Fortnite's Day in the Sun May Be Over
Fortnite, the game that took the gaming industry by storm in 2018, may finally be slowing down and potentially even peaking in usage. According to SuperData, Fortnite revenue rose just 2% monthly in July after rising sharply all year.
This isn't the end of Fortnite, and it's still one of the most popular games in the world, but it may not be the threat competitors feared it could be. And with new games coming later this year, we could see powerhouses like Activision Blizzard (NASDAQ: ATVI), Electronic Arts (NASDAQ: EA), and Take-Two Interactive (NASDAQ: TTWO) take power back in the industry.
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Fortnite's slowing growth
2% sequential monthly growth isn't bad for any company, but it's a stark contrast to Fortnite's growth earlier in the year. According to SuperData, Fortnite's revenue rose from $130.3 million in March to $223.4 million in April and $295.5 million in May. But with $318.3 million of revenue in June and another 2% growth in July to about $325 million, that growth is slowing rapidly.
If I were Fortnite, I would be concerned about revenue in July, as the Season 5 battle pass was released mid-month. Could the Fortnite star be fading just as the game becomes a big money maker?
Is Fortnite Call of Duty? Or Pokemon?
We've seen ups and downs in video games before. Remember the Pokemon Go craze in 2016? Or how popular Guitar Hero and the Sims were before they all but vanished in the last few years?
Some games have staying power, others don't. What's driven Activision Blizzard's success is its ability to make Call of Duty, World of Warcraft, and Candy Crush relevant for years, or even decades. The game itself has staying power because of loyalty players have to the brand. Fortnite hasn't yet proven that it has the same staying power.
Competitors are coming for Fortnite's space
The battle royal concept Fortnite made popular hasn't been lost on other game developers, who are modifying and building games to compete in the market. PUBG and H1Z1 are two of the most intriguing to watch in 2018, while Activision has said Call of Duty will have a battle royal mode and Battlefield V, which Electronic Arts recently delayed until Nov. 20, will have a similar mode.
Adding a battle royal feature in games doesn't involve reinventing a game altogether, so developers can adapt to this market trend fairly easily. That may be Fortnite's biggest weakness long-term.
Fortnite may help video games long-term
Video game executives have argued that Fortnite will expand their market by bringing in new gamers who didn't previously play, or pay for, video games. That thesis was tough to buy when Fortnite was sucking all of the air from the room and threatening to take over a large share of the video game market.
Now that we're seeing a clear slowdown in Fortnite's growth, it's worth considering that executives might be right and the game's popularity may be an entry point for new gamers, growing the pie for everyone. We'll have to wait a few more months to see if Fortnite's slowdown continues, but right now it looks like this is a crisis the video game industry has averted.
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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Activision Blizzard, Take-Two Interactive, and Tencent Holdings. The Motley Fool recommends Electronic Arts. The Motley Fool has a disclosure policy.
