Live Player Analysis; Tim Sweeney of Epic Games
The first release in a series discussing live players in markets & governments.
Tim Sweeney founded Potomac Computer Systems in 1991 when in college at the U. of Maryland. He got started making games on his Apple II in his parents’ basement, his with first game was called ZZT, an action adventure puzzle game with a built-in game editor.
In ‘92, the company was renamed Epic MegaGames and in ‘98 they released Unreal, which was a huge breakthrough for 3D gaming. The Unreal Engine, developed for that game, is still a widely used game engine today. Sweeney himself was the primary architect behind Unreal Engine, which is quite a feat and shows the extreme depth of his technical skills. Each new version of the engine has broken technological boundaries in gaming.
Tim has made dozens of key decisions, unprecedented in the gaming world that have pushed Epic Games to the top.
In 2015 they made Unreal Engine free and set up a revenue sharing model. In 2017 they released Fortnite, which started as a PvE game and they added Battle Royale one month later. The game being free has brought a lot of players and attention to it over the years, their revenue being from in-game purchases (~4.5+$ bn yearly). Their pivot to Battle Royale at PUBG’s peak popularity was a critical decision that changed the company’s trajectory. Note: PUBG has declined in popularity ever since Fortnite’s launch.
After Unreal Engine, and Fortnite, the next play was a seeming impossible task. Becoming a competitor to Steam. It was a risky bet but it has been paying off. The decision was definitely in part due to Tim’s belief that stores should not be taking a huge cut of revenues. Their revenue split is slightly better for developers than Steam’s (88/12 vs 70/30) and they give away a free game every month. The store did $950M in sales in 2023, and has 270M accounts. Compared to Steam’s $8.7B in sales, and over a billion accounts. This doesn’t include Fortnite purchases which were about $5B. While it seems like a drop in the bucket compared to Steam, giving developers another option to release is always great. Epic building out their own platform is great for Fortnite’s infrastructure and long term success (Unreal Editor for Fortnite is only available on Epic Games Store). Due to the size and scope of their efforts, taking on the behemoth of Steam was a key choice that has allowed them to build their own ecosystem, free from 30% store cuts which Sweeney believes are not economically justifiable1. And they have made a stance to not allow Apple or Google to do the same to them on mobile platforms.
From 2020-2023, Epic sued Google and Apple for anticompetitive practices after it tried to bypass Apple’s 30% cut by adding direct payments in the app. Apple removed Fortnite from the App Store and Epic took them to court. Apple was required to allow developers to direct users to alternative payment methods but Fortnite is still not on the App Store(except for in the EU). They sued Google for a similar reason, Google lost and were found to be maintaining an illegal monopoly for app distribution and payment processing. Fortnite is available on the Google Play Store. The verdict may force Google to open Android to competing app stores. These lawsuits obviously benefit Epic’s financials but they also stem from Sweeney’s beliefs in open platforms, free markets, and that content creators are the most important part of an ecosystem. He argues Apple/Google’s closed ecosystems stifle innovation and hurt consumers and developers. Having a strong set of beliefs and acting on them is common among live players so it checks out that Sweeney and Epic have spent/lost over a billion dollars in legal fees and lost revenue. [He is also a large supporter of land conservation and owns over 56,000 acres in North Carolina]
Epic has made key acquisitions to strengthen Fortnite and make it the next Roblox with thousands of player-made games and experiences:
Psyonix (Rocket League) - Added a racing game in Fortnite called Rocket Racing, and upgraded Fortnite's vehicle mechanics and allowed for more cross-promotional opportunities.
Harmonix (Rock Band) - Added a Rock Band style mode into the game and sell a ton of popular songs for people to play to, as well as a ton of other music integrated emotes and experiences like in game concerts with Snoop Dogg, Eminem, Marshmello, Mariah Carey, and more.
Bandcamp -Aan indie music release platform, which has further supported Fortnite's growing presence in music culture and live events
Sketchfab - Enhanced 3D asset integration capabilities, expanding creative options for Fortnite's item shop and collaborations. And Quixel - provided Epic with a massive library of high-quality 3D scanning assets for environment design and high quality textures
SuperAwesome - Added child safety technology, to maintain Fortnite's appeal to kids while complying with regulations.
These are some of their most important acquisitions, but they have also been doing collaborations with every company, celebrity and athlete on the planet. The Fortnite shop has featured cosmetics from Marvel/Disney, Star Wars, Naruto, Attack on Titan, the NFL and the NBA, John Cena, Stranger Things, and countless more. The image below is an image made 4 months ago listing a lot of collaborations, they are definitely missing some, but this might help people understand how many different characters are in the game that players may have seen elsewhere.
The image doesn’t show any musician collabs, some of which were extremely popular. Like Travis Scott's Astronomical Event with 12.3 million concurrent players in attendance and Remix: The Finale which had 14.3 million players watch Eminem, Ice Spice, Juiceworld, and Snoop Dogg. Their largest in-game event was a Marvel promotional, titled the Galactus event, that had over 15 million players in attendance. For each musician that works with Epic, they have an in-game skin made, some other cosmetic items, an emote with their song(s), and songs they’ve released that players can play in the Rock-band style mode.
On December 7, 2023, Fortnite had a bunch of changes: adding in the previously mentioned Rocket Racing and Fortnite Festival modes. They also implemented a new Lego mode, which is an open-world survival and crafting game similar to Minecraft. All of the skins Epic has made in the past now have a Lego counterpart, and there are now dozens of Fortnite-themed Lego sets available for purchase.
Tim Sweeney is building a “metaverse” in Fortnite with players able to be any character they can imagine, going to all types of different maps and game modes, with 124,000 Creator “Islands” made in 2024. Roblox has been growing in popularity, and similar to building off of PUBG’s Battle Royale success, Fortnite has enabled creators to make their own games inside of Fortnite with the Unreal Editor. A recent article stated that Creator Islands account for 36.5% of total Fortnite playtime and that these creators earned ~$350 million from Epic2. Fortnite seems to be catching up as Roblox revealed it paid out $741 million to creators in 2023.
Why is Tim Sweeney a Live Player?
While Tim & Epic have been inspired by PUBG & Roblox, they have done a lot more than just copy a 100 player survival format and creator made games. Injecting a video game with so many pop culture references that the game has appeal to every age group and audience has not been done before. Collaborations and live events have been done with celebrities like Lebron James and Shaq, musicians like Metallica and Billie Eilish, anime characters from Naruto and Dragon Ball, characters from Family Guy and Terminator. No other game or brand has done collaborations across so many mediums that they have become hard to count. Epic has been carefully acquiring companies in music, racing, and 3D assets, kid safety tech, and more in order to upgrade the Fortnite experience in so many different dimensions, constantly coming out with new updates for the main battle royale game, new items in the shop every day, and new tools for creators. Tim believes in the metaverse, players, and developers and stands behind it by his billion dollar legal battles against Apple/Google, supporting developers with 18% more than Steam offers, and building a game that players care about and can build their own experiences on.
Fortnite is popular and PUBG is dead for a reason, because Tim Sweeney is making decisions that have not been done before, and his bets on creators, collaborations, taking on Steam, and strategic acquisitions are paying off. Epic Games is not a publicly listed company, so you cannot invest in them but they are definitely worth paying attention to for people watching or working in the gaming world.
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