The cost of running Fortnite has gone up a lot
Wtf didn’t they make a shitzillion dollars? Why are they needing help to ‘pay the bills’? Did they squander all of that money on EGS and avocado toast? Smh
Bills and shareholders pockets are basically the same thing.
Uh oh, Epic’s not making more profit than last year! We need to squeeze money out of parents’ pockets for their gullible kids and milk our cash cow harder!
With Epic, and most companies, it’s not even that they don’t make more profit each year - but that investors (shareholders) now expect not a net growth in revenue/profit, but a net growth on the net growth in profit!
I know it sounds confusing so let me break it down:
Company makes X1 profit one year.
Next year, company makes X1 + 3% profit (X2 is thus X1 * 1.03)
The following year, the company makes X2 + 9% profit (X3 is thus X2 * 1.09, or X1 * 1.03 * 1.09)
Then the year after that, the company makes X3 + 12% (aka X4 = X3 * 1.12 = X2 * 1.09 * 1.12 = X1 * 1.03 * 1.09 * 1.12).
The net growth on net growth is thus explained as 3% to 9% to 12%.
And investors/shareholders are now demanding not just that revenue grows but that the growth of revenue also grows linearly.
Meaning if in the fifth year, the revenue grows, but only by, say, 2%, they consider that as a bad year because the last year the growth was 12%, so this is a 10% setback, aka time to bring in a “shaker”, who fires half the departments to save money, introduces bullshit “oh poor company doesn’t have money” customer-facing crap like Epic just did; then pick up a hefty bonus and fuck off to the next company to ruin.
What you’re describing is called a Growth Stock as opposed to a Mature Stock. I heard these terms recently when reading about the AI bubble and will just quote the relevant parts, because the author describes it better than I ever could:
Pluralistic: The Reverse Centaur’s Guide to Criticizing AI from Cory Doctorow
You see, when a company is growing, it is a “growth stock,” and investors really like growth stocks. When you buy a share in a growth stock, you’re making a bet that it will continue to grow. So growth stocks trade at a huge multiple of their earnings. This is called the “price to earnings ratio” or “P/E ratio.”
But once a company stops growing, it is a “mature” stock, and it trades at a much lower P/E ratio. So for every dollar that Target – a mature company – brings in, it is worth ten dollars. It has a P/E ratio of 10, while Amazon has a P/E ratio of 36, which means that for every dollar Amazon brings in, the market values it at $36.
It’s wonderful to run a company that’s got a growth stock. Your shares are as good as money. If you want to buy another company, or hire a key worker, you can offer stock instead of cash. And stock is very easy for companies to get, because shares are manufactured right there on the premises, all you have to do is type some zeroes into a spreadsheet, while dollars are much harder to come by. A company can only get dollars from customers or creditors.
So when Amazon bids against Target for a key acquisition, or a key hire, Amazon can bid with shares they make by typing zeroes into a spreadsheet, and Target can only bid with dollars they get from selling stuff to us, or taking out loans, which is why Amazon generally wins those bidding wars.
That’s the upside of having a growth stock. But here’s the downside: eventually a company has to stop growing. Like, say you get a 90% market share in your sector, how are you gonna grow?
Once the market decides that you aren’t a growth stock, once you become mature, your stock is revalued, to a P/E ratio befitting a mature stock.
If you are an exec at a dominant company with a growth stock, you have to live in constant fear that the market will decide that you’re not likely to grow any further. Think of what happened to Facebook in the first quarter of 2022. They told investors that they experienced slightly slower growth in the USA than they had anticipated, and investors panicked. They staged a one-day, $240B sell off. A quarter-trillion dollars in 24 hours! At the time, it was the largest, most precipitous drop in corporate valuation in human history.
That’s a monopolist’s worst nightmare, because once you’re presiding over a “mature” firm, the key employees you’ve been compensating with stock, experience a precipitous pay-drop and bolt for the exits, so you lose the people who might help you grow again, and you can only hire their replacements with dollars. With dollars, not shares.
And the same goes for acquiring companies that might help you grow, because they, too, are going to expect money, not stock. This is the paradox of the growth stock. While you are growing to domination, the market loves you, but once you achieve dominance, the market lops 75% or more off your value in a single stroke if they don’t trust your pricing power.
Which is why growth stock companies are always desperately pumping up one bubble or another, spending billions to hype the pivot to video, or cryptocurrency, or NFTs, or Metaverse, or AI.
…and it’s not enough anyway!
Did someone assume the money on tap from skins would last forever?
It’s still going strong. It remains one of the most profitable games on the planet.
Yeah but how long can you add stuff to it until the margins dont make sense? How many salaries have gone up due to the success that werent being paid in the beginning? What competition do they have now that they didn’t have when they basically popularized the genre? How much does it cost to frankenstein it into a roblox platform? All things to consider when thinking of the future of Fortnite. I dont think its failing by any means, but I am seeing bloat creep.
I’m sure inflation has eaten into their margins, including salaries (though they’ve done layoffs in the intervening years, so who knows), and I’m sure the game is not at the height of its popularity and spending anymore. That said, they’re raising prices because they’re confident they can get away with them, not because they’re in dire straits.
I’m sure they’ll be around for a decade or more. I think all the collabs they do are a cool thing, I just hate the game so I’d never play it. Also, phantasy star online did concerts first in 2013.
The poor indie company needs some fundraising. :-(
I feel like the Lemmy description should retain the double quotation marks, since they often indicate “…so said a deceitful snake oil salesman.”
And you’ll keep buying it.
Lol. Lmao, even! Micro transactions and battle passes get enshitified like everything else.
Enshittierfied.
If you’re stupid enough to buy V-Bucks, you don’t deserve the money you’ve earned to begin with.
The children getting V-Bucks for birthdays and Christmas didn’t earn any money in the first place, but they ask for V-Bucks and Roblox money rather than full entire video games.
The children getting V-Bucks for birthdays and Christmas didn’t earn any money in the first place
Their parents did. They are fucking stupid.
but they ask for V-Bucks and Roblox money rather than full entire video games.
Those kids are fucking stupid.
The kids are stupid for wanting something that would make them happy? I would call that standard child behaviour. And parents are stupid for making their children happy? I’d rather be stupid than a bad parent.
Kids ARE stupid, yes.
They’re kids. They don’t know anything yet, and they want to play what their friends are playing.
Let’s all hand our money over for skins so our kids can sit inside and play video games instead of doing real shit. Good idea. That will make sure they are corporate boot lickers for life.
Also, you can play the game without wasting money on skins.
You’re on a gaming forum. You didn’t play video games as a kid?
I still play video games. I’m an adult though. I pay for a game and play it. Paying for skins is stupid. FTP or paid doesn’t matter.
And we’re all proud of you, but try explaining that to a child.
I did, but you don’t need vbucks to play Fortnite. Also, one thing didn’t keep my attention for long, so I preferred more games when I was a kid. Vbucks just buys skins. And you get free skins just playing the game and free vbucks just playing the game.
So pretty stupid to spend most of the limited money as a kid on skins year after year when it’s pretty much thrown at you so you don’t have to stick to default skins.
You don’t need V-Bucks to play Fortnite, but kids aren’t also known for having fully-developed skills like budgeting and delayed gratification. Perhaps it holds today’s kids’ attention longer because it’s changing in a way that games didn’t when we were kids.
