Fortnite’s cash cow is PlayStation, not iOS, court documents reveal

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Image: Epic Games

Earlier this month, we learned that the iOS version of Fortnite was a huge revenue driver for Epic Games — the game earned more than $700 million from iOS customers over the two years before it was pulled by Apple, according to court documents (PDF) released ahead of Epic’s trial against the iPhone maker. But even though iOS Fortnite players brought in a staggering amount of money for Epic, iOS isn’t the biggest platform in terms of revenue for the game — apparently, it might even be among the smallest.

Court documents reveal that PlayStation 4 generated 46.8 percent of Fortnite’s total revenues from March 2018 through July 2020, while Xbox One, the second-highest platform, generated 27.5 percent. iOS ranked fifth, with just 7 percent of total revenue. The remaining 18.7 percent would have been split between Android, Nintendo Switch, and PCs.

In 2020, iOS revenues were projected to be an even smaller piece of the pie: just 5.8 percent, compared to 24 percent for Xbox One and “almost 40 percent” for PlayStation 4, according to a new deposition (PDF) of Epic Games’ David Nikdel, a senior programmer who works on the backend services for Fortnite.

“iOS was always the lowest or second lowest if Android was listed, correct?” lawyers asked Joe Babcock, Epic’s CFO until March 2020, in a separate deposition. The answer was yes.

Babcock explicitly confirmed that the iOS version of Fortnite earned less revenue, month to month, than:

iOS’s low revenues compared to other platforms may not be entirely surprising, based on past comments from Epic CEO Tim Sweeney. He said in a declaration that Fortnite on iOS represented 10 percent of the game’s total average daily players in the two years from when the game launched to when it was pulled from the App Store in August. And Fortnite is considered to be a billion-dollar business all on its own: in 2019, it reportedly brought in $1.8 billion in revenue all by itself. (Epic projected company-wide revenue of $3.85 billion in 2020, to give you some idea of how big Fortnite is compared to, well, everything else Epic does.)

Thanks to these court documents being released ahead of the trial, we now have a better idea of where Fortnite makes most of its money — and despite the huge amount of dollars flying around mobile games right now, PlayStation and Xbox seem to account for the bulk of Fortnite’s earnings. They could make Epic’s choice to fight Apple and Google make a bit more sense — even if they alienate the app store companies, Epic can bank on Sony, Microsoft, and Nintendo consoles continuing to rake in cash.

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Given how Fortnite has cross-progression, I wouldn’t be shocked if the vast majority of mobile players used PC or Console as their main platform, and only played the mobile version when they were out and about.

What about the people, like some of my friends, who only have a phone?

This is also why Epic can afford this type of court battle. Their business is completely fine if Apple decides to pull the plug (which they did). Epic can make close to 40% more money on iOS if they can bypass the 30% Apple tax (100%/70%), so this is absolutely worthwhile for them.

Let’s just take a moment to observe that anyone who uses the phrase "Apple tax" is showing us either their:

  • Incredible ignorance of business and government, or;
  • Bias against Apple.

If you’re going to call it the "Apple tax", then don’t you also have to point out the:

  • Play Station tax;
  • Xbox tax;
  • Switch tax;
  • Google tax;
  • Etc.

Hey, but why stop there? If companies like the above aren’t supposed to make any profit, then isn’t any company that marks up a product really just taxing us? That would give us the:

  • Epic tax;
  • Target tax;
  • Corner bodega tax;
  • Nordstrom tax;
  • Etc.

Words matter. Please stop the ignorance.

Only governments have the power to tax. When private entities, like Apple, Epic, you and me, enter into a contract to have a transaction, that’s just business. The difference between what companies pay for something, and their sale price, is called gross profit. It’s been around forever and it’s perfectly normal.

Epic has every right to sue Apple if it feels it’s been treated illegally, and they have every right to lose that lawsuit. Which they will.

Not to nitpick the nitpicking, but…

If companies like the above aren’t supposed to make any profit,

By all means we should mention the Playstation/Xbox/Switch here — to genuinely discuss instead of shutting discussion down.

You can do anything you want with the device you purchased… go throw it in a lake.

But what you can’t do is anything you want with the software… that’s licensed.

Huge difference.

go throw it in a lake.

Or perhaps put linux on it? Heck, Sony used to sell Playstation 3s with that as a selling point. (Take your pick to BSD or Android if you’d like.)

Open bootloaders seem like a great compromise to me, and hardly likely to effect anyone’s bottom line. Epic wouldn’t be happy… but I don’t think that’s in the cards no matter what.

I think that discussion is happening.

