Author: Melanie Kramer

Euro at a 2-Month Low Over Italy’s Bonds, Budget, and Brexit

Investors are selling euros and Italian bonds and Italy’s bond yields have hit highs. There are serious concerns from the European Union (EU) over Italy’s draft budget.

Italian Bonds

10-year Italian bond yields rose to 3.74% early on Friday, October 19, 2018, marking the decline in demand for Italian bonds.

The spread between yields of German and Italian bonds has widened to its highest level in almost five years at 3.4 percentage points. The widening spread illustrates the higher demand for German bonds, as Germany’s government debt is viewed as being a safer investment vehicle due to its stronger economy.

Italy’s economy and debt situation are much more volatile. Debt in the third-largest EU economy is running at around 130% of its GDP, so Italian bonds are a riskier prospect.

Italian budget concerns

Budget Concerns For Italy

The yield spread between Italian and German bonds has been heightened as the EU raises concerns over Italy’s budget plans. The EU’s financial authorities rejected Italian budget proposals earlier this week citing an “unprecedented” break of EU rules pertaining to government spending and deficit levels.

Italy’s budget plans include an increase in spending and its budget deficit, which would allow Italy’s government debt to remain high. The EU has written to Italy warning:

“Those three factors would seem to point to a particularly serious non-compliance with the budgetary policy obligations laid down in the Stability and Growth Pact.”

The potential of further tensions between the EU and Italy has pushed investors to sell their Italian bonds and the price to fall, increasing the bond yields, and widening the difference between Germany’s bond yields.

Matteo Salvini, the leader of the Northern League, one of the two coalition partners in the new Italian government of 2018 said of the budget proposals:

“If Brussels says I cannot do it, I do not care, I will do it anyway.”

Portuguese and Spanish bonds have also seen a sell-off in recent days which could point to a backlash over Italian budget concerns. Italian stocks are also down.

Euro at a Two Month Low

Italy’s bond yield increase and fall in bond demand, alongside the origin of this activity–the EU’s concerns over Italy’s budget and economic plans– have affected confidence in the euro. The euro is now at a two month low.

The euro is also impacted by Brexit as discussions continue. A Bank of America strategist, Kamal Sharma warned in August 2018 that if the ongoing Brexit talks didn’t find a resolution, the impact would be seen on both euro and sterling.

Sharma said that sterling rates against the dollar could fall to lows experienced in the mid-1980’s. Stephen Jen, a currency expert at Eurozone SLJ predicted of possible EU action over Brexit stalling:

“Brussels needs to think very carefully about trying to punish UK. It is effectively using the threat of trade sanctions as a weapon. But the extreme disruption for the EU itself if this happens would be greater than some might think.”

Images from Shutterstock.

October 19, 2018
Are Millionaires the New Custodians of Our Oceans?

The world’s richest people are renowned for taking to the seas to enjoy their wealth. Now, many millionaires are developing a heightened environmental conscience and becoming custodians of our oceans as well.

They’re creating foundations, donating money, and even their precious ships, to help protect the blue playgrounds they love.

The Monaco Yacht Show

As well as showcasing million-dollar mega yachts and every accessory imaginable, the Monaco Yacht Show is a beacon of hope for marine conservation projects.

This year’s show in late September opened with the 2^nd Monte-Carlo Gala for the Global Ocean. The gala is a charity event organized by the Prince Albert II of Monaco Foundation and Milutin Gatsby the Global Fundraising Chairman.

It’s backed by the show’s organizers and this year’s event chairs included Madonna, Orlando Bloom, Gerard Butler, Pierce Brosnan, Robert F Kennedy Jr., and many more.

Prince Albert II of Monaco has made oceans the priority of his foundation saying:

“The oceans are the lungs of our planet. Our standard of living, our economy and even our health depend on it. But they are seriously threatened by the consequences of climate change and marine pollution. I believe that all is not lost if we work hand in hand.”

The $27 million proceeds from this year’s event will be used to fight plastic pollution and ocean acidification, protect corals and endangered species and develop marine protected areas.

The Leonardo DiCaprio Foundation

Leonardo DiCaprio, net worth $245 million, was awarded the “Prince Albert II of Monaco Foundation Prize” for his philanthropical work towards protecting the planet.

DiCaprio’s foundation donated at least $11 million to ocean conservation in 2014, $7 million at the “Our Oceans” conference and $3 million to Oceana.

