'Free' Game Making $300 Million Per Month? But I Thought You Can't Make Money On Free...

from the old-school dept

For most of the first decade of the millennium, we would post over and over again about content business models and how "free" content makes a ton of sense as a component of a business model. And yet, people in the legacy entertainment industry would laugh and laugh, and talk about how "you can't make money on free." You even had folks who claimed that if you gave away anything for free it proved you had "no fucking clue" about how to run a business. My favorite may have been Doug Morris, who was boss of Universal Music and then Sony Music, insisting that there was no way anyone in the recording business could make money on "free."

These days, that's all looking pretty silly, but just to drive home the point: the insanely popular free video game Fortnite made $318 million last month. Not last year. Last month. And it's free. Of course, as we've always said, the whole point of free is not that free is the business model, but that free is a part of the business model. And that's exactly how Fortnight works.

Even better, all of that revenue comes from nonessential in-app purchases. You don't ever need to pay any money to play Fortnite. And, if we went by what the entertainment industry "experts" from years past would tell you, if that's the case no one will ever pay. Except, obviously, they are, to the tune of over $300 million per month. Why? Because, they're still buying an actual scarcity: mainly different skins or dances/moves that let them show off. In other words: fashion. Something to make themselves distinct -- to stand out. That is a scarcity. Even in a digital world.

So, Fortnite is yet another example of how someone is taking a digital property, and leveraging free to attract a massive audience, and then figuring out ways to charge for a scarcity that people actually want to buy. And people are paying like crazy. So, can we put to rest the idea that you can't make money off of free yet?

Filed Under: business models, differentiation, economics, fortnite, free, free to play, scarcity

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  1. identicon
    Anonymous Coward, 28 Jun 2018 @ 2:00pm


    Oh please, don't make me laugh.

    There is no implied argument that piracy is "no big deal". (but there is a fair amount of studies and data that the amount of people who pirate things is a drop in the bucket compared to those that legitimately pay for them) The only argument being made, implied or otherwise, is that you can absolutely make money by offering products for free.

    People don't know what they aren't missing.

    Exactly. Which is why giving out your products/services for free is excellent marketing and advertising to get them to realize what they are missing and turn them into paying customers. How do you not understand this? Indie artists, game makers, and others do this all the time. Ever heard of Ed Sheeran? He got big because he gave his songs out for free and people pirated them. Fortnite got big because they had a solid product and gave it away for free.

    The smartest business model of all is to not try to win over freeloaders.

    This statement is misleading and this entire article proves you dead wrong. True freeloaders who refuse to pay for anything are going to pirate and there is jack all you or anyone else can do about it, yes. And it would be a waste to try to get them to pay for anything.

    But there are other people who wouldn't mind paying for it if they thought the price was reasonable. Additionally, there are people who wouldn't buy or pirate it at all, who actually might become a customer due to free products.

    it has nothing to do with the need to strengthen copyright protection due to internet theft of intellectual property.

    What exactly needs to be strengthened? It's already against the law to steal someone's stuff. How much stronger do you want? What magical law is going to drastically reduce theft of intellectual property? And seriously, where is this huge crisis of intellectual property theft I keep hearing about? Because I haven't seen it. Hmm? I'm waiting.

    Don't like it? Don't buy it.

    And there's the rub. People like it, they want to buy it. Did you catch that? People want to buy things. Or did you miss the part where a game, given away for free, ended up make the developer hundreds of millions of dollars? It's when the price demands are unreasonable and it's so loaded with DRM, and complex to actually purchase and use, that a small percentage of people turn to piracy. And we are talking small here.

    So, what exactly were you saying again?

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