Why Fortnite Makes Billions – Wisecrack Edition
Welcome to this Wisecrack Edition on the Economics of Fortnite!
Written by: Rebekah Sinclair
Directed by: Michael Luxemburg
Narrated by: Jared Bauer
Edited by: Mark Potts
Motion Graphics by: Drew Levin
Produced by: Emily Dunbar
Why Fortnite Makes Billions – Wisecrack Edition
Hey Wisecrack, Jared here. Are you one of the millions spending your evenings as a digital dark elf shotgunning strangers in the world’s most popular video game? Or if not, are you wondering why everyone won’t shut up about the fluorescent cartoon version of PUBG? Whether you’re a Fortnite fan or not, you might have a more pressing question: How the hell is this free game making billions of dollars? You might think you know the answer, but here’s something you might not have considered. Fortnite isn’t making money in spite of the fact that it’s free.
It’s making money because it’s free. Also, it’s stupendous success might illuminate one of the fundamental tenets of the modern economy. So climb off your bear force one and button up your virtual britches as we break down the economics of Fortnite. For those of you living under a pixelated rock, Fortnite is a battle royale style shooter where you hunger games your way to the finale in hopes of being the last cat standing. You can also play in squads, or 50 vs 50, it sets itself apart from other battle royale games with its more colorful and cartoonish style, and the ability to build things like a murderous minecraft.
Oh, and also, “everything” is free: the game is free to download, the weapons are free, and you don’t even need an expensive console, since you can play online on a potato. This essentially makes the game available to everybody with access to a computer. But Fortnite’s producer, Epic Games, are making staggering amounts of money. In May of this year alone they made 318 million dollars. That’s enough for Elon Musk to launch 5 rockets…to fucking space. In other words, it’s a shit ton. Not surprisingly, Fortnite makes its money on in-game purchases, usually its in-game currency: v-bucks. We’re gonna assume the V stands for virtual, not vapid, vacant, or vacuous. Because what does this virtual cash get you? Badass weaponry to slay your foes or super powerful armor to protect you from the bad men trying to t-bag you? No. You know what you can buy? Dances. And shiny things, functionless armor, and different characters. In fact, you can buy all the badass, silly, or individualized shit you want, but it’s all purely cosmetic.
We all know lots of games manipulate us into buying things, “Entice the player with a simple game loop. Use lots of flashing, cha-chings, and compliments to make the player feel good about themselves, train the players to spend your fake currency, offer the players a way to spend real currency for your fake currency” “so they’ll forget they’re spending money” “then make the game about waiting, but the player can pay not to wait. It’s a surefire way to make lots of money!”
That’s not news. But Fortnite is different than other free to play games, where you can buy stuff that actually, you know, helps you. In those games, free to play is essentially pay to win. Why wait 20 hours for your fortress to upgrade if you can speed it up for 99 cents? But Fortnite insists on equal access to all players even if you suck, “Ok. I’m just gonna climb this mountain … ok this is bad. bad bad bad.” “ooooh lux!” “I really fucked up this time dude.” by making sure that none of the purchases actually give you any advantage, which, even if you hate the game, you have to give props to Epic Games.
So why do people buy this stuff that’s only function is cosmetic? Are we all just idiots trying real hard to turn reality into an episode of Black Mirror. Well, laugh all you want, but our fortnite showboaters are actually just doing something that we all do, whether we like to admit it or not. It’s basically just the logic on which our whole economy is built. To understand why people want to spend their real money on v-Bucks, just to spend those bucks on a pick that’s shaped like a lollipop. We need to hop on a Battle Bus and transport ourselves to the year 1899. Back then, most economists were trying to figure out how the markets worked based on how useful goods were, how much labor went into making them, and of course, the supply and demand of those items. Economists essentially believed people would rationally order their purchases based on need. You buy bread because it feeds you, coats because they keep you warm, etc. But then, they looked at how the wealthy were spending their money and thought — “what the fuck?” It turns out people were buying the 19th century equivalent of bunny brawler or ginger gunner skins, except theirs were probably filthy and gave you small pox or something.