Our Oceans Conference / https://www.thegef.org/events/our-oceans-conference

In 2017 the foundation donated $15 million, and then a further $20 million, in grants to organizations with impactful environmental projects. Di Caprio said at the time:

“We have a responsibility to innovate a future where the habitability of our planet does not come at the expense of those who inhabit it.”

The actor’s foundation also partners with National Geographic Pristine Seas and has, since 2010, funded 70 high-impact projects across 40 countries with a “total direct financial impact” of over $80 million since 2008.

The Bertarelli Foundation

Ernesto Bertarelli, a Swiss pharmaceutical billionaire and wife Kirsty, created the Bertarelli Foundation which has funded marine reserves in Belize and the Indian Ocean.

The Pew Bertarelli Ocean Legacy Project, formed in 2017, aims to create 15 large marine reserves by 2022. The legacy project was created with the goal of establishing these ecologically significant, protected areas, the first generation of “great marine parks.”

11th Hour Racing

The wife of former Google chairman Eric Schmidt, Wendy, an avid sailor, formed 11^th Hour Racing as part of the Schmidt family foundation. The organization and racing team works with the sailing community and related industries to improve operating practices in order to restore the health of the oceans.

It supports many ocean-focused causes including those involved in monitoring and addressing the ocean waste and plastic problem. In 11^th Hour Racing’s latest report, citing them as the most sustainable team to compete in the Volvo Ocean Race, says:

“We managed to significantly reduce our footprint, educated thousands of fans on renewable energy and plastic pollution, and most importantly we were able to leave a lasting legacy.”

The International Seakeepers Society

This society gives million-dollar yacht owners another way to help the oceans, by lending their yachts to scientists. The non-profit matches yacht owners with scientists who often spend massive amounts of their funding and research budgets on chartering vessels to do their ocean-based research.

Seakeeper’s yacht specialist Tony Gilbert says:

“Ninety percent of a scientist’s small budget will go towards chartering an expedition vessel. We’re allowing them to save all that money and put it to a better use, such as paying lab assistants and the actual research itself.”

Billionaire mathematician and hedge fund manager James Simons is worth around $15.5 billion. His $100 million-dollar yacht was used by scientists for a shark research expedition near to Antigua.

OceanX

Ray Dalio, another hedge fund magnate, and worth around $18 billion, created OceanX. The organization has designed a purpose-built, and one of the most advanced exploration yachts complete with its own laboratories, submarines, helicopters, and media production center.

The Alucia2 was the first to explore the deep ocean around Antarctica taking one of its submarines below 1,000 meters deep. The ship was used extensively in the ocean protection inspiring “Blue Planet II” series.

The Alucia ship in Antarctica. Image Source: OceanX Facebook

It will take concerted and combined government, industry, and people-led efforts to truly protect our oceans and our planet. But, it’s enlightening to see some of the world’s richest people not only giving back to the earth and environment but also spending their time to influence and educate others to protect the oceans.

Featured image by Shutterstock.

October 19, 2018
Invesco OppenheimerFunds Deal to Create $1.2 Trillion Combined AUM

Mass Mutual and Invesco yesterday, October 18, 2018, announced an acquisition of OppenheimerFunds and merger that will create a combined asset management firm that will become the 13^th largest in the world, with total assets under management (AUM) of $1.2 trillion.

Off the back of the deal, at the time of writing, Invesco shares were up 3.8% to $21.74.

Under the agreement, Invesco Ltd will acquire Massachusetts Mutual Life Insurance Company (MassMutual) affiliate OppenheimerFunds. Shareholders of MassMutual and OppenheimerFunds will receive common and preferred shares, and MassMutual will become a major shareholder in Invesco. MassMutual’s stake in Invesco will be around 15.5 percent and become its largest shareholder.

Benefits for Clients and Investors

The deal will create a new, larger, asset manager opening up additional scaling for clients and shareholders. The range of investment capabilities will enhance Invesco’s ability to meet the demands of its global clients, says the press release. Invesco will become the sixth-largest retail investment manager in the US.

Invesco will also benefit from OppenheimerFunds’ high performing investments, its strong international and emerging markets equity franchise, and its US third-party distribution platform. Invesco will continue to lever its diversified portfolio and global presence as well as its technology-enabled client services.

