Gaming Stocks Going Down Due to 'Fortnite'?
The New York Times. MarketWatch. The Wall Street Journal. CNN. Fortnite is getting the blame for the average 10% stock drop from large publishers like EA, Activision/Blizzard, and Take Two Interactive. Fortnite has been a massive success since introducing it's battle royale mode, and continues to make headlines weekly, if not daily, in the gaming world.
But is this latest stock drop the fault of Epic Games?
Released in 2017, Fortnite is still keeping up with their audience's needs. Currently the game has over 200 million registered users. During the Marshmello concert this past weekend, 10 million users were logged in to experience the event. It's an active and thriving gamer-base, and it shows in the profits. Epic Games earned $2.4 billion USD in 2018 from the game. Almost $1 billion more than it's next competitor on the list Dungeon Fighter Online (at $1.5 billion). The incoming update to the Llama Loot Boxes is likely to help bolster sales, with customers being able to view box contents before purchasing.
As quarterly meetings wrap-up for publishers, some have toned down their projected sales due to the luke-warm reception of their products in the winter months. EA had to adjust for the loss of sales with Battlefield V (nearly 1 million less copies moved then what was projected.) Activision/Blizzard has had steady sales but no growth. This has caused investors to be wary with their stock. With key executives and creatives leaving in 2018, the company also adjusted it's projections for 2019. These changes are in the range of figures that most of us will never see in our lifetime: instead of $1.8 billion, it's been dropped to $1.7 billion. It's not much for the company, but it is a lot to the employees working there. To save money, layoffs or another game might get cut from production.
What happened to cause the drop? Some of the blame is because of free to play games like Fortnite. You can, very literally, play that game for free without spending a single penny. Updates are regular. You know what you are getting out of the product. You didn't spend $59, $69, or $99 on a buggy, glitchy game. It's free. It works. It's fun. But this is not the only reason for the stock slide.
Part of it was a very busy release cycle. From September 2018 to January 2019 games like Red Dead Redemption 2 (RDR2), Call of Duty Black Ops 4, a decent Assassin's Creed game, a good Spider-Man game, Soul Calilbur VI, Resident Evil 2, Kingdom Hearts 3, and Super Smash Bros. Ultimate were released. These are only a handful of popular games from the past 5 months, and we barely scratched the surface. Dragon Quest XI was released in North America and Europe during this time and I'm still playing it. With so many games on the market, it's difficult to have your staples be noticed by the audience at large. Call of Duty Black Ops 4 was the top selling game in October, but it still didn't meet the company's projected sales.
Which leads into the next point that part of the problem is the company setting unrealistic expectations. Call of Duty Black Ops 2 had a better launch and earned more within it's first 15 days than Ops 4. Though Ops 4 set an impressive start of $500 million USD within the first 3 days of release. Everyone on the team should be incredibly proud of that accomplishment. But the executives and investors don't see that as a win. It didn't meet the $1 billion benchmark that Ops 2 managed. Therefore, it's a "loss." Sometimes it's the company that is it's own worse enemy. It's not Fortnite's fault that Activision created high expectations on sales that were not realistic to the diverse market.
Should gamers be worried about EA, Activision/Blizzard, and Take-Two's futures? Nope. Not one bit. They'll be fine. They'll continue to make games and adjust slightly to fit their bottom line. It's important for us as journalists and gamers to not take the quick route with placing blame. We need to analyze the issue from all angles before reaching a conclusion. And Fortnite is one of many reasons why some gaming stocks took a small hit. It's not the primary source.