Looking at data from the latest AppAnnie release (for those not familiar, AppAnnie is a tracking company that helps track mobile application downloads) shows that Android users will download 170 billion applications this year. This yearly figure shows an increase of 20 billion apps on a year over year basis, with even more impressive revenue figures. Revenue from these app downloads will surpass $50 billion, a $10 billion jump year over year as well.
These numbers are impressive, but when you look at one of the biggest apps currently, Fortnite, creator Epic Games has snubbed Google. By enabling direct downloads from their site, Epic Games gets revenue directly from the user, bypassing the cut that the Android App store would normally take. By comparison, Apple does not allow direct downloads, and has gained nearly $54 million in revenue by its 30% cut, meaning Google gets a $50 million snub.
Why Fortnite goes direct to consumers
The monetary reasons for going direct to consumers is obvious. By directly publishing the game, Epic Games gets to the keep the $50 million it would normally have to pay to Google as a transaction fee. One could argue that going through the Android App store would provide better security with Google completing security reviews, but with such a large company like Epic Games and a wildly popular game like Fortnite, the chances for a security risk are slim to none.
How Fortnite pulls in $300 million a month
Launched in June of 2017, Fortnite now boasts 125 million monthly players. For comparison, that’s nearly the entire population of Mexico. Popular game mode “Battle Royale” is free to play, and with that many players, you can see how the game would boast such impressive revenue numbers. Revenue has crushed sales on the Apple App Store, remaining at the top for revenue and in-game purchases.
Fortnite’s impact on the big boys
While a $50 million snub to Google might not seem the biggest, it would add up across several apps who decide to do this. Now, the million dollar question, how do you invest in a game that makes $3.6 billion? Tencent Holdings currently has a 40% stake in Epic Games, and you can trade the Chinese based company through their ADR, under ticker TCEHY. A 5 YR Discounted Cash Flow Revenue exit gives us a price target of $61.25, a 39% upside to the current share price as of end of market on 8/15/2018.