Published: October 02, 2018
Fortnite gathered 80 million users in August and it is a big hit. My interest turned to Tim Sweeney, CEO of founder of Epic Games, developing Fortnite. I traced , interviews, blog and videos of the past on him(I put links at the end). As a developer, he founded game developer company at just 21 years of age. I found that he is a very interesting person with great influence on the future of the Industry.
The reason why I was interested is that Epic surprised Google this summer. Epic didn’t give "Fortnite" app to Google Play Store, which shaken the world of mobile games. Tim is handling it by making it available only by downloading directly from the FortniteEpic website instead.
Tim explained motivation for this behavior from the game developer as that "Tax of 30% (against the revenue from the Google Play Store) is too high."
It was not indiscriminate attack. Tim says that in the case of console business it is reasonable for a console shop to impose tax on game publishing. Console vendors have laid out a business model that sells the console itself at a price lower than the final cost and collects it with a fee related to game publishing. Console vendors take risks at the same lavel of publishers, such as doing marketing campaigns through collaboration with publishers.
However, Tim claims that the "open platform" like Android and iOS can not justify "taxation of 30%” for payment, bandwidth required for downloading, customer service and so on. As more robust mobile gaming distribution, Tim pointed out Korea's cacao talk, China's Tencent WeGame, He also pointed out that steam and GOG are the correct form of circulation on PCs as well. In his view, the commercial practice of the game industry in Asia is better than that in North America and Europe.
What is interesting is that Tim makes words and actions as it is that anyone feels but does not dare to talk, afraid to suffer losing their interest. Publisher and platform tend to be relationship between “serfs and manor lord”, but Epic exercised influence gained multi-platform title "Fortnite" across PC, game console and smart phone.
Tim's behavior is extreme, but maybe a strategic aspect as well. Because he named only Android which has the lowest revenue contribution to Epic. ”Prioritize attack on weak enemy” is the strategy of "Battle Royale".
At the same time, Epic's battle is supported by game engine "Unreal Engine” Epic develop and provided. Epic's power is getting stronger by taking the position of the game production platform. The Unreal Engine is a successful example of a typical dog food, initially created to simplify the cost of creating their own games. Epic began to offered it to the developer outside. Epic are provide with free material of "Paragon" which cost 12 million dollars, and the firm also open the functions used in this Fortnite to the engine users. Epic made the Unreal Engine 4 free. The company has raised the share of third-party developers in the marketplace from 70% to 88%. Epic began offering benefits to users' developers as a platform.
The Unreal Engine eliminates the barriers between PCs, smartphones, and game machines and gives developers opportunities for cross-platform development. Cross-platform development relieves developers from the gravity of fragmentation by pressure of platform, so that they can pursue to optimize revenue.
Fig01 free material of "Paragon"
When coming to Japan, Tim refers to "Mechatof's Law" and points out that cross-platform deployment gives opportunities for Epic to enjoy network effects enjoyed by Facebook, Tencent, Apple and others.
In "Fort Knight", the play time of the user who is playing with friends of real society is three times that of the user playing alone. It's 3 times! It is big. Do you know Metcalf's law ? It is an economic principle that aims at the value of social networks and game platforms. The platform's value for gamers is proportional to the number of real friends you can interact with.
And as you can see in this article, his belief that creating an open ecosystem and a place for creators to work there is very hard.
Of course, in order for all creators to show their true potential, the industry needs to provide an open market where developers can reach audiences. Due to well-known criticism toward Microsoft and its Universal Windows Platform, Tim became advocate of “accessible ecosystem”.
In addition, this is a contribution in the business model revised by Unreal Engine three years ago. This is to make the game engine available at a low price at first, making it available for free later. This also allow anyone to see the source code. From prestigious AAA developers to bedroom coders (amateur programmers) - there are provisions that 5% royalties are imposed on commercial releases, though - can use same tool equivalent with Gears of War and other big titles.
It is well-known strategy for software company to produce a proprietary mechanism and “divide and conquer” users, but the strategy does not necessarily optimize the benefits of end users. Such a proprietary mechanism is applied to various places in the Internet industry, but Tim showed successful examples as the escape route of the structure. It is the best role model that people who make business in the next era should emulate.