Martin L. Flanagan, President and CEO of Invesco said the deal would accelerate Invesco’s growth and that:

“This is a compelling, highly strategic and accretive transaction for Invesco that will help us achieve a number of objectives: enhance our leadership in the US and global markets, deliver the outcomes clients seek, broaden our relevance among top clients, deliver strong financial results and continue attracting the best talent in the industry.”

OppenheimerFunds’ picks many international investment stocks and bonds for its portfolio. In an interview with LiveMint today, Flanagan said that despite investors appearing to choose index tracking over active investment funds:

“Investors are looking for a broad range of ways to have us meet their outcomes—it is high-conviction active management, it is passive, and it is alternatives.”

The acquisition and merger are expected to increase Invesco’s earnings per share by around 18% in 2019 and around 27% in 2020. These predictions may have been fuelling the demand for Invesco’s shares. The deal will be finalized in the second-quarter of 2019 subject to regulatory and third-party approvals.

Featured image from Shutterstock.

October 19, 2018
Good News for Investors as Global Markets Rally

After a tough start to the week all round, global markets appear to be rallying. The US stock market rose sharply yesterday, October 16, after technology stocks had plummeted last week losing millions for investors and shaking global markets.

The Dow Jones reported its best day since March 2018 after Morgan Stanley reported third-quarter earnings higher than predicted, alongside Dow members Goldman Sachs, Johnson & Johnson, and United Health.

The Dow was up over 500 points, the S&P gained 2.1% and the Nasdaq 2.9%.

Netflix beat all expectations and its shares soared more than 14 percent in after-hours trading. Morgan Stanley’s better than expected results were driven by a 15 percent rise in investment banking revenue.

Global Markets – Shanghai Shows Slight Rise

On opening today, China’s markets had also rallied somewhat after a prolonged sell-off. The benchmark Shanghai Composite Index rose just over 1%.

China’s stock markets have been struggling with internal economic issues and the ongoing trade war with the US. Last week China’s markets hit their lowest point in four years.

Cryptocurrency Market Capitalization

Cryptocurrency markets also plummeted last week, mirroring the US stock markets and dropping billions from the overall market capitalization for all cryptocurrencies.

After a sudden upturn and fall back on October 15, the market has leveled somewhat. Bitcoin’s price is again hovering around the $6,500 mark.

Gold Prices

Gold, often a go-to in times of uncertainty, saw a two-month high on October 15. Lukman Otunuga, Research Analyst for FXTM commented to CNBC:

“While the sell-off in stocks rekindled some demand, there were other key factors in play. With escalating trade tensions, concerns over slowing global growth, geopolitical tensions and U.S. mid-term election jitters in the mix, gold has a chance to shine.”

Otunuga’s comments support predictions by investment firm Incrementum found in their chartbook summary titled In Gold We Trust.

Experts and analysts aren’t celebrating too much just yet, though, as the threat of a potential recession as well as trade and political turmoil is fuelling what might be a rocky road for all markets for some time yet.

At the time of writing, and the opening of the US markets, the Dow has fallen 200 points so far today amidst the ongoing volatility.

Featured image from Shutterstock.

October 17, 2018
The 10 Largest Technology Deals of the Digital Age

Technology deals, mergers, and acquisitions get bigger every day. The highest value deal of all time, so far at least, tops $67 billion. The top 10 wheeling and dealing technology giants include Dell, Microsoft, HP, Facebook, and even grocery chain Walmart. Check out the largest of the digital age so far.

1. Dell Acquired EMC for $67 Billion

Server and hardware giant Dell, at the time half the size of EMC with a value of $25 billion, agreed on the deal to buy EMC in 2015. EMC as an entity would go private and become part of Dell.

EMC’s VMWare would continue to be separate, publicly traded company. The deal closed in 2016. Dell is now considering going public with an initial public offering (IPO) but has also considered buying back Dell “tracking stock” tied to its 81% share of publicly listed VMWare.

2. Avago Bought Broadcom for $37 Billion

Once the biggest technology deal in history, the Avago deal was overtaken by Dell acquiring EMC. Avago and Broadcom, keeping the name Broadcom, became a chip and semiconductor powerhouse which then tried to buy out Qualcomm in what would have been a $121 billion deal.

The deal was blocked by US President Donald Trump citing national security concerns over the monopoly a Chinese company would have over US mobile technology.

