They aren't losing money on Fortnite, they're losing money on vanity projects like the Epic Game Store where they spend tens of millions of dollars for exclusivity deals with developers, and give away free games to try to poach Steam users with an otherwise inferior product. Unfortunately it is their employees that are paying the price of leadership making it rain with their overflowing coffers they couldn't help but burn.

> ”Sorry, HOW?!? How can a company like Epic games … be losing money with a product that is so mature?”

I’ve been playing Fortnite a bit lately, after my nieces got me into it.

One thing is that although the player counts are high (always hundreds of thousands of players online, just in the main Battle Royale game), the average revenue per player can’t be that high.

For one thing, once you’ve bought the $10 battle pass once, you only need to average maybe 1 or 2 games per day to earn enough vbucks to buy the next season’s battle pass with vbucks. So if you stay active you can pay once then play the game free forever and still get access to a huge amount of free cosmetics. And much of the player base is kids who are just begging their parents/uncles to buy them stuff in the game rather than spend money themselves because they don’t have credit cards to link to their Epic accounts.

Compare this to something like Hearthstone which is similarly mature. They have a similar battle pass but there’s also a strong incentive to pay real $ for extra card packs and cosmetics. And there are clearly plenty of adult whales buying this stuff. For example, there’s a new mythic Deathwing skin on a gacha wheel that costs, on average, about $200 (!!) to get. It’s only been out a few days and I’ve run into multiple players who have it.

The epic store with its giveaways and exclusivity deals is probably burning money.

This. You need to fire your CFO immediately if you don't have billions of dollars in cash after the run you just had on Fortnite.

Kids who play video games grow up, and get off Fortnite, and you have to convince the next generation to sign up.

And anyways, the population who plays these kind of live service shooters is relatively constant imo, and there are new games on the block nowadays.

Actually what's an anomaly is how long Fortnite continued to be popular.

> "We're spending significantly more than we're making, and we have to make major cuts to keep the company funded," he said.

The chances this is accurate are extremely small. This is either anticipating AI coding goals, the CFO proved they were overloaded on developers, or they're just cutting to hit quarterly numbers.

I think big media companies are just structurally unable to stop trying to double their revenue. They just keep pushing out more products and over-extend at the same time everyone is losing interest in them. That's how you end up with say the MCU producing at quadruple the old pace and the movies making less than ever. At some point there's just nowhere to go.

It might be a case where they're projecting costs and a pessimistic Fortnite market a few years out. I doubt this something you do after the money is gone. You'd look ahead and see your runway in a down market is way too short and cut costs.

You can't just bet the farm on dropping a new $5B/year game.

>"We've had challenges delivering consistent Fortnite magic," Sweeney said, adding "market conditions today are the most extreme" since the early days of the company founded in 1991.

Probably the closest way to say "we're in a recession and gaming isn't resistant to this one" I've heard yet. But it makes sense: a "free" service that entices with cosmetics is easy to cut when parent money gets tight.

And if kids lose interest they will move to another game. Or more likely, TikTok and its medium. Just increasing the dopamine.

They have ~5000 employees.

Most game companies are a tiny fraction of that size. Even most AAA games are made by teams of hundreds. Not teams of thousands.

All the lawsuits they are doing

Fortnite is almost 10 years old, I'd be interested to see the average age of the playerbase. People have less time for games when they get older.

Because games is simply not a particularly profitable industry. There's a reason why Valve moved on from making games to being a digital landlord.