Hey folks - Ben here again. Welcome to Edition #78 of The SEG3 Report.

Today’s spotlighted piece focuses on Epic Games’ new updates for Fortnite creative, and what they mean for creators from a monetisation and discovery perspective.

Also covered: TV adaptations of video games have generated 140% player growth + ABinBev partners with Netflix on co-marketing and integrations for live sports events and new entertainment releases.

Let’s dive in:

Contents: Edition #78

• Fortnite Developers To Be Able To Sell In-Game Items From December

• TV adaptations of video games generate 140% player increase

• Netflix And AB InBev Announce Multi-Year Global Partnership

Fortnite Developers To Be Able To Sell In-Game Items From December

From December, developers will have access to a new revenue stream by being able to sell items directly from their Fortnite islands. Sponsored rows are also launching, helping creators get their experiences discovered.

TL;DR:

• 74% of in-game spend going to creators (for a limited time!)

• Sponsored rows have been added in discover so creators can opt to spend for increased visibility

• Creator communities to be launched for direct channels from creators to players

Following Roblox’s recent announcement (covered in Edition #76) that creators would be earning a greater % through DevEx, Epic Games have announced multiple updates for creators and players on the Fortnite platform.

Why should you care?

It’s a major play from Epic to try and make Fortnite a more appetising environment for creators to build.

Many developers and brands have dabbled in Fortnite creative - but the challenges have remained:

• Discovery has been difficult

• Creator monetisation hasn’t stacked up against Roblox

• And to some degree, you compete with OG Fortnite for players attention and time

That has meant that many developers and brands have favoured Roblox as their go-to for building experiences and communities.

But could these updates change those tides?

David Taylor, a SEG3 LA alumni, compared the economics of both platforms after Epic’s latest update:

So on one-hand, clearly a positive update for developers, but on the other-hand, a long way to go to catch Roblox.

That being said:

What’s the formula, and how can you benefit?

As we know, creators that build experiences on UGC gaming platforms monetise through revenue shares from the platform.

Epic have just made this somewhat more appealing for creators, by tweaking their formula. These changes being:

• Fortnite’s updated engagement payout formula

The engagement formula places 40% of the net revenue from Fortnite’s Item Shop and related real-money purchases into the engagement pool, with engagement being defined as:

• Minutes played

• New user acquisition

• Lapsed user acquisition

• Playtime surrounding V-Bucks spend

• Island Retention

It will be updated on the 1st of November to better reward creators for bringing in new or re-engaging lapsed players. Creators who achieve this will receive 75% of those new or lapsed players’ contributions to the engagement payout pool for their first six months.

• Discover to have a sponsored row added

From November there will also be the opportunity for creators to pay to promote themselves on the discover page via a new sponsored row in the ‘discover’ section.

Discoverability has been the toughest aspect for creators on the platform, so this provides an opportunity to boost their own revenue by paying to be featured, taking a leaf from true online media.

They also add that an initial 50% of the revenue generated from the sponsored row will go into the engagement payout pool, then becoming 100% from the end of 2026, so all of the money will be staying within the community.

• Fortnite creator communities

Creator communities will be launched for creators to share updates directly on the web and in Fortnite, building their own community forums where they are able to share messages and images.

These forums can include island updates, event information, feedback requests and more. Posts that are made will appear to the players in a variety of areas, all of which serves to engage a creator’s community even further and to build that bond and engagement.

Why Now?

The battle to attract, grow and then retain a creator community will be important for Epic as they go up against other major UGC platforms.

Giving creators new tools to better promote their experiences, rewarding them for reactivating players or offering incentives more in-line (or better than) their competitors means that it becomes a more attractive proposition for developers to allocate the time and resource to experiment.

Closing Thought

With competition for creators intensifying and platform revenues growing by the day, this move was necessary. Given the entertainment ecosystem Epic has built around Fortnite, offering stronger support for developers to fully leverage the platform and its community is a long overdue step. For creators and brands, it opens the door to more experimentation, discovery and fairer rewards for the worlds they bring to life.

And it’s not just UGC gaming that has announced changes for creators this week -YouTube has too… see more in ‘other news’ down below!

TV adaptations of video games generates 140% player growth, report indicates

A new report by Ampere Analysis has stated that video games which are converted into TV shows are gaining dramatic player increases following the on-screen adaptations, at an average growth of 140%.

TL;DR:

• Video game IP is now THE source for TV & Film

• The report shows that investment into other forms of media can drive player growth

• Sales of games such as Fallout increased dramatically following the release of the show, both the most recent but also historical games.

• Even shows with modest popularity are still driving a strong positive uplift in players.

Why should you care?

Very recently we have seen the latest version of this with the announcement from Paramount Pictures that they will be taking one of the world’s largest gaming franchises, Call of Duty, to create a CoD movie that is planned for release later this decade.

Alongside this, we’ve seen Angry Birds (another Paramount Pictures venture which already has a third film in production for next year), Sonic and many more gaming IPs take successfully to the big screen.

Ampere’s report shows an almost 500% (see graph above) increase in monthly active users on the game’s platform in the month after the launch, which is a staggering figure.

What are the benefits?

• By creating a TV show from a successful gaming franchise, you are building on your IP and an already established audience, rather than having to create a completely organic and brand new one starting from scratch.
  

• Characters are usually already established and it requires less work from the studio developing the show.
  

• Not all of the audience will engage immediately, but if the show proves to be successful more will follow, as well as any organic audience you create.
  

• Through promotion and advertising, both from TV for the show and the game developer for the game, there is deeper awareness to the general public which strengthens the brand in general.

