Microtransactions: The Gaming Industry’s Multi-Billion Dollar Business Model
Sheamus Finnegan
Marketing Editor
Anybody with a young sibling or cousin is likely familiar with Fortnite, an online shooter released by Epic Games. Since its launch in 2017, Fortnite has become one of the most popular online shooter titles of all time. In 2023, the game generated $3.5 billion in revenue despite being completely free-to-play. How, then, has a free-to-play game become a multi-billion-dollar franchise?
The answer lies in its monetization strategy, which has subsequently been adopted by many other games. This strategy involves the use of “battle passes,” brand collaborations, and cosmetic items to fuel microtransactions, i.e., in-game purchases.
Once purchased for approximately $9, Fortnite’s battle pass allows players to unlock in-game items through progression over the course of the “season,” which usually lasts two to three months. The battle pass has the double benefit of earning revenue and boosting engagement by encouraging players to progress in the game.
Brand collaborations have also been a significant driver of revenue for Fortnite. The studio partners with famous brands, IPs, or celebrities to produce cosmetic items, which are then sold through microtransactions.
Take, for example, Fortnite‘s collaboration with Star Wars in May 2025, when the game launched its “Galactic Battle” season. Players were encouraged to purchase Star Wars character skins and other branded cosmetic items. Fortnite has done similar crossovers with Marvel, the John Wick franchise, and the NFL, as well as countless other IPs and celebrities, including Eminem, Ariana Grande, and Billie Eilish.
These in-game sales are extremely profitable. According to Newzoo, a global leader in gaming industry data, microtransactions on PC alone generated $24.4 billion in 2024, accounting for 58% of total PC gaming industry revenue that year.
Epic Games’ Fortnite is perhaps the best example of what has become known as a “live service” model, or the “Games as a Service” (GaaS) model. While games used to be treated as finished products at launch, games operating under the modern live service model are supported with continuous monetized content updates after the initial launch of the base game. The content from these updates creates a continuous second stream of revenue after the one-time initial sale. The live service model treats the release version of a game as a platform to build upon rather than a finished product.
Another video game company that has incorporated a live service model into its games is Activision, best known for its Call of Duty franchise. Out of the $7.53 billion in revenue reported in Activision’s 2022 annual report, only $1.64 billion came from product sales, while the remaining $5.89 billion came from “In-game, subscription, and other revenues,” showing that studios can make more from in-game microtransactions than from the sale of a game itself. Activision’s competitor, Electronic Arts (EA) has experienced similar results, also bringing in significantly more data from in-game purchases than full-game sales.
In 2020, Activision released Call of Duty: Warzone, a free-to-play addition to the franchise that very closely copied Fortnite’s formula, both in terms of gameplay (both are “battle royale” games) and monetization strategy. Like Fortnite, Warzone has been massively profitable, reportedly earning over $5 million per day in 2020.
While this model is highly lucrative, some studios have faced criticism from players who feel that too much emphasis is placed on the sale of in-game items and not enough attention is given to developing and improving the core gameplay. Other fans feel that many of these cosmetic items ruin the immersion of certain multiplayer games.
While Fortnite’s stylized and cartoonish visual style (and younger target audience) lends itself well to the inclusion of flashy out-of-universe characters and cosmetics, the same is not always true for games such as Call of Duty, which has historically been a gritty military shooter. For many players, the immersion of a gritty military shooter is broken when online matches are filled with pop culture icons, cartoon character skins, or otherwise out-of-place visual elements.
Despite any controversy, microtransactions have been massively successful for the studios that have employed them. If there is any truth to the expression “money talks,” then the multi-billion-dollar microtransaction industry isn’t going away soon.
Contact Sheamus at finnegs1@shu.edu