Fortnite, A Free Game, Made $9 Billion In Two Years

from the competing-with-free dept

For years -- years! -- Techdirt has been a place that has argued that offering a product or service for free, where that made sense, could actually be a fantastic business model. While there are lots of examples of that sort of thing these days, you have to understand that this concept was met with derision and scorn by all kinds of industry folks big and small. Some said anyone offering something for free had no clue how to run a business. Others even more absurdly claimed that there was literally no way to compete with "free."

Well, the video game industry has long claimed to have a "free" problem when it comes to piracy. The problem with combining those claims with claims that you can't compete with that sort of thing is that the success stories are there and you don't exactly have to look hard for them. Back in 2018, we talked about Fortnite, a free game that makes its money in all other sorts of ways. And by "its money" I mean that it was making $300 million per month. But then there were claims that all of this was some flash in a pan rather than anything sustainable. The problem with that is that, thanks to the trial just kicking off between Apple and Epic, internal Epic documents indicate that Fortnite made the company $9 billion over the course of two years.

Today, the trial between Epic and Apple finally began after nearly nine months of legal filings and pre-trial hearings. During the court proceedings, new documents surfaced providing more data on how these companies operate. For example, we now know that Fortnite made $9,165,000,000 in two years.

That huge number comes from a financial board presentation report that Epic created in January 2020. In this document, Epic stated Fortnite made just over $5.4 billion dollars in 2018. The following year, the popular battle royale game pulled in $3.7 billion.

This is not someone competing with free; this is someone dominating piracy into total irrelevance. As Kotaku points out, it's worth comparing these numbers to numbers spent elsewhere in the entertainment industry. Microsoft bought Bethesda for $7.5 billion, less than what this one game made. And, yes, Fortnite is one of the most wildly successful games of all time. But that isn't really the point. The point is that there are business models that make "free" work and this is the shining example of that being done.

Any whining from the industry about how this one example isn't fair is just that: whining. It's on business leaders to innovate into new business models that work in the modern era. Epic has figured out how to do that. And not just with Fortnite, either. We already discussed how Epic is using free video game giveaways in the Epic Store to build up the adoption of that platform. Despite the losses the company incurred with this practice, Epic appears to be super happy about it all.

There needs to be more of this, even as similar business models appear to be picking up speed. More success for the industry by adopting a model where piracy is simply taken out of the equation.

Filed Under: business models, competing with free, copyright, fortnite, free, piracy, video games

Hateful Eight Pirated Leak Harms Film All The Way To Box Office Records

from the grilled-leaks dept

Mike just recently did a post on the horrible effects of piracy on Hollywood box office results from last year, which can be summarized as "holy shit, look at all the money!" That post took a macro look at the year Hollywood had at the box office, in which revenue and individual ticket sales were both up, despite the fact that piracy exists. Still, the post warned of one potential rebuttal some might make: yeah, but Star Wars.

And it's true that such a high level look at the numbers would need to account for the smash hits released and gobbled up by the public. Still, such examples seem to indicate that the public is willing to fork over dollars if demands are met, but there are micro-examples of this as well. Take, for instance, The Hateful Eight, Tarantino's latest film. You may recall that the film suffered a leak prior to its release, making it widely available on the internet for anyone who wished to engage in a little piracy. It was downloaded hundreds of thousands of times, leading some to worry that its availability to would hamper its success at the box office. That's when one writer, with impeccable intelligence and an un-matched sexual charisma, wrote:

Pay close attention to how Hateful Eight does at the box office, because it's almost certain to be a smash hit, even as it competes with a certain film franchise from a long time ago and far, far away. And that really is the point. Even as media reports will breathlessly detail the pirating of the film, even as we'll be told about street corners in China where copies of the film are offered, and even as the download numbers of the film will soar, the film will do well.

So, how did it all work out for The Hateful Eight? It was, as predicted, a hit. As in a record-breaking hit. Specifically, the 70mm version, something requiring special equipment that is unavailable to most pirates, helped propel the success.

The 70mm version of the film, which has been showing in the largest 70mm release in more than 20 years, had a strong opening-weekend debut, earning $4.6 million at 100 venues in 44 U.S. markets. After its first two weeks, its 70mm engagements have grossed $11.2 million for a $112,000 per theater average for the first 12 days.

The neo-Western expanded to a total of 2,474 engagements at the beginning of its second weekend on Jan. 1, and its combined 70mm and digital showings have grossed a domestic total of $33.8 million to date.

