How to Invest in Fortnite (and why you should!)

What is Fortnite Battle Royale?

So if you’ve been on the internet at all these past few months, you’ve probably seen or heard of the recent hit game called Fortnite Battle Royale. (For future reference, Fornite and Fortnite Battle Royale are two separate games. For this post, I will be discussing only Fortnite Battle Royale when I reference Fortnite). Right now, it is the most played game as well as most viewed and streamed on platforms such as YouTube and Twitch.TV, and you’ll even see many non-gamers doing Fortnite related videos such as the new recent trend of Fortnite dancing.

Before I discuss how you can invest in Fortnite, let me give you a little background on the game for those who don’t know much about this video game.

First off, Fortnite Battle Royale is a free-to-play battle royale game created and published by Epic Games and is currently in an early-release stage. Battle Royale is a gaming genre which essentially means players randomly drop into a map, and the sole objective is to scavenge for supplies and then either kill every other player or survive until you are the last-man-standing. Think Hunger Games.

Much like Facebook after MySpace, Google after Yahoo, and Apple after Nokia, Fortnite is another example of a successful game-changing product that is not a first mover or pioneer in the category/industry (pun intended). In fact, PUBG, a game very similar to Fortnite and also came first, was quite popular and controlled the market before Fortnite (based off numbers/statistics. I don’t play either game, so there is no bias here). One huge mistake that PUBG made was making the game has a price sticker of $30, while Fortnite is instead a free-to-play PC game which made consumer acquisition much easier, and is instead able to take advantage of the freemium model that has been very successful in recent years (freemium = free to play, but pay for bonuses & cosmetics). Don’t get me wrong though, PUBG is in no way a failure, as over 40 million copies of the game were sold across all platforms. However, Fortnite, in just a few months since release, has already amassed over 45 million players and is, as I mentioned earlier, currently the most popular video game. I mean, when you start seeing a video game make news headlines on Google and news front pages, you know you’ve hit the world by storm.

Some other crazy statistics about Fortnite:

• One streamer, Tyler “Ninja” Blevins, was reportedly making $500,000 per month as streaming revenue.
• According to SuperData, for April 2018, the game generated US$296 million in revenue.
• Received 10 million players in the first two weeks of release, and currently over 45 million players.
•  Chance the Rapper, Joe Jonas, Finn Wolfhard, Roseanne Barr, and Norm Macdonald,  Drake, Travis Scott, Kim DotCom, and Pittsburgh Steelers wide receiver JuJu Smith-Schuster have all played Fortnite.
• There will be Celebrity Pro-Am Electronic Entertainment Expo 2018 in June, featuring 50 celebrities and 50 top players competing.

So, How DO I invest in Fortnite?

So, you want to somehow invest in Fortnite? Well, just like if you wanted to invest in The Avengers movies, there’s no direct way of investing in individual movies; instead, you’d had to invest in Disney, which owns Marvel Entertainment, the creators, and publishers of The Avengers franchise.

But who owns Fortnite? As I mentioned earlier, Fortnite was created and published by Epic Games. But guess who owns Epic Games? A very unknown (In NA) Chinese tech giant called Tencent (TCEHY) owns about 40% of Epic Games.

What is Tencent? (TCEHY)

With twin skyscrapers located in China’s Silicon Valley (Shenzhen), Tencent is a multinational investment holding company currently with over a 500 billion market value at number 5 on the public market cap size and is ahead of Facebook, Berkshire Hathaway, Alibaba, JP Morgan, and J&J in value. Since going public on the Hong Kong stock market in 2004, it’s gone up over 11,000%!

If you live in China, Tencent probably controls your life. Tencent developed WeChat, one of the world’s most popular apps, with over 1 billion monthly users and 900+ million daily active users. So what exactly is WeChat? You’ve probably guessed or already know that one of its main purposes is to function as a social media & messaging app, but in China, it is dubbed as a “super app” or “app for everything.” Payment services, augmented reality, city services (for booking and transportation) & artificial intelligence integration are just a few things that WeChat is offering/developing.

Here are just a few other investments and industry that Tencent is involved in:

• E-Commerce: Tencent owns 15% of JD.COM (the 2nd largest e-commerce platform behind Alibaba Group)
• Music: A majority stake in Tencent Music Entertainment, which has more than 700 million active users and 120 million paying subscribers, the world’s largest and most profitable. 
• Tenpay (Chinese version of Paypal)
• Tencent is the largest video-game publisher in the world (by revenue)
• Dubbed as China’s most valuable company by WSJ

Tencent in America

But wait! There is more…Tencent wasn’t satisfied with dominating the Chinese/Asian market, that they decided to make their presence known in America.

Tencent is the world’s largest video-game publisher by revenue. We already mentioned that Tencent owns Epic Games (100%). But although Fortnite might be the biggest game of 2018, there is another video game that has created a massive audience in the past few years, and that is the game League of Legends, created and published by Riot Games.  And yes, Tencent owns 100% of Riot Games. And let’s not forget video-game APPS, because Tencent owns 84.3% of Supercell, the publisher of Clash of Clans (long-standing most played app).

Tencent also has investments in Tesla (5%), Snapchat (12%), and Activision Blizzard (~5%). And somehow, not only does Tencent have the world’s largest music entertainment service, but they also managed to own 10% of Spotify, which dominates music streaming in NA. And with the recent NBA finals ending, the Chinese can thank Tencent who is responsible for NBA broadcasts in China. 

I think everyone would be quite impressed by this dark horse company. Tencent snuck up on everyone and became the 5th most valuable company in the stock market all while everyone was focused on the Zuckerberg and Facebook’s privacy scandal…

So, if you want to invest in Fortnite (and 100+ other great things), look no further than Tencent, China’s Facebook, WhatsApp, Twitter, EA, and Spotify, all in ONE.

Other resources:

What is Tencent? CNBC YouTube Video

Tencent Vertical Campus CNBC YouTube Video

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If you have more questions, please feel free to reach out. I will gladly help you with any concerns, and we can hop on a call/chat if you want.

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Disclaimer:

I am not a professional financial advisor or planner as much as I’d like to be. All thoughts on the DTF Website are strictly my opinions unless otherwise stated. I understand there may be errors in my writing. My articles are not meant to be offered as professional advice, as I am currently learning a lot about finance myself. Please always do your own research and due diligence when it comes to financial decisions. Money is very important! I may own some stocks discussed in this article.

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