hat do a businessman and a child have in common? Besides the ability to dream big, they both believe in Unicorns.
As you might expect, we are not talking about the one-horned horse in the case of the adult - but a company that reaches the milestone of 1$ Billion dollars in private valuation. In fact, this level of success is so rare that there is no better term to describe the companies that manage to do it.
And Epic Games is a great example of a Unicorn company that managed to secure this title after years of changing the gaming industry. The company achieved Unicorn status sometime after 2012, following decades of growth and innovation and massive investment by the Chinese Giant Tencent. But the way they did it is nothing short of something epic - no pun intended.
And even though it was founded back in 1991, to this day the video game company is still privately owned and valued at more than $30 billion.
The thing is - everybody could have seen the potential of Epic Games from their early products
Does “Unreal Tournament” ring a bell? It was one of the most immersive, adrenaline-pumping gaming experiences that I had the chance to experience. And I bet I’m not the only one. But at the same time, the company released its Unreal Engine which became the world’s go-to 3D computer graphics game engine. What’s even more astounding is that Unreal Engine was named the most successful gaming engine by the Guinness World Records.
They didn’t stop there, though! The Gears of War trilogy showed that Epic Games has something special up its sleeves. The first game and its next 2 sequels, starting with Gears of War in 2006, featured a conflict between humanity and a type of reptilian humanoid known as the Locust Horde. It’s safe to say this was a real success that later turned into a media franchise with new games being created ever since. Microsoft acknowledged this and acquired the franchise in 2014, with their Coalition subsidiary developing versions of the game ever since.
Subscribe to our newsletter
Getting to unicorn status wasn't overnight for the gaming giant
Epic Games’ early focus was on developing games that proved the strength of its proprietary gaming engine. Games such as Jazz Jackrabbit and Dare to Dream were some of their early ventures - but they didn’t yet hit the mark. In 1998, everything changed when the company released the Unreal Engine. That was the year when they made a name for themselves that proved to last decades.
With the release of Unreal Tournament, which was based on the first Unreal gaming engine, Epic Games brought real value to the world. The visuals and playability were something else for the time. It was out of the ordinary - and if you are old enough to have encountered it at the time, I believe you agree.
But since the company’s games are mostly free to play, and its games engine is free to use by developers, how do Epic Games create revenues for itself? The answer is - microtransactions and percentage cuts. Their Unreal Engine is used by many developers worldwide and once a game is developed it is listed on the Epic Games Store. This allows the company to create a wide pool of games that attracts a lot of monthly users who are going to buy the games available. After a game generates a threshold of revenues, Epic Games can take %5 percent of the total money generated by the game.
But Fortnite and microtransactions changed everything for Epic Games
After struggling with its popularity among gamers for a few years Epic Games opted to pivot and create a battle royale game mode. The rest was history. It was such a smart move because, at that time, the battle royale genre was booming. A lot of people already played PUBG (PlayerUnknown’s Battlegrounds). Fortnite came in perfectly - as it didn’t require high-performance computers like its competitors.
In its first year after its release back in 2017, Fortnite generated more than 5 billion dollars in revenue for Epic Games. Therefore, in 2018, the company reached 8 billion dollars in valuation. Just think about the math for a second. In 21 years, Epic Games managed to get to Unicorn Status. Then, in just 6 years, they increased their valuation 8 times. That’s mind-blowing.
What more can we say about Fortnite? It’s a cultural phenomenon. Few games managed to grasp the minds and time of people the way Fortnite did. The game has more than 200 million active users and has won a wide array of awards since its launch - including the Teen Choice Award for Choice Video Game in 2018 and the BAFTA Games Award for Evolving Game in 2019.
At first, I was wary of Fortnite’s cartoonish aesthetics and basic gameplay, but as time went by, the game became more and more addicting. The introduction of the battle pass was something that gave people something to look forward to. Now you wanted to spend a lot of time in the game because you were able to buy new skins or dances. And those are the microtransactions that made billions of dollars for Epic Games.
Whether you are a gamer or not, we find it hard to believe that you haven’t heard or seen at least one Fortnite meme. And the story of Epic Games is nothing short of incredible. They hit the mark with their gaming engine and the games in which they invested the most. Rarely a misfire in their portfolio. This way, they were able to reach Unicorn Status. I wonder what the future will hold for Epic Games - is Fortnite here to stay?
By
Bill O'Neill
•
November 13, 2024 9:00 AM
.webp)
.webp)
