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#1: Fortnite changes the game with Creative Economy 2.0 and UEFN

Roblox has long been the king of user-generated content (UGC) in the gaming industry, but its reign may soon come to an end. Fortnite, Epic Games’ wildly popular battle royale, has recently made some significant changes to its UGC system that have the potential to challenge Roblox's dominance. 

The new features include the Unreal Editor for Fortnite (UEFN) and the Creative Economy 2.0 initiative (Creator 2.0), which will provide content creators with a range of new tools and functionalities, as well as improved payouts. Let’s explore how these changes could threaten Roblox's hegemony in the industry.

UEFN and Creative Economy 2.0: What Changes?

UEFN and the Creative 2.0 are game-changers for Fortnite's UGC system that come with a major overhaul to Fortnite’s economy and how it compensates developers. UEFN is a toolset that combines Fortnite Creative mode with the latest Unreal Engine 5 tools and a new UEFN-exclusive programming language called Verse.

The integration has elevated Fortnite's UGC system, surpassing its prior version by providing creators with an extensive array of new customization possibilities for gameplay experiences, coupled with superior visual and audio fidelity and optimized performance. 

A comparison between the UEFN-made gameplay demo, which you can watch here, and a video showcasing Creative 1.0 creations, which you can watch here, highlights the significant advancements that this new toolset brings to Fortnite's UGC system. For Fortnite creators, whose creations now capture approximately half of all player engagement on the platform according to Epic CEO Tim Sweeney,  this will likely prove to be a major upgrade to the sophistication of the Fortnite Creative toolset. 

Creative 2.0, on the other hand, replaces the previous Support-a-Creator program (which will now return to being an affiliate marketing program for streamers) with a new system for monetizing content based on player engagement. Under this system, Epic allocates 40% of Fortnite's net revenue generated from Fortnite’s in-game purchases to content creators based on the engagement and retention levels of their Creative islands, which should in theory provide a massive leap to revenue. 

One element of the revenue share to take into consideration here is that Epic is also included in the payout pool. Considering that half of Fortnite’s activity takes place on Fortnite Creative maps, that leaves around 20% of the game’s net revenue available to content creators and 12.6% of total revenue when including what Epic pays to third-party payment processors and other fees.

Interestingly, Epic this week began posting public concurrent player counts, indicating that its core Battle Royale and Zero Build game modes are far and away the most popular playlists available at the moment. But the company is not publicly talking about how it’s going to calculate engagement and retention for its revenue share.

Though Epic is in essence competing against its own creators, the company told The Verge it hopes the lucrative payouts will encourage more developers to build for Fortnite Creative, in turn driving more engagement and retention and increasing the overall share of the pie paid out to third-party creators. “We want to grow by welcoming creators, bringing in new genres of games and new ways to engage that go beyond the battle royale experience,” Sweeney told the publication in an interview during GDC.

The recent updates propel Fortnite Creative mode ahead of Roblox when it comes to the construction of sophisticated, high-quality games. Not only does it present creators with a broader selection of top-notch tools, but the widely recognized Unreal engine also appeals to non-mobile game developers who may be interested in shifting development resources toward UGC platforms. 

At first glance, Fortnite's new reward model may appear less lucrative than Roblox's. However, Fortnite's higher overall revenue gives it a subtle edge. For instance, in 2021, if Fortnite’s Creative 2.0 system were in place it would have allocated 12.6% of its estimated $5.8 billion in revenue, amounting to $730 million in developer payouts if engagement on Fortnite Creative islands was approximately 50%. In contrast, Roblox allocated 29% of its $1.9 billion in revenue that year, resulting in a comparatively lower $550 million in developer payouts.

That is not to say that Roblox doesn’t still hold some advantage in the UGC industry. It already has scores of developers, both amateur and professional of all sizes, who have invested in the platform. Switching to Fortnite would carry some significant costs, especially considering the vastly different toolset and audience demographics. 

But most importantly, Roblox’s player base is primarily on mobile; more than 70% of Roblox players access the game on a smartphone or tablet. Considering Epic is still engaged in a drawn-out and complex legal battle with Apple and Google over app store fees, Fortnite remains unavailable to download on mobile with the exception of third-party sources on Android. Nevertheless, Roblox's position in the industry is made more tenuous by Epic’s Fortnite announcements. 

Implications for Roblox

There’s no reason to suspect any immediate impact on Roblox’s business due to the launch of UEFN and Creator 2.0. Both game platforms can coexist, albeit with greater competition. However, Roblox has made it a mission of the last several years to diversify its player base, and the platform now counts players over the age of 13 as its largest segment. It’s also worth noting the fastest-growing age group for Roblox is 17-24, the company told The Verge last year. 

