily Item Shop” has been a catalyst for successful monetization of the free-to-play game.

The game’s microtransaction model has played a central role in its financial success, throwing out the use of the dreaded loot boxes for a less luck based (though no less lucrative) daily item system.

Each day skins, gliders, emotes, back bling and other cosmetic items are placed in the shop for only 24 hours, before changing again the next day, creating an urgency to making purchases while a particular item is available.

Fortnite also remains the most watched video game on Twitch, but statistics do show these numbers slowly dwindling, as it faces increased competition from new releases over the fall period, namely Call of Duty: Black Ops 4, and its own battle royale mode, Blackout.

Business

Activision in talks to reduce fees owed by CDL & Overwatch League teams

Published: 2/Dec/2020 22:14 Updated: 2/Dec/2020 22:35

by Theo Salaun

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Recent reports from The Esports Observer indicate that Activision Blizzard are in the midst of discussions to possibly reduce the amount the amount owed by Overwatch League and Call of Duty League franchises as part of their entry fees.

With all OWL and CDL plans derailed over the past year, Activision are reportedly trying to rework the hefty investments that organizations have made into their franchising opportunities. When the massive game development company pitched both leagues, neither was expected to be profitable in the short-term, but projections have taken an even greater hit due to current global restrictions.

A groundbreaking esports concept centered around the city-based model that is used in traditional sports, Activision required $20 million entry fees for the OWL’s first 12 teams and then fees in the range between $30 to $60 million for its next eight. For the CDL’s inaugural season, 12 teams needed to put up at least $25 million apiece, even more for cities that were in high-demand.

Now that the plans for local events have understandably shifted, neither league is expanding for their next season and ownership groups in both are looking for ways to save cash. As reported by The Esports Observer’s Adam Stern, this has engendered cost-cutting discussions with Activision’s latest new senior executive hire, Tony Petitti.

overwatch league 2020 event crowd
Ben Pursell For Blizzard Entertainment
One of the many avid crowds at Overwatch League events.

Petitti, formerly Major League Baseball’s deputy commissioner, was hired by Activision Blizzard CEO Bobby Kotick to a senior role involved with both of their leagues as the President of Sports and Entertainment. He joins Johanna Faries, a former National Football League executive, who brings a traditional sports perspective as the commissioner for both the CDL and OWL.

Given their experience with city-based sports leagues, Activision is likely aware of the profitability challenges that their current esport and sport investment groups are facing. As such, it should be no surprise that they are willing to have conversations about concessions that can make current projections fit closer to the original expectations.

As Stern reports, those discussions have included discounting some of the original entry fees: “one idea that is being weighed is reducing the amount of money they owe to the video game maker.” 

Call of Duty League LAN
Call of Duty League
Following in the OWL’s footsteps, the CDL also had huge enthusiasm for live events.

With Immortals Gaming Club selling their Los Angeles Call of Duty franchise to 100 Thieves and reportedly being interested in selling their OWL spot as well, many are wondering if franchise valuations have shifted.

Fortunately, it appears that the profitability projections have remained somewhat consistent despite current predicaments. As reported by Forbes’ Christina Settimi, 100 Thieves COO John Robinson would not set an exact figure on their LA Thieves purchase, but suggested that “franchise values have held up.”

Activision would likely want to avoid an exodus of owners, so these discussions to cut costs and protect brand health are reportedly ongoing.