3) Softbank Takeover of ARM for $31.4 Billion

This 2016 deal raised concerns in the technology community. Chip maker ARM was seen as a benign monopoly, neutral in the world of technology. Its technology is used by almost all smartphone processors and now is in many of the chips that will power the internet of things (IoT).

Softbank is a Japanese tech conglomerate that wasn’t neutral due to its ownership of U.S and Japanese wireless carriers. This, some said, could cause distrust in the industry.

Japan’s Softbank

4) Microsoft Bought LinkedIn for $26.2 Billion

The largest acquisition for Microsoft, this deal closed in 2016 and gave Microsoft greater power in Silicon Valley. The software giant is still working on ways to integrate social media network LinkedIn with its other Microsoft platforms and products.

5) HP Bought Compaq for $21 Billion

Hardware maker HP was already under pressure when it bought Compaq in 2001. Both brands product lines overlapped with low-profit margins in the traditional computing market and HP lost half its market value in the following four years.

Further acquisitions by HP were similarly disastrous, but its share price has recovered since 2016. Now HP and competitor Lenovo make almost half of PCs sold worldwide.

6) Facebook Grabs WhatsApp for $22 Billion

In a deal that closed in 2014, Facebook paid $6 billion over WhatsApp’s initial early 2014 value. Facebook’s stock price was also soaring. The deal accompanies other, not so large deals, for Facebook like its acquisition of Instagram and then Oculus, taking Facebook into the realm of virtual reality.

Facebook is dealing with other issues right now, including numerous concerns over how it collects and uses personal data.

Facebook has other problems

7) Nokia Acquired Alcatel-Lucent for $16.6 Billion

Closing in 2016, the deal moved Nokia to the top in mobile telecommunications and places Nokia as one of the few suppliers of 5G equipment alongside Ericsson and Huawei.

The acquisition helped to reinvent Nokia after falling from its dominant market position in the emerging mobile phone industry to near bankruptcy as smartphones took over.

8) Walmart Bought Flipkart for $16 Billion

Not a company you would first describe as a technology one, Walmart is actually building its technology stack. Acquiring Indian e-commerce company Flipkart was a strategy to compete with Amazon’s worldwide domination of the e-commerce marketplace.

Walmart is also an early mover in the blockchain space, having filed numerous patents and already adopting blockchain technology into its supply chain management.

9) Intel Bought MobileEye for $15 Billion

MobileEye, the self-driving technology company, was acquired by Intel in 2017 and is a play into artificial intelligence and autonomous vehicles by processor maker Intel.

MobileEye’s computer vision, machine learning, and mapping technology are now built into Intel driver-assisted and autonomous driving systems. Fiat-Chrysler, BMW and Alphabet’s Waymo all use Intel technology.

10) Amazon Acquired Whole Foods for $13.7 Billion

Though Whole Foods is not a technology company, Amazon certainly is and the deal in 2017 gave Amazon physical stores with which to expand its e-commerce empire.

Amazon now sells its devices in Whole Foods stores and offers discounts for Amazon Prime members. Whole Foods also gives Amazon another angle to try and expand its fresh food delivery aspirations.

Technology Deals Set to Increase

As new technologies like blockchain, artificial intelligence, virtual reality and the internet of things accelerate in development the number of technology mergers and acquisitions, and their value is likely to increase.

Today’s technology giants will need to innovate and continue to acquire if they want to retain market positions in a transforming technological landscape.

Images from Shutterstock.

October 17, 2018
China’s P2P Lending Sector Is in Serious Trouble

Facing stricter regulation, China’s P2P lending sector is declining rapidly, and could even collapse entirely.

P2P lending has been lucrative in China with little constraining regulation. The industry is worth as much as $120 billion and has been high-risk, but high return.

Chinese regulators have been clamping down on debt and financial risk, the number of loan defaults is rising, capital investments are running out of the sector, and Chinese citizens are losing money. And getting pretty angry about it.

In July 2018, 114 P2P lending platforms in China were shut down or had funds suspended, without warning, by China’s regulators over liquidity concerns. Since June 2018, 243 online P2P lending platforms have gone bust.

In an endeavor to prevent failing P2P loan company leaders fleeing and leaving Chinese citizens to take the burden of debt, many P2P loan executives are also being prevented by Chinese authorities from leaving the country.

Ordinary Chinese citizens have used P2P lending platforms to invest savings. The P2P companies then lend the funds to individuals and small companies. Reporting by Bloomberg also indicates that hundreds of P2P lending platforms had collapsed by early October 2018, leading individuals to lose thousands.

