There's no question that Fortnite was the surprise hit of 2018. The brainchild of privately held Epic Games quickly became a pop-culture phenomenon, generating more than $1 billion in revenue since its release just one year ago. The free-to-play battle royale game quickly became the topic of conversation, not only among gamers, but among analysts and executives in the gaming industry, as well. Many wondered aloud whether Fortnite was expanding the gaming market or stealing share from established players like Activision Blizzard (ATVI).

Activision responded with a battle royale entry of its own, a mode called Blackout for Call of Duty: Black Ops 4. The private beta version of Blackout recently premiered, and the early reviews are calling it an unqualified win for Activision. Some went even further, suggesting that Blackout could be a "Fortnite-killer."

A screenshot from Call of Duty: Black Ops 4's battle royale mode Blackout.

A screenshot from "Call of Duty: Black Ops 4's" battle royale mode "Blackout." Image source: Activision.

A worthy adversary

Excitement over the initial reaction to Blackout resulted in one analyst saying that Fortnite may have peaked, based on his assessment of the competition's recent releases. Benchmark analyst Mike Hickey said in a note to clients that:

[The] upcoming Call of Duty: Black Ops IIII [sic]: Blackout, Battle Royale (BR) mode, PS4 beta launched yesterday, greatly exceeding our expectations. Buzz from streamers was sensational, in our view. Popular Twitch streamers were gushing on the quality and fun of the play, while subscriber comments were calling Blackout a Fortnite and/or [PlayerUnknown's Battlegrounds] PUBG killer.

PUBG was the original battle royale game, but was quickly eclipsed by the success of Fortnite

According to Hickey, the beta version of Call of Duty attracted nearly 400,000 viewers on Twitch, the popular video game streaming site owned by The analyst believes that, "Blackout will be a potentially massive hit, and drive up to an additional $500 million in incremental annual recurrent digital monies." Based on players' early reactions to the game, Hickey believes Blackout "will migrate investor focus from the Fortnite-led [battle royale] competitive threat to the opportunity for [battle royale] in driving meaningful growth." 

Was the Fortnite phenomenon already winding down?

Even without Blackout's entry into the growing battle royale genre, Fortnite growth had already been slowing. After putting up double- and triple-digit growth in each month since its release and generating more than $1 billion via in-game purchases, Fortnite's recent growth had slowed to just 2% sequentially, as outlined by my colleague Travis Hoium.

Fortnite recently released a new Battle Pass in July -- which, in previous instances, had resulted in acceleration of growth. That wasn't the case in July, according to media intelligence company SuperData, which noted:

Fortnite's peak may be behind us. Fortnite revenue is up only 2% from June. Growth was modest despite Epic releasing Season 5 of the game's battle pass midway through the month.

"Call of Duty: Black Ops 4" character Ajax.

"Call of Duty: Black Ops 4" character Ajax. Image source: Activision.

Upping its game

Even in light of the challenge presented by the battle royale genre, Activision stuck to its game plan. When the company reported its second quarter results, it beat not only its own forecast, but analysts' consensus estimates, as well. Revenue grew to $1.6 billion, up 1% year over year, while earnings per share of $0.62 easily surpassed expectations of $0.36. This helped Activision achieve a record first half in terms of revenue, net bookings (net revenue less deferrals), and earnings per share.

With the pending full release of Call of Duty: Black Ops 4 early next month, we might just see more records from Activision.