Fortnite’s Complicated Return to iOS Is Hardly a Victory

After four years of exile from the world’s biggest mobile entities, Fortnite is finally regaining some of the platform proliferation it had when it became a household name.

Epic Games last week announced its return, alongside “Fall Guys” and “Rocket League Sideswipe,” to iOS users in Europe and Android users worldwide after multiple legal battles triggered after its apps were removed from Apple and Google’s app stores, due to skirting their in-app purchase systems. Epic is still fighting Apple’s block in the U.S.

But even if the developer can keep 100% of Fortnite’s in-app revenue through the Epic Games Store, significant catches abound.

Per Newzoo, mobile gaming accounts for 49% of revenue in the near-$200 billion global video games market, but Europe is only the third biggest region. It’s still a heavy hitter estimated to bring in close to $35 billion this year, but that’s from a mix of platforms.

Meanwhile, faster-growing markets including Africa, the Middle East and Latin America are mainly picking up speed from the wide accessibility of mobile games, which also dominate the No. 1 Asia-Pacific market. Newzoo’s estimates show gaming revenue in the Middle East and Africa will grow close to 9% year-over-year in 2024, as opposed to just over 3% in Europe.

The Middle East and Africa now have nearly 560 million gamers, a lead of more than 100 million compared with Europe. Given that Fortnite isn’t available in China, which heavily regulates things such as in-game purchases for consumer bases with children, getting Fortnite on phones in emerging mobile markets is a big priority.

That doesn’t mean Epic didn’t catch a lucky break from the European Commission and EU Digital Markets Act.

Epic is among many top gaming companies that have cut staff in droves over the last two years, having laid off 16% of its workforce last November as it juggles multiple businesses after expanding heavily into publishing.

Some of this pain was undoubtedly eased by the $1.5 billion deal Epic struck with Disney in February, and Fortnite’s return to iOS coincides with its new “Doctor Doom” season of content amid Marvel’s return to glory in the wake of “Deadpool & Wolverine” dominating the box office this summer with more than $1 billion globally.

Epic knows what it’s like to do those numbers. Before Fortnite was nixed by Apple and Google from mobile stores, Sensor Tower estimated it had already earned $1 billion from mobile revenue by April 2020, a span of two years since it first launched on mobile platforms.

Off of mobile, Fortnite still accounted for 8.4% of global playtime on PC and PlayStation and Xbox consoles. It remains among a handful of older online games that collectively account for more than a quarter of what gamers on those platforms are playing at any given moment, not to mention the mix of annual releases and live services from “Call of Duty.”

That’s all well and good, but an iOS return limited to Europe leaves a substantial amount of money on table when considering just how much mobile could matter to Fortnite’s big picture. While Epic Games is a private company, Roblox is not, and the latter’s earnings paint a distressing picture for what Epic has been missing out on.

Roblox earned $2.8 billion in revenue last year, and its 2023 annual report detailed a whopping 80% of its users are on mobile.

Still, Epic had its reasons for challenging Apple and Google’s practices, which become clear when examining thorough analysis of Roblox’s earnings. Despite near-constant growth in revenue and user engagement, plus seemingly high cash flow, the company has struggled to stay profitable thanks to tremendous expenses.

Some of those are unique to Roblox, which spends more than $100 million each quarter on “certain infrastructure” and trust and safety expenses, but its quarterly cost of revenue has surpassed $150 million for more than a year, hitting nearly $200 million last quarter. That covers distribution expenses including Apple and Google’s cuts of in-game spending on mobile.

Given how developer exchange fees at Roblox have cost more than $200 million for the last three quarters, Epic’s desire to cut out the middlemen of Big Tech for mobile revenue is more than understandable, as doing so makes Epic’s long prioritization of generous shares of revenue with developers more affordable.

Keeping in line with its Epic Games Store policies, the company intends to offer third-party releases on its mobile app by December and will take only 12% cuts of those games’ revenues, but Apple requires developers who wish to release games through third-party apps like EGS to pay a “core technology fee” of €0.50 for each install after a million.

While Epic is willing to manage a fee like that, it’s likely to discourage developers from partnering with them on the mobile front if releasing a hit mobile game comes with such a charge.

As nice as it must feel for Epic to see concessions in its battle with Big Tech, the company is still running a complicated business model that must continue to rely heavily on PC and consoles at a time of cost-cutting and reduction for leading companies on those platforms. It’s far from clear if getting back on mobile to such a small degree will be worth it.