There's no denying that Fortnite has been the surprise hit of 2018. The open world survival video game is published by privately held Epic Games -- though it's worth noting that Chinese tech giant Tencent Holdings (NASDAQOTH:TCEHY) owns a 40% stake in the company.
Fortnite first debuted in late 2017 but didn't catch the public eye until the release of its battle royale mode. Epic Games sought to even the playing field by refusing to sell in-game items that gained players a competitive advantage, allowing even novice gamers to compete. This resulted in a phenomenon that took the world by storm, with Fortnite: Battle Royale amassing over $1 billion in sales since its release in September 2017. Legions of new participants have joined the ranks of gamers as a result.
Now Epic Games is looking to leverage the recent spotlight on all things Fortnite by licensing a broad assortment of consumer merchandise for fans of the game.
Breaking out the big guns
The company announced that it is partnering with Hasbro (NASDAQ:HAS) to bring new Fortnite-themed merchandise to the consumer marketplace. The companies are kicking off their partnership with the release of Nerf Fortnite blasters and a Fortnite edition of Monopoly. Hasbro noted that players were already turning to Nerf blasters to enact real-world Fortnite battles.
"Fortnite has quickly become a cultural phenomenon with legions of players worldwide, many of whom are already searching for NERF blasters to host their own Fortnite battles," said Jonathan Berkowitz, president, Hasbro Brands.
Meeting the growing demand
Epic Games began its push into consumer products for Fortnite earlier this year, seeking to leverage its growing fan base and finding other ways to tap into the gaming sensation. The company has licensed a wide variety of toys and games inspired by its smash hit.
The company has partnered with Spirit Halloween and its parent Spencer's to create a broad range of costumes, cosplay, gear, and accessories inspired by Fortnite characters. The specialty retailer already carries a full line of officially licensed Fortnite products, with everything from t-shirts to coffee mugs. The costumes are available online and in stores now, in time for Halloween.
Moose Toys will release a host of mini 3-inch collectibles and buildable forts for fans that will hit stores just in time for Christmas. Additional items, including micro-collectibles to battle playsets, will be available beginning in 2019.
Epic also inked a deal with toy company Jazwares to create a range of Fortnite-inspired gear, including figurines, loot boxes, tool and weapon replicas, stuffed toys, and playsets.
Staying power or fad?
This consumer merchandise push comes at a critical time for Fortnite. As my colleague Travis Hoium pointed out, the 2% growth the game achieved over the previous two months is in stark contrast to the explosive growth seen earlier this year. This could be a sign that the popularity in the game is waning, or it could be a pause before another growth spurt. The addition of consumer products could help stoke fan enthusiasm and garner additional interest in the game.
Both Epic and Tencent were banking on Fortnite's release in China to help keep up the momentum, but the approval process for new games has been frozen, as the government offices responsible for granting these licenses are in the midst of a reorganization. This has effectively shut Fortnite out of the world's largest gaming market -- at least for now.
Show me the money
The majority of revenue from the free-to-play game has been generated by micro-transactions -- in-game purchases that customize the look of your character without increasing skills -- on things like skins, emotes, and character models.
Keeping players engaged is critical to the game's future success. A recent survey sponsored by LendEdu found that more than 68% of Fortnite players have spent money on in-game purchases, and 37% of respondents said that this was the first video game for which they'd made in-game purchases. The study also revealed that the average player is spending between six and 10 hours per week playing the survival game and has spent about $85 on in-game purchases.
Time will tell whether the gravy train is running out of steam or just taking a breather, but I wouldn't count out Fortnite just yet.
Danny Vena owns shares of Hasbro and Tencent Holdings and has the following options: long January 2020 $50 calls on Hasbro. The Motley Fool owns shares of and recommends Hasbro and Tencent Holdings. The Motley Fool has a disclosure policy.