That means Epic’s new tools and creator economy changes might in the future threaten Roblox’s headway on capturing older audiences, which in turn could threaten both its pipeline of new developers and the older, more lucrative players that might be more willing to spend money on Roblox experiences. Fortnite’s biggest competitive advantage is its broad, mainstream appeal across age groups in addition to its massive, built-in user base. That makes Fortnite Creative a much more formidable challenger to Roblox than, say, Manticore, The Sandbox, and the scores of other metaverse-style platforms vying for the UGC crown. 

With the addition of the UEFN, Fortnite developers can now create more intricate and high-quality games that cater to older audiences, and many of its UEFN demos showcased more mature experiences that might appeal to gamers turned off by the cartoony aesthetic of Fortnite Battle Royale.  Nevertheless, Roblox still holds the advantage among mobile game content creators and the company can maintain its competitive advantage there by targeting mobile players worldwide and optimizing its platform for lower-cost Android devices. 

All in all, the growing competition in the UGC space is great news for both consumers and builders. Fortnite's enhanced UGC tools will no doubt accelerate the pace of innovation in the market, resulting in an even more dynamic landscape for UGC platforms. This provides consumers with more choices and developers with new opportunities to showcase their creativity. However, competition can have its side-effects, such as higher user acquisition costs, escalating R&D spend, and potential creator payout wars between platforms. 

Nonetheless, it's clear the emergence of new and established platforms will only continue to drive the industry forward. It will be fascinating to see how the UGC market, and by extension Fortnite and Roblox’s ambitious metaverse dreams, shake out in the years to come.

Game Launch Radar

#1: Merge Vikings 

• Publisher: Metacore
• State: Closed Beta
• Territories: Australia, Canada, Finland, Philippines, U.K. 
• Classification: Merge
• Quick thoughts:
  • Merge Vikings is a mobile game developed by Metacore, the same studio behind the popular game Merge Mansion. The new title combines elements from the Merge 2 genre and Build & Battle subgenre, resulting in a unique gameplay experience.
    • In the game, players are tasked with merging various elements in a 2x2 grid to produce resources such as wood, food, and gold. This core mechanic is similar to that of Merge Mansion and other casual merge games. The resources produced through merging are used to build and upgrade various buildings, strengthen village defenses, and enhance battle power.
    • The game has both PvP and PvE modes. In competitive battles, players must strategically place their Vikings on a grid to defeat their opponents in a turn-based combat system. The game also features a guild system where players can join forces with others to take on larger challenges and earn additional rewards.
    • You can watch a video of the gameplay here. 
  • While other games like Pirate Evolution! and Top War have combined Merge elements with Strategy gameplay, Merge Vikings sets itself apart by using casual merge puzzle mechanics as the core of its gameplay rather than an auxiliary mechanic. This unique approach could appeal to players who enjoy both casual Merge games and Strategy games, although the overlap between both subgenres is not significant. 
  • The game's success remains an open question, but with the backing of Supercell as an investor and the popularity of Merge Mansion, Merge Vikings has the potential to become a successful casual title. 

#2: Call of Dragons

• Publisher: Lilith
• State: Global Launch
• Territories: Worldwide
• Classification: 4X Strategy 
• Quick thoughts:
  • Call of Dragons takes the core gameplay of Lilith's highly successful Rise of Kingdoms and adds a fantasy theme with RPG elements and high-quality graphics.
    • As in other 4X strategy games, players begin by building their own kingdom with resource-generating buildings, defensive structures, and barracks for training troops. Resource management is crucial to progress, and players must engage in battles with other players and AI-controlled factions to expand their territory and capture resources. Combat combines traditional 4X strategy elements like unit management and tactics with RPG-style hero abilities and special attacks.
    • The game features several RPG elements, including the ability to collect and train dragons for use in battles, as well as various quests and challenges. The game also includes a campaign mode and boss battles.
    • However, unlike other 4X strategy games, Call of Dragons places little emphasis on the exploration aspect and lacks a focus on diplomacy.
    • Despite this, the game's metrics are promising, with a D90 RPD of $0.62 in Brazil's Google Play store, putting it slightly behind titles like Rise of Kingdoms ($2.78), State of Survival ($1.69), and Evony ($0.67).
    • You can watch a video of the gameplay here. 
  • Overall, Call of Dragons offers a unique twist on the 4X strategy genre with its RPG elements, although the lack of some key components from the strategy subgenre may deter core players. Nonetheless, the game's current metrics suggest it could be a significant title for Lilith.