All of that for a film which was leaked early and available for pirating. So, why the success? Well, the obvious answer is the 70mm gimmick, which those pirating the film couldn't enjoy. But that doesn't really tell the whole story, because $34 million gross early in a film's release, especially when competing with Star Wars, is quite a thing. The real reason for this is the combination of Tarantino building up a loyal fanbase that wants to support his work coupled with the theater experience that is still immensely important to many viewers. Going to the theater is an event that cannot be replicated in the home for many movie-goers, no matter how good home theater technology gets.

So, if this demonstrates that piracy doesn't really translate into lost ticket sales in the theater, as I believe it does, then this all returns us to the question of why Hollywood wants to spend so much monetary and emotional capital fighting a fight that might not really matter?

Filed Under: box office, competing with free, hateful eight, leaks, piracy, quentin tarantino, records, screeners

More Research Again Shows: Good, Authorized Services Compete With Piracy

from the well-duh! dept

We've been arguing this for years, but the best and so far only way that's been shown to effectively deal with the "challenge" of piracy is to figure out ways to compete against it. We've highlighted this point for quite some time, but people still try to argue against it. However, the evidence keeps coming in. We just posted about some data on unauthorized file sharing in the US and attitudes towards it. Those showed that it was a mainstream activity, especially between friends and family. Furthermore, it showed that "enforcement" campaigns targeted at trying to make people think that "piracy is theft" were almost certainly going to fail for not taking context into account.

Instead, focusing on new and useful legitimate services has to be the way forward... and the data from that same Musicmetric study seems to confirm that. It showed that there was a notable dip in BitTorrent usage in countries that had good authorized offerings:

Musicmetric found that music file downloads using BitTorrent tend to increase in countries that don't have legal music streaming services such as Spotify. Among the top 10 countries with the fastest growing BitTorrent market share in the first half of 2012, only one, France, had Spotify.

Conversely, in the top 10 countries where BitTorrent activity has decreased fastest, five have access to Spotify.

Of course, it also seems worth noting that the one country that has Spotify and shows increasing BitTorrent market share is France... which has Hadopi, one of the strictest "enforcement and education" plans out there. I'm sure it's just a total coincidence...

Filed Under: authorized services, competing with free, competition
Companies: spotify

Yes, You Can Compete With Free, But It Has To Be Done Right

from the don't-kill-the-golden-geese dept

We've talked in the past about how good, easy, convenient and cheap/free legal content distribution services appear to have an enormous impact on reducing infringement -- and as a bunch of folks have been submitting, yet another study out of Sweden has found the same thing is true. The rate of music infringement continues to drop rapidly, and the main reason is the rise of Spotify and a few other legal services.

We've made this point over and over again for years, and it's great to see some examples backing it up. However, when we make the point that the focus should be on this, rather than ratcheting up copyright enforcement and copyright laws -- a strategy that has never been shown to work, and which has been shown to have massive negative consequences for culture and speech -- a standard refrain from entertainment industry insiders is that they did innovate with things like iTunes, Hulu etc., and yet there's still file sharing. Thus, they say, enforcement is the answer.

That's wrong. When we talk about competing with free, we don't mean doing anything to compete with free. We mean actually making the services as good, convenient and easy. There have been cases -- like Spotify and Netflix -- where the industry has really done a good job, and then we see the results like what's happening in Sweden. But, every time we see one of those success stories, we hear of efforts by the legacy industry to make those services worse, as they feel jealous that the services, rather than the content, get all the attention. Indeed, the recording industry keeps trying to cripple Spotify, even as it competes successfully with infringement. Ditto Netflix.

There's an important point here: competing with free/infringement isn't just about doing something. It's about actually understanding what consumers want, and delivering it to them in the way they want it. Netflix and Spotify have been able to do that -- and hopefully the industry doesn't suffocate them along the way -- but just saying that making efforts should be enough is kinda like saying copyright is there because artists should get rewarded for their labor. Doing stuff doesn't get you paid. Doing stuff that people want, in a way they want it, with natural ways to make money, is how you get paid.

Filed Under: business models, competing with free, economics

Despite Whining About Piracy, Secondhand Sales, Video Game Sales At All Time Highs

from the well,-look-at-that... dept

We've been noting how both the movie industry and the music industry had terrific years in 2008, despite the public perception being passed around by certain legacy companies in both industries that they were being decimated by "pirates." Apparently the same is true in the video game industry as well. Dan writes in to let us know that, at least in the UK, video games sales were at a record high, despite all hand wringing about the need for DRM and how piracy and secondhand sales have been destroying the industry. Once again, it seems like if you just put out a good product and give people a reason to buy, they're more than willing to do so. Still, how long will it be until we hear UK cultural secretary Andy Burnham declaring that the video game industry needs special protection against the scourge of piracy?

