Mario Stefanidis, VP of research at Roundhill Investments, joins Cheddar News' Closing Bell, to discuss how games will now be able to play "Fortnite" on their phones for free. He also explains how this is a clever way for Epic Games to get around restrictions from Google Play and the App Store in which it would have had to concede 30 percent of its revenue.

Closing Bell

Microsoft, Epic Games Team Up to Get 'Fortnite' on Mobile Devices for Free

switching gears now, one of the biggest names in tech is joining forces. One of the biggest names in gaming Microsoft and Epic Games latest partnership will allow mobile gamers to play Fortnite once again on their phones but not in the way that you might think joining us now is Mario, Stephanie Diaz, vice president of research at Round Hill Investments Mario. So how do gamers play Fortnite on their phones this time around? So this is kind of similar to what we saw with Epix partnership with NVIDIA's G Force now, cloud service about a year ago, but gamers will be able to play on their iphone and their android device via the web browser. So this is a cloud gaming service where instead of running the game on your actual phone, you're actually streaming the game from external servers. So this is a clever way to get around the restrictions that both the google play and app stores have placed on um on on Fortnite where Epic isn't willing to concede 30% of their revenue mary, you ever played Fortnite, yep, I used to play Fortnite all the time. So you know it's free, right? It is free, but the way Epic makes all their money is via micro transactions. So the V bucks as they call them. Um that is their primary money maker, like pretty much for the whole business, so doing anything to not pay that 30% cut is monumental for them. So the question here is uh my question here is, we know it's free but game Pass isn't free and video G Force now isn't free. So what do users now will have to fork over to play? So they'll they'll have to fork over about $15 a month. Um You know I would argue that for what you're getting with those services which is you know, hundreds of games on the cloud, the ability to play in um you know, top resolution, top frames per second, you know, it's a pretty good deal. So last year Epic Games held back for nine from being available on Microsoft's platform due to viewing the tech giants X. Cloud service as competition to its pc offerings. So what changed? Um you know I think Epic realizes that they have to make partnerships with whoever they can. Um you had their latest funding round where they raised money again from Sony for a second time, you know have this partnership with Microsoft, so they're now partners with all the major publishers um since their lawsuit with Apple and Google is technically still ongoing, I think they realize that you know they have to make allies where they can. So last month also epic games raised about $2 billion $31.5 billion. So what do you see as the next steps for the company? Do you think it could go public? Yeah so it's interesting because their last funding round before that was in April 2021. Where they raised that about $29 billion 10% increase. Um but I think it was important because we're in a period right now where private companies valuations are getting slashed left and right and you're even hearing about layoffs, so just bolstering um their valuation is really important. They hired an Ir professional last year. I don't know if that went anywhere, but certainly I think public is in their next step. Uh as long as equity markets can find their footing, you know, I think if they went public now, the stock would not do so well as other growth companies have been facing. Alright, so Epic Games has been fighting battles with other tech companies, mostly google and Apple. So how much of advantages Microsoft gained by being a friend instead of a photo to Epic. Yeah, I think on the one hand, I think it's a lot better for Epic than Microsoft because Microsoft is like 50 times their size. But on the other hand, you know, these types of partnerships for Microsoft are super important. Um the news broke a couple of weeks ago that they were looking to integrate advertisements into their free to play games. So you can now imagine within um this partnership that you're going to see billboards that have ads served by Microsoft within the Fortnite universe, and you can imagine that for all of the free to play titles that their onboarding onto the game's past. So this is an alternate revenue source for the company beyond their, their subscription services, which is their bread and butter. I'm just waiting for the day where I hear like this Over Shield is brought to you by Adidas. I always say how the game with Adidas. Now, the next question, I hope not. So do you believe Microsoft will be bringing more free to play games to the cloud? Yes, I I do now that they've practiced code with free to play with the subscription service and the upcoming ad integration into these titles. Um I think they certainly are gonna bring more games, you know, the era of premium titles that are $60-70, I think it's kind of on the way out. We're gonna have the subscription bundles offered by the major publishers like Sony via Playstation Plus, and Microsoft via xbox games pass. Um that are kind of, I'm gonna take video games into the future of media. Similar to how net netflix offers a video subscription and how Spotify offers an audio subscription for the first time, we now have a third major subscription category. Who are the winners here? I mean, it feels like if you look at the surface, the gamers are the winners here because they get to play Fortnite again on their phones and mobile, but who are the winners here in this deal. Yeah, I think everyone's kind of a winner except the Apple and google, you know, they're not going to be getting any cut now from, from the revenue. Um, nor are they entitled to one since this is a cloud service, external from their app store. But yeah, the gamers will be able to play Fortnite again. They'll be able to play all the other titles on the, on the cloud service. And then for epic, they're finally back on these stores after more than a year hiatus. Um, so you know, everyone except the Apple and google are really the winners. All right. Last question is very important to play console or pC. I got to know I'm mainly a pc. Gamer data boy. Mario Stephanie says vice president of research at Round Hill investments. Thank you so much for joining us, Mario, Always a pleasure.