Other Game Announcements

• Super Meat Boy Forever finally makes the jump to mobile (Link)
• Jetpack Collective to publish Rare Pets - Merge Game Mystery (Link)
• PUBG Mobile upgraded with immersive Dolby Atmos in audio update (Link)
• NetEase’s Vikingard re-collaborates with MGM’s Vikings (Link)
• Fishing Clash to cease distribution in China as NetEase closes subsidiary studios (Link)
• Ace Racer zooms to 1 million downloads as devs showcase new technology (Link)
• PlaySide Studios announces Dumb Ways to Die 4 (Link)
• The popular mobile game Onmyoji based on the Japanese folklore is getting its Anime on Netflix (Link)
• War Robots brings its PvE game mode titled Extermination (Link)

Company Announcements

• Supercell’s game teams are expanding – starting with Clash of Clans (Link)
• Epic to unify content marketplaces and offer creators 88 percent revenue cut (Link)
• Netflix Games will add Monument Valley, Ubisoft, and more to service (Link)
• Misfits Gaming launches creator-led Roblox studio Pixel Playground (Link)
• Supercell blocks its games in Russia and Belarus (Link)
• Tencent’s revenue increased 0.5% year-on-year in Q4 2022 (Link)
• Take-Two Interactive has acquired mobile retro-games subs service GameClub (Link)
• Nexon appoints two new directors to its board (Link)

Ecosystem Announcements

• Unity details 2023 roadmap (Link)
• Twitch viewership dips 8% in February as it hit 1.64 billion hours (Link)
• Canada Judge rejects unlawful gambling accusation in EA loot box lawsuit (Link)
• Mobile ‘paid competitive gamers’ are on the rise (Link)
• Beamable launches live services marketplace for gaming backend software (Link)
• Croquet for Unity makes multiuser games ‘automatically’ (Link)
• Flexion Q4 financials close with another record quarter (Link)
• 74% of women play mobile games daily (Link)

Content Worth Consuming

• Marvel Snap, Marvel Contest, CoD Mobile: What makes them a mass market hit? (Game Analytics): “What does the stellar mass market success of games like Marvel Snap, Marvel Contest of Champions and CoD Mobile share in common? No, it’s not just that they are all popular IP/Franchises. (IP driven games fail very often too, it took 3 versions to get CoD right on mobile). While it’s true there is no one factor or a “Reductionist” winning formula like gameplay, IP or UA. There is however a common pattern or framework that emerges, when you look closer at the success of developers who chose to adapt traditionally hard core PC/Console genres successfully on mobile…Is there really such a framework? and if it exists can it be repeated?…read on to find out!” (Link)
• Drive-Up Your Revenues with Seasonal Events (Game Refinery): “From national calendar days to religious holidays, seasonal events are a great way for mobile games to find new and exciting ways to drive player engagement. With over 90% of the top-grossing 100 iOS mobile games using seasonal events to boost their revenues, national holidays have become an essential part of LiveOps with players expecting an influx of new content as we approach the holiday seasons.” (Link)
• Frozen City post-IDFA global launch UA case study (Matej Lancaric): “A city-building simulation game set in an ice and snow apocalypse. As the chief of the last town on Earth, you have to gather resources and rebuild society. Collect resources, assign workers, explore the wilderness, conquer tough surroundings, and use various methods in order to survive.” (Link)
• Mastering the world of IPs (Level Up Podcast): “In this LevelUp episode, Melissa sits down with Josh Burns, Senior Director of Business Development at FunPlus. They get into the history of IPs in mobile games, what to look for in an IP, their role in 2023, Josh's advice for smaller studios looking to leverage them, and more.  ” (Link)
• Microsoft’s mobile gaming opportunity (Mobile Dev Memo): “Phil Spencer, the CEO of Microsoft’s gaming division, declared this week that Microsoft could release an alternative app store on both iOS and Android as soon as next year if its acquisition of Activision Blizzard is approved. Spencer’s comments come as the deal faces competitive review by a number of regulatory agencies, most notably the UK’s Competition and Markets Authority (CMA), which will issue a decision on the matter in late April.” (Link)
• Unsuccessful Hypotheses: When promising ideas don’t reach their potential. (Azur Games):  “Development is not always a straightforward process. Sometimes, even the most promising mechanics and features can result in negative outcomes for various metrics. However, this is a normal part of the learning process, and it’s crucial to rely on thorough testing before rolling out a new version to all users. In this article, we’ve gathered a few examples of such cases.” (Link)
• Why the F2P playbook needs to change (Pollen VC): “Sonja Ängeslevä, CEO and Co-founder of Phantom Gamelabs talks with Peggy about why the free to play games playbook needs to change, and how to do it. Sonja has vast experience in product management, CI and data analytics in the fields of mobile gaming and B2C product development.” (Link)

A big thanks to Fernanda Gonzalez for writing this update! If Naavik can be of help as you build or fund games, please reach out.