Then along came economist and sociologist Thorstein Veblen, who made a discovery that might seem obvious today. For Veblen, you can explain these “irrational” purchases by recognizing that people don’t just purchase for utility, they also purchase, basically, just to be cool. You might call this, the “snob factor” in economics, but he gave it a different name: “conspicuous consumption”. Veblen recognized that people purchase certain goods and services in order to publicly flex their wealth. And what did Veblen observe the wealthy doing to show us their mad mullah? The “ceremonial differentiation of the dietary”: basically, really, really expensive booze…Along with servants, huge houses, and cars. While the poor had to get by on bread and water, the ability to consume, and even waste, set the wealthy apart. Because what says “I’m special” more than literally throwing (or drinking) away your cash or, in a more metaphorical sense, stealing your mom’s credit card to spend hundreds of dollars on V-Bucks. “You’ve spent hundreds of pounds on Playstation. I can’t believe you’ve done this again!”
Without this conspicuous consumption, our modern economies might not even exist. If the economy just fed us, clothed us, housed us, and gave us medical care and called it a day, the economy would grind to a halt. For companies that always need to increase their profits, how do you squeeze a few more dollars out of a coat? You slap a designer’s name on it or you jack up the price to attract those obsessed with status. Fortnite is maybe one of the most impressive examples of the digitization of conspicuous consumption. You can’t set yourself apart IRL as you spend hundreds of hours playing video games, nobody can see your sweet kicks, or Vineyard vines swag. And when all eyes are on you once you’ve made it to the last two survivors, don’t you want to leave an impression?
But Fortnite does more than just scratch a digital itch for a behavior we see everywhere around us in fashion, cars, and houses. Because it takes this idea of conspicuous consumption and gamifies it. Mobile games have the benefit of massive piles of data which allow them to optimize your spending. Fortnite employs these techniques which are now common on e-commerce sites and mobile games, like limited-time offers with countdown clocks to really remind you how much you’ll regret not taking advantage of this deal in the next 13 hours. But what sets Fortnite apart is its Battle Pass structure. Let me explain. So, if you’re a regular player, each “season” you can level up up to a hundred times, getting the occasional skin, glider, tag, or now, toy. But it’s not every level. And as you, a free player get to see, oh man, in 4 levels, I’ll get to look like The Red Skull crossed with Namor the Submariner. But you’ll also see, side by side, all the things you’re missing.
V-Bucks and XP bonuses and costumes, you get the idea. And at the bottom, there’s a nice reminder that if you spend $10 bucks on the Battle Pass, you can unlock all these things you’ve already “earned.” Whereas some games might offer loot boxes to manipulate you like a casino – drawing you with the dopamine hit from the luck of the draw, Fortnite draws you in with pure conspicuous consumption. Everyone else with the serious V-bucks is going to have this emote, do you really want to be the pleb without it? And of course, you can earn V-Bucks by playing the game and completing challenges but that’ll just take too much time and set you apart as the poor kid. But , you might be thinking: conspicuous consumption is for the rich, or at least Lil Tay. “I ain’t got no license, but I dropped 400 racks on this car.” People dropping money on Fortnite aren’t necessarily loaded.
Well, for Veblen, just because conspicuous consumption starts with the rich, doesn’t mean it ends there. If the rich want to show how important they are with the things they own, the poor want escape the stigma of poverty by appearing rich. And then once the poor have successfully emulated the rich, the rich need to buy more equally useless things to again distinguish themselves. Veblen called this depressing cycle of economic E-Peen waving, “pecuniary emulation.” In this way, Fortnite’s battle pass system works a lot like fashion magazines. Anyone can afford to peruse the pages to see what high society is wearing, even if they can’t afford the clothing itself. But that’s ok, in fact, it’s the point. . You want the audience as large as possible so that everyone, regardless of wealth, can spot your $50,000 purse. . And this is how Fortnite makes money: by playing on our desires to be at least as cool, but preferably cooler than everyone else. What better way to earn money than by making the game free to everyone, so that nobody feels left out, but then providing incentive for folks pay to demonstrate their awesomeness.
Like I said: the game isn’t making beaucoup bucks despite the fact that it’s free, it’s making money because it is free. And does it work? Let’s look at some stats: in a survey of 1000 Fortnite players, 68.8 percent had spent an average of $85 on the game, all of it on cosmetic stuff. “Why? Because it’s all about keeping up with the Kardashians.” So is Fortnite really doing anything we don’t already experience in our analog lives. Not really. They’ve just found the shiny new digital arena in which we all want to be liked and feel special. So free or not, we’re totally buying. And as always, thanks for watching, peace.