At SEG3 LA last year, Justin Scarpone of SEGA, explained how storytellers are using a variety of platforms to engage fans and target audiences ⬇️

Want to get more for your brand’s vision and hear more from how the best in the business are transforming in the modern media era? Join us at SEG3 LA on the 9-10 December this year - Purchase your pass here.

Re-engaging the unengaged - a theme…

With fandom being generated at a young age according to a number of reports, keeping those fans or players engaged and providing them with access for re-engagement through a TV show or film only adds to the experience.

As we all know, with the battle for attention at the highest level it has ever been, the battle for lapsed players is increasing, and it is key to highlight that theme from both the Fortnite piece above and the undercurrent running through this story.

Look at it as some of the strongest marketing material around and a key use of your IP. Reach and monetisation is far more significant within a major game, so driving players to the game, or in this case back to the game is key.

TV more impactful than the big screen?

Interestingly, the report notes that the uplift is much greater on average from a TV show, at an average of 203%, compared to a more modest uplift of 48% from films.

This made me wonder why exactly that may be:

• Does TV shows having a longer shelf-life through numerous episodes which keep viewers engaged have a greater impact, compared to a film lasting ~2 hours and with a shorter lifespan at release?
  

• If lucky, you may get multiple seasons from a TV show with strong engagement, whereas creating a multi-film franchise could be a much tougher proposition.

What are your thoughts on the reasons behind it?

Closing Thoughts

This is a space that is going to continually be explored, but with the data showing that Fallout’s TV show had almost 29x the impact on monthly active users compared to two releases of DLC content on the game in 2023, it seems like a smart strategy and investment for those looking to extend the reach of their IP and re-engage/drive lapsed audiences back to launched and new games.

Netflix And AB InBev Announce Multi-Year Global Partnership

Netflix and AB InBev yesterday announced a global multi-year partnership deal, linking the worldwide drinks company with the planet’s largest streaming platform.

TL;DR:

• The organisations will collaborate on co-marketing campaigns across global and regional titles.

• Partnership to include consumer activations and title integrations.

• Deal includes co-branded campaigns around live events, such as NFL’s Christmas gameday and the Women’s World Cup 2027.

• Netflix’s expansion into events, particularly sports, is widening their partnership potential.

So, why should you care?

This marks a new generation of entertainment marketing. Netflix has traditionally been a “watch at home” platform, largely free of traditional advertising (until recently). But as the company expands into live events, sports, and real-world experiences like Netflix House (which we covered in Edition #40), it’s opening new doors for brands like AB InBev.

For many, many years brands have advertised within TV shows. I personally still remember the ‘outrage’ that came with Daniel Craig’s James Bond drinking Heineken in the early 2010s rather than a martini.

But this seems to be a more sophisticated, systemic approach that connects campaigns to titles, live broadcasts and event activations, giving Netflix new spaces for brand integrations without diluting the viewing experience.

In short, its really about finding opportunities for your brand to be part of the conversation in an authentic manner that can help you to open up new connection points.

At SEG3 London in June, Cathy Boxall of Dentsu talked to AirBnB’s partnership with Warner Bros and how they strategically integrated them into the story 👇

So, what stands out from this collab between ABinBev & Netflix?

1. Collaboration on co-marketing campaigns across global and regional titles

With subscribers all over the world, Netflix offers a global reach to brands. This is likely to have been a key point of interest to AB InBev as a giant of the drinks industry with brands and products for each corner of the globe.

By linking up with Netflix, it gives them an opportunity to tailor campaigns to where titles resonate most and products have strongest cultural fit.

2. Netflix’s expansion outside of solely the streaming world is driving brand intrigue

Netflix are starting to spread their wings further than just pure streaming of TV and film.

From WWE to the NFL, Netflix is embracing live sports and event culture. AB InBev, a long established sponsor of sports now has more opportunities to plug into these high-impact cultural moments.

So, what can you steal from this?

1 - Target your brand to local impact areas.

AB InBev are matching their brand to global and regional market opportunities, highlight where your biggest areas for impact could be and target those.

2 - Long term immersion shown to drive greater value

Merging with and fully integrating yourself into the TV and film community long-term has shown to be much more valuable than briefly dipping your toe. When engaging it must be done with full engagement and genuine effort, rather than simply for a quick-win.

_{In episode #3 of The Speakeasy podcast - Stefan Rothenbuehler of The Coca-Cola Company discussed their integrations and partnerships into music, entertainment and culture.} 

Closing Thoughts

Product tie-ins and placements aren’t new, but what Netflix is building, now alongside ABinBev, is a hybrid of streaming, live events, and real-world activations, which could set the tone for the next era of entertainment marketing.

In other news this week:

• YouTube announces new updates, including new ways to earn, live update changes and tools for podcasts and shorts creation: find out more.

• LiveScore Group announces transformational partnership with X and xAI: read here.

• NumberEight Signs New Podcast Partnership with DAX US: read more.

• UK Government Ready To Change Law So YouTube Carries Public Service Content Prominently: more here.

• The Chiliz Group acquires OG Esports, reuniting with original co-founders: read here.

• CVC Forms $14 Billion Global Sport Group Focusing on Leagues, Teams: read here.

• Crypto.com launches Champions League NFTs with chance to win experiences: read here.

• Como 1907, The Players Fund launch accelerator: read here.

• Mass participation event company RunThrough link up with Apple TV’s Slow Horses for a unique 5k race ahead of the season five launch: more here.

• Mercury13 acquires majority stake in Bristol City Women: read here.

• TikTok & LaLiga extend partnership agreement: read here.

• Land Rover & England Rugby make Defender official partner: read here.

Working on anything cool, or have a press release you would like us to cover? Send it in for the chance for it to be covered in next week’s edition!

That’s all for now everyone - thanks again for reading the latest edition of The SEG3 Report, and if you found it of interest, please do consider sharing with a friend!