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Fortnite Creator Champions New Paradigm for Publishing Games

Three years ago, Epic Games, a privately owned videogame developer with backing from established entertainment giants Disney and Tencent, shook up the videogame industry when it introduced the free-to-play Fortnite Battle Royale. Fortnite was a $1 billion in sales in less than a year, and rival game publishers such as Activision and Electronic Arts began to take notice when Fortnite started eating into their revenue streams.

Now, Epic is going a step further toward disrupting the games industry.

Image source: Getty Images.

On Thursday, Epic announced it will spearhead a new "developer/publisher model" that "fundamentally changes" how games are created, published, sold ... and profited from.

Teaming up with developers genDESIGN, maker of The Last Guardian and The Last Colossus, Playdead (Inside, Limbo), and Remedy Entertainment (Control, Max Payne) , Epic will serve as the publisher of its partners' games. In doing so, however, Epic will guarantee that the developers retain "100% of all intellectual property and full creative control of their work."

Utilizing the financial heft it's gained from the success of Fortnite, Epic "will cover up to 100% of development costs, from developer salaries to go-to-market expenses such as QA, localization, marketing, and all publishing costs." Then, after a game has been published and gone to market, Epic will pay itself back for these development costs. Whatever profits come in on top of that will be split 50/50 with the game's developer.

As Epic founder and CEO Tim Sweeney explained: "We're building the publishing model we always wanted for ourselves when we worked with publishers."

And it's not done yet. "Additional information, development partners, and games will be announced in the coming months," said Epic.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Activision Blizzard, Tencent Holdings, and Walt Disney. The Motley Fool recommends Electronic Arts and recommends the following options: long January 2021 $60 calls on Walt Disney and short April 2020 $135 calls on Walt Disney. The Motley Fool has a disclosure policy.


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