Epic's hit game Fortnite was the biggest name in video games in 2018, outearning powerhouse franchises like Activision Blizzard's (NASDAQ: ATVI) Call of Duty and Electronic Arts' (NASDAQ: EA) FIFA. Fortnite made battle royale games popular and captivated everyone from teens to adults.
Fortnite's success came as something of a shock for video game makers, as they had been focused on massively multiplayer games and esports as the future for gaming. But now companies are catching up, and the competition means Fortnite's shine may be wearing off.
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EA takes a stab at battle royale
Electronic Arts was the first big new competitor of the last year to aim directly at Fortnite with Apex Legends. The free-to-play game was launched in early February and in its first month was No. 6 in gross PC game revenue and No. 4 in consoles, according to SuperData. It hasn't passed Fortnite in revenue, according to these early numbers, but it's getting close.
As Apex Legends was hitting the market, Fortnite was falling down the video game charts. According to SuperData, the game was No. 1 in consoles and No. 3 in PC revenue in December 2018, and two months later it had fallen to No. 2 and No. 5, respectively.
The fact that players would try a new battle royale game and, in some cases, leave Fortnite behind could be bad for Fortnite in 2019. There are very few switching costs between games, and hot games don't usually last long before they're upgraded or replaced. Are we seeing Fortnite's time in the sun coming to an end? Are the trends that drove Fortnite's popularity already fading?
Looking past Fortnite
Not every gaming company is chasing after the battle royale market that Fortnite built. Tencent Holdings subsidiary Riot Games makes League of Legends, which continues to be one of the most popular games in the world despite being launched in 2009.
Activision Blizzard isn't chasing battle royale formats. Instead, it's trying to take its popular brands from consoles and PCs to mobile devices. The company is betting that older games have more staying power and they just need to move to more platforms for customers to find the content on.
The risk is that new games and brands will win customers' imaginations like Fortnite did. And given the early popularity of Apex Legends, the battle royale market still looks extremely strong.
Lots of open questions for 2019
What we don't know right now is whether Fortnite will be a one-hit wonder or a lasting franchise. Call of Duty, for example, was launched in 2003 and remains one of the most popular franchises in video games. World of Warcraft has been around since 2004. If Fortnite has that kind of staying power, it would steal market share from other game makers.
On the other hand, Fortnite could be a short-term phenomenon. If the game continues to slip down the charts, we may see it fade fast. Even the biggest games in the industry can come and go quickly, but for investors, we're looking for staying power. 2019 could tell us if Fortnite or any of the other battle royale games have that.
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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 and Tencent Holdings. The Motley Fool recommends Electronic Arts and Tencent Hldgs. The Motley Fool has a disclosure policy.