Filed Under: competing with free, piracy, uk, video games

Video Game Developer Talks To Pirates: Realizes He Can Compete With Free

from the shocking dept

Slashdot points us to an interesting story of a video game developer in the UK, Positech Games, who put up a blog post recently, asking people who "pirated" the company's software to explain why they did it. They did... in droves. Now there's a new post up discussing both the results and how the company is responding. While the guy sounds surprised about the results, they don't really seem all that shocking: people hate, hate, hate DRM of any kind (which should serve as a counter to the guy who showed up here last week insisting that DRM is here to stay). That was the thing they were most vehement about. After that, they were upset about the high price of games and the short demos that were offered that weren't representative of the game.

The good news is that the company is responding. It's swearing off DRM completely, reducing prices on some games and promising better demos. It's also exploring ways to make it more convenient to buy to avoid any "hassles" that users have in buying. It's nice to see someone realize that, rather than freaking out and trying to sue everyone, the proper response to "piracy" is to figure out how to better compete with it by decreasing inconveniences and giving people a reason to buy rather than pirate. So far, it appears that Positech is focusing mostly on that first issue (decreasing the annoyances). Hopefully it takes the second step also, giving people additional reasons to buy rather than pirate.

Filed Under: competing with free, piracy, uk, video games
Companies: positech

Content Industry Could Learn From eBay Seller Turning A Profit With Public Domain Content

from the competing-with-free dept

Last year, Mike made the point that saying you can't compete with free is saying you can't compete, period. Every business makes a profit by adding value so that customers will be willing to pay above marginal cost for its products. The fact that the marginal cost of content (once it's been created) is zero doesn't change that principle. You can add value to free content just like you can add value to any other product. The New York Times Bits blog nicely illustrates this with a post about the market for public domain content on eBay. Apparently, there are a number of people who make a living by finding obscure, copyright-free content on the Internet, burning it on a DVD or other convenient format, and selling it on eBay. Despite the fact that every one of those customers could have tracked down the video for themselves and watched it on their computers, a lot of people are apparently willing to pay for a DVD version.

This business model actually illustrates two good ways to add value to free content. First is convenience. A lot of people don't have a high-speed Internet connection, don't like watching videos on their computer monitors, or want to be able to take their content with them in a compact format. For those users, a DVD is a much nicer format than a file on their computer's hard drive. DVDs are also a much more convenient format for giving gifts: you can wrap a DVD and put it under the Christmas tree, something that's harder to do with a video on YouTube. Second is filtering and organization. There's way more content out there than any one person could possibly watch. So there's a lot of value in helping people separate the wheat from the chaff. That's a big part of the value we provide here at Techdirt: a lot of the information you'll find on our blog comes from other sites, but we try to highlight only the best and most relevant information, helping our readers to keep up with news in the technology world more easily. By the same token, people who sell public domain content on the Internet create value by filtering and organizing the information so it's easier for others to quickly and easily find what they're looking for.

I won't belabor the implications for traditional content industries. Like it or not, their content is available for free on peer-to-peer sites, and if they want to make a profit they're going to have to find ways to make their content more valuable than what you can get with BitTorrent. Two important principles for doing that are: use formats that convenient and versatile and make sure content is organized in a way that makes it easy for users to find what they're looking for. That means, for example, that you probably shouldn't cripple your products with DRM or sue companies that help people find your content.

Filed Under: adding value, competing with free, ebay, public domain

Leopard Illustrates Another Way To Compete With Free

from the reliability-is-valuable dept

You often hear people in copyright debates claim that you "can't compete with free." We've tried to explain why that's wrong: In fact companies find ways to compete with free all the time. The latest example comes via Wired's David Kravets, who points out that Apple's latest OS is all over BitTorrent. People who want to avoid giving Apple its $129 can visit their favorite BitTorrent search engine and download the new operating system free of charge. Yet apparently, some of the same people who were downloading bootleg copies of the OS earlier this week will head to their local Apple Store tonight to pick up a legitimate copy. "If you're going to use a system to run your life, you're less likely to take chances with an illegitimate copy," says BigChampagne's Eric Garland. Being sure your computer isn't running a defective or compromised version of Mac OS X is worth $129 to a lot of people. Of course, that's not a new insight. One of Red Hat's most lucrative products is its software subscription service, which allows companies to pay money in order to guarantee the software they get will be stable, secure, and will work well together. Red Hat's customers could download the software themselves and roll their own version of Red Hat, but for many companies it's just not the risk that they'd miss a critical bugfix or security patch.

Filed Under: competing with free, free, leopard, operating systems
Companies: apple