Bloomberg went on to describe how one Chinese woman committed suicide after losing almost $40,000. In a note to her parents, the victim of China’s P2P lender PPMiao said:

“A state-backed P2P just ran away, its shareholder unwilling to take any responsibility.”

Hundreds of other citizens, saying they too were victims of PPMiao’s exit, protested at China’s International Finance Center in August.

Chinese authorities are taking action, including setting up “communications windows” to respond to requests by P2P lenders and clamping down on borrowers who try to avoid loan repayments. The government is also seeking other ways to protect and educate investors.

China’s P2P Lending Sector to Decline from 1,500 to 50 Companies

An exodus of capital from the industry accelerated in June 2018. In the last four months, the total outstanding value of P2P loans has fallen from 1.02 trillion yuan to 853.6 billion yuan.

There are just over 1,500 P2P lending companies in China currently. In 2015, at the industry’s peak, there were 3,500. Under new, stricter, regulation, industry participants expect this number to fall to as low as 50 after the regulatory changes take effect.

Going forward, P2P lenders will need to hold licenses granted by financial regulators, only if strict criteria are met. Few of the 1,500 current operators are expected to meet these requirements.

Roger Ying, the founder of Beijing-based P2P lender Pandai, has sold his stake in the business and exited the industry. Speaking to the Financial Times Ying said:

“The licensing is pretty much a prolonged process designed to flush out P2Ps.”

Ying, like others, forecasts that less than 50 P2P lenders will remain in China after the cull, adding:

“To put it mildly, I’m happy to have exited [the industry] when I did.”

Featured image from Shutterstock.

October 17, 2018
5 of Fortnite’s Top Players Have Won a Combined $1.2 Million So Far

Fortnite’s top players are winning big with Battle Royale. The top five have netted $1,193,825 in prize money to date. US Player “Bizzle” is top of the rankings winning a total of $322,275, and all 20 of Fortnite’s top players have earned over $100,000 each.

According to figures from eSportsEarnings Battle Royale’s best players are earning thousands and in some cases hundreds of thousands, from playing Fortnite’s last-person standing, death-match style game.

Players battle it out in squads of four, teams of two, or on their own to survive in a time-limited, fictional island-based battle.

Since its launch in September 2017, Fortnite has accelerated rapidly in popularity, especially with pro-players and esports teams. Estimates suggest the game now has upwards of 80 million monthly players.

All five of Fortnite’s Top Players are based in the US. From the top 20 players, 13 are in the US, one is from Canada, and the remaining six are from European countries.

Fortnite’s Top Players

Timothy Miller AKA “Bizzle” – $322,275

Miller took the top spot away from Jake “POACH” Brumleve in early October by consistently winning in Fortnite’s Summer Skirmish and Fall Skirmish series. He placed second in the PAX West Summer Skirmish. Though he hasn’t won a week of the skirmish outright, Miller’s consistent ranking overall is paying off.

Jake Brumleve AKA “POACH” – $317,975

20-year-old Brumleve plays for esports Team Liquid. Like many Fortnite players, he’s also a YouTube celebrity. Born in Illinois he attends Iowa State University and was Fortnite’s top-winning player until his recent defeat.

Austin Etue AKA “Morgausse” – $250,000

Independent player Etue’s winnings come from his one major win of the Summer Skirmish Series finals at Pax West in Boston. The 19-year-old told ESPN his tournament winnings would be added to a bank balance of just $16, and that he’d be looking to invest at least some of the money after advice from his financial advisor.

Fortnite has so far rewarded players with over $10.5 million in winnings, with many of the top players earning even more from their YouTube platforms and non-game earnings, appearances, and royalties.

The game’s streaming icon Tyler Blevins, AKA “Ninja,” has reportedly earned nearly $6 million in total to date.

Fortnite’s Summer Skirmish matches had a total prize fund of $8 million, Fall Skirmish will have $10 million and Epic Games has committed to a $100 million total prize fund for the 2018-2019 gaming season.

The season is just getting started, many of Fortnite’s top players are expected to top winnings of over $1 million each from tournaments alone this time around.