So, what should we call a compulsory levy from an authoritative body that is based on cash receipts received by the payer? Alt-tax?

The cash is received by the shopkeeper… that’s how stores work.

Its called Mark Up. Every shop has it to cover overhead & make a profit

It’s in my post. It’s called "gross profit". And it exists in pretty much every business.

BTW, it’s worth noting that Apple made a choice when it created the App Store to:

  • Allow devs to set their own price (within a set of proscribed price points), and;
  • Fix it’s gross margin at 30%, and;
  • Make the above public knowledge.

(And since that time has done nothing but lower the gross margin.)

It did not then, and does not today, have to make any of those choices. If Apple wanted to, it could simply ask devs what price they want for their apps, then set the App Store price themselves if they wanted to. But they don’t. They give devs a lot of control and predictability.

You’ll notice that Xbox, PlayStation and Nintendo do not publicize their gross margins – those devs operate under an NDA. I think Apple has paid a price for its transparency.

Make the above public knowledge.

I mean it is against app store guidelines to talk about it or mention it in your app.

The console vs smartphone argument is like comparing a dirt bike in your backyard to driving it down a highway.

Yeah it seems similar, it’s the same dirt bike, but context matters and the legal system is perfectly capable of drawing a distinction between a console operating system and a smartphone.

Just like it doesn’t pose any challenge to court system to legally require a license plate and indicators on the dirt bike when someone tries to drive it on the highway.

Really… no. They aren’t different. Which is what was established in Elliott v United Center, and many many other cases trying to make this same argument.

So where does a tablet fit into this?
And where does the Switch fit?

Its impossible to define the technical boundaries between console and "smartphone" (your name for it).

I’d say you’re doing a pretty good job of showing your "Incredible ignorance of business and government" since you’re trying to compare a general computing device to a game console. Consoles have always had a tax associated with them, and that tax is actually lower now than it has been in the past. Go look up Nintendo’s software licensing terms for the NES.

Computing devices on the other hand have not. There’s no reason software should be "taxed" at a higher rate than other time in computing history simply because it’s running on a smaller device.

I’m not sure why you think "things have generally been done this way" means the weight of the law dictates that things must be done that way.

If this were an article about how the iPad can replace a laptop, I have no doubt many people currently arguing iOS is a general purpose computing device would instead be calling it a consumption OS that no serious person could use for REAL work. A TOY!

But, again, there’s no legal framework that says a single use device gets to make certain fee arrangements that general purpose devices DO NOT legally get to make.

That’s a fiction people parrot because they saw someone else say it.

Remember that, like PC’s, consoles from Atari, Mattel, Coleco, and Magnavox used to all be open before the video game crash of 1983. Then they switched to the vertically integrated business model licensing access to their platforms we know today (Nintendo being the first and then everyone else following suit). So if things being "generally done this way" means Apple can’t switch to a vertically integrated model then consoles should have been forced to remain open as well, right? But they weren’t.

First, "tax" doesn’t mean what you think it means. Maybe if you got your language right you’d get your ideas right.

Second, the artificial construct you create defining the difference between a console and a "general computing device" has no weight in law to my knowledge. Please provide a case or code reference that will prove your point.

1. Consoles most certainly have not "always had a tax associated with them". Anybody was free to make their own cartridges (this is in fact how Activision got its start) on just about any console up until the video game crash of 1983. After that, consoles makers decided to tightly control their ecosystems to prevent another meltdown like 1983.

2. This concept of "general computing device v console" has no legal weight that I know of. The only people who invoke it are technologists who think it is important. If you can point to a legal ruling where this differentiation made a difference, please feel free to point us to it. So far no one has been able to show me one.

3. Just because PC business model was structured to allow anybody to install anything they wanted on them does not mean that this is some legally mandated business model. Companies are allowed to structure their products as they see fit. Console makers were free to change to a vertically integrated business model after years of openness. I would argue that Apple is free to do the same thing with their mobile devices.

4. This is a case about a game maker who sells their product across a variety of platforms. The fact that Epic is perfectly OK with paying 30% to console makers but scream highway robbery when Apple and Google charge the exact same thing for the exact same services makes the console model very relevant to this case. You can try to dismiss console’s relevance with the "general computing device" argument but I don’t think the court will buy it.

So instead of "apple tax" you’d be fine with it being called "Apple Fee" ? Like credit card fee.

Sure. Or like a console fee. Or an retail fee.

A platform owners cut is not a tax or a fee. Its a Cut, or a Mark Up

It’s not a tax. It’s not a fee. It’s a gross margin. This isn’t complicated.

Ask any accountant if you don’t believe me.

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