Featured image Poach overtake by Bizzle, Dexerto.com

October 16, 2018
Remember AOL? Steve Case Speaks About Technology Boom and Bust

AOL Founder and billionaire Steve Case led the mammoth $165 billion AOL Time Warner merger in 2000, two months later the dot-com bubble burst beginning the new firm’s demise. Case says the deal taught him an important lesson:

“Vision without execution is hallucination.”

The AOL and Time Warner merger was, at the time, the largest in history and created the world’s biggest media corporation.

Case led the deal and said recently to Business Insider that he still believes the assets were right to make the deal work:

“Having a good idea is important, but being able to execute the idea is even more important, and that comes down to people and priorities, and we were unable with the combined AOL Time Warner company to get that side of it right.”

A Clash of Cultures

The billionaire blames the culture clash between the two companies on the deal’s failure rather than the dot-com bust. AOL found Time Warner to be old-fashioned and Time Warner saw AOL as a threat. Time Warner executives were suspicious of Case’s power within the combined company.

As technology stocks and cryptocurrency markets find increased market pressure, with some predicting one, or both, to be following the precedent of the dot-com bust, maybe Case’s lesson is prudent.

AOL Time Warner Logo / Shutterstock

“So, it really came down to trust, and kind of there was not a common vision that the team embraced and was aligned around.”

Technology and fintech mergers and acquisitions are some of the largest in business today. In finance, traditional players are looking to either compete with or acquire, new fintech firms with innovative ideas, like blockchain, to drive the future of the globe’s money markets forward.

Case says the AOL Time Warner merger failed because of trust and:

“There was not a common vision that the team embraced and was aligned around.”

AOL was one the first of the big internet companies, overwhelmed eventually by the advent of WiFi and companies like Google, Microsoft, and others.

Encouraging Technology Startups Outside of Technology Ecosystems

Today Case, aged 59, focuses on his venture capital company Revolution and its $150 million “Rise of the Rest” initiative. He believes the future of US startups sits outside of three areas: Silicon Valley, New York City, and Boston, which currently receive 75% of all venture capital investments in the US.

He’s touring the US with the initiative, focused on encouraging entrepreneurship, including holding pitch contests with $100,000 prize funds.

The Rise of the Rest seed fund has backing from Amazon’s Jeff Bezos, Starbucks CEO Howard Schultz, and Alphabet Chairman Eric Schmidt.

Case believes the world is approaching a technological and societal shift, and that if the US doesn’t catch up it will fall behind. He believes city and local microeconomies should be taking advantage of the opportunity presented by new technologies. And, that new companies should look to locate in areas which may benefit them more, rather than technology ecosystems. Case says:

“It may make sense, for example, for a company that wants to revolutionize the agricultural industry to settle in the Midwest, where the right supply chains already exist, and the culture of farmers is best understood.”

Though the Rise of the Rest fund is not one of the largest seed funds, it could be exposing startups to some of the fund’s members and supporters. One company, Branch Technologies, didn’t win the pitch but did gain a connection to MIT Lab. Another, Partpic, who won a 2015 competition was bought by Amazon.

Case, it seems, has a lesson to share with today’s technology giants as well as a wealth of experience, and some capital, to help increase opportunities for US startups of today.

October 14, 2018
Fortnite’s $2.5m Per Day Fortune Set to Rise with Android Expansion

After taking the gaming world by storm, Fortnite’s fortune can only increase with the news that it’s now available on even more Android devices. The game’s rollout to iOS generated $300 million worth of revenue in the first 200 days.

The most recent reports suggest the phenomenal success from Epic Games is now earning $2.5 million per day and has upwards of 80 million monthly players.

Fortnite for Android

Fortnite became available to more Android users on October 11, 2018, with the launch of its full, no invite needed, Android beta version. Up to now only invitees and newer Samsung devices could run the Android version.

Fortnite’s Android version will now work on most Android devices running Android OS version 8.0 or above and with 3GB of RAM or higher available. This is a resource-demanding game, so if your system is old and slow, it might not run.

Fortnite for Android

But NOT on Google Play

Fortnite fans won’t be able to download Fortnite from the Google Play Store since it’s only available on the Fortnite website.

Epic Games’ CEO explains the very savvy move for Fortnite:

“We’re trying to make our software available to users in as economically efficient a way as possible. That means distributing the software directly to them, taking payment through Mastercard, Visa, Paypal, and other options, and not having a store take 30 percent.”

It’s not like Fortnite needs Google Play Store to reach more players, up to June 2018, 125 million people had played they game, with 40 million playing in June alone. By August, with the expansion to new devices, 78.3 million people had played Fortnite. The latest figures are likely to show even higher growth.

Epic games will also not list on Steam for the same reason, and Sweeney says he’d avoid Apple’s App Store too if he could. Sweeney wants a direct relationship with Fortnite customers on all platforms, he says:

“The great thing about the Internet and the digital revolution is that this is possible, now that physical storefronts and middlemen distributors are no longer required.”

Fortnite’s Fortune

Of course, for Sweeney, he has a bit of weight to support his argument. Fortnite is, according to reports, now grossing $2.5 million per day since the release of Season 6.

By the end of September 2018, iOS earnings for the game had hit $1.5 million after releasing for Apple devices in March 2018.

Of the $300 million made on iOS devices in 200 days, 65% is from US-based players and $20 million was spent in the last week of September alone.

Unlike less successful games, Epic just doesn’t need the support of Google or Apple to promote Fortnite. If Android use delivers the same results as iOS, in 200 days, Google could have lost out on around $90 million worth of in-game purchases.

This is based on the assumption that player spending will be through in-game Google Play purchases, after a download from the Google Play Store.

Predictions by the Bloomberg Billionaires index suggest that by the end of 2019, Fortnite’s fortune will be $2 billion in revenue and have catapulted Epic Games’ worth from $5 billion to $8 billion.

The Fortnite Model

Fortnite’s revenue comes from solely from in-game purchases, the game itself is free. But, in a business model that bucks the gaming trend, players can’t buy items that affect their in-game performance.

Players can only purchase cosmetic skins, dances, and game modes for their characters priced at between 200 to 2,000 V-bucks, approximately $2 to $20. Accessories in the Fortnite shop are often time-limited, encouraging players to buy before they miss the opportunity.

A recent study of 1,000 Fortnite players revealed that 69% had made in-game purchases averaging over $80 each. Fortnite has some of the highest rates of revenue-per-user in the gaming industry and operating margins of over 50%.

Fortnite is set to make billions, with no sign of its success abating any time soon. Part of that success is down to the massive prize pool offered to players.

In May, Fortnite set its 2018-2019 prize pool for winning players of tournaments at $100 million, believed to be the biggest total sum of money offered for esports tournaments by a single company.

And it doesn’t stop there: Chinese gaming giant Tencent owns 40% of Epic Games. A Fortnite roll-out for China has been delayed by regulators, but is expected for 2018, which would open up the massive gaming market in China to Fortnite’s raging success.

Featured image from Shutterstock.

October 13, 2018
Study Says If You’re Too Nice You Might Not Make It Rich

A new study by the American Psychological Association implies that if you’re a “nice” person, you’re less likely to become a millionaire.

The study, published on October 11, 2018, concluded that compared to their less agreeable peers:

“Nice people may be at greater risk of bankruptcy and other financial hardships.”

It’s not because nice people are more cooperative, but because if you’re nice, you might not value money as much as, well, not-so-nice people!

In personality research, “niceness” is measured in “agreeableness” and the research’s authors used a standard measure of this personality trait to judge niceness.

They then assessed a group of over 600 participants on their financial success including debt and savings, agreeableness, negotiation styles and how important money was to them. Using a regression analysis and further studies covering a 3-million-person strong data set they concluded:

“Agreeableness was associated with indicators of financial hardship, including lower savings, higher debt and higher default rates.”

This relationship between being nice, and a lack of financial success, said the authors, is driven by the finding that:

“Agreeable people simply care less about money.”

The findings were truer for lower-income individuals who were less financially able to handle their predisposition for not placing enough importance on their finances.

Then Why Are Some Millionaires Really Nice People?

Studies, at the end of the day, are studies. This one, though appearing to be representative, didn’t focus in on the “agreeableness” of millionaires. If we contrast the findings to how charitable some of the world’s richest people are, you’d have to agree some of them are pretty nice people.

Take Bill Gates, for example, he’s been America’s richest man for 24 years according to Forbes, only being knocked off the top spot by Jeff Bezos in 2018. Gates has so far given nearly $33 billion, a massive 41% of his current net worth, to charitable causes. Warren Buffet has given away nearly $26 billion, 39% of his current net worth.

Though, maybe in business and while making their fortunes, these billionaires were almost certainly extremely focused and very shrewd.

Featured image from Shutterstock.

October 13, 2018