ERTS Electronic Arts Inc. (MM)

By Sarah E. Needleman 

The hottest videogame right now spends no money on marketing, has raked in hundreds of millions of dollars in sales and isn't finished being developed.

"PlayerUnknown's Battlegrounds" -- or "PUBG," as fans call it -- caught the videogame industry off guard this year with its twist on the time-worn shooter genre. Rather than rack up the highest kill count, 100 players parachute onto an island with nothing and do whatever it takes (hiding included) to be the last one alive.

It resembles the "The Hunger Games," and players are snapping up the $30 game. More than 13 million copies have sold world-wide since March, according to its publisher, Bluehole Studio Inc.. a privately held company in South Korea. That puts Battlegrounds in a league with blockbusters such as Electronic Arts Inc.'s "Star Wars Battlefront" and Activision Blizzard Inc.'s "Overwatch."

Battlegrounds' rise from a constant work in progress to the buzziest title of the year challenges the conventions of how modern blockbuster videogames are made.

An early playable version was created in a year for less than $5 million by a team of 40 developers and sold at a discount since March on a site for "early access" games that aren't polished. The only marketing came from players on live-streaming sites such as YouTube.

A tent-pole game from a big publisher, meanwhile, often takes hundreds of employees years to make and can cost tens of millions of dollars if not more, plus additional spending for marketing. It can be akin to producing a Hollywood popcorn flick.

Battlegrounds, available for PCs, is launching on Microsoft Corp.'s Xbox One consoles later this year. Big publishers should take heed, industry watchers said.

Bluehole "effectively disrupted the market," Benchmark Co. analyst Mike Hickey said. The game's success shows developers don't need deep pockets to create a blockbuster, he said.

Last year, Bluehole recruited Brendan Greene, an acclaimed "modder" who tinkers with the open-source code of popular games, to create Battlegrounds despite his lack of formal industry experience. He thinks Battlegrounds is here to stay.

"If this was a flash in the pan, a month or two into it we would've seen [player] numbers drop," said Mr. Greene, who is the PlayerUnknown in "PlayerUnknown's Battlegrounds."

For much of his childhood in Ireland, Mr. Greene lived on an army base where his father served as an officer. "I did obstacles courses and played war games with friends," an inspiration for Battlegrounds, the 41-year-old said. Older, he struggled as a photographer and website designer but his fortunes changed in 2014, when a Sony Corp. unit licensed the last-man-standing game mechanic he developed to use in its survival game "H1Z1."

He attributes the success of Battlegrounds to its responsiveness to fans -- employees regularly mine fan forums to spot and solve their biggest gripes -- and the freedom it gives players.

"If you want to run around in your underwear with a frying pan, you can do it," he said. "It's probably not the wisest decision, but you can do it."

Games where a scrum of players fight to be the lone survivor, a genre known as battle royal, are heating up since Battlegrounds' release. On Sept. 12, Epic Games Inc. added a battle royal mode to its exploration game "Fortnite" and mentioned Battlegrounds in its marketing, prompting criticism from Bluehole.

Epic and Bluehole declined to comment.

Battlegrounds came up several times in conversations at Goldman Sachs Group Inc.'s telecom and media conference in New York in September, according to Strauss Zelnick, chief executive of Take-Two Interactive Software Inc., publishers of the Grand Theft Auto franchise. Take Two pays close attention to its competitors, he said.

And developers at Electronic Arts are Battlegrounds fans. "A lot of us guys are playing it and really liking it," said David Sirland, senior producer for the company's Battlefield franchise. He declined to say whether EA has plans to add a battle royal mode to Battlefield.

Like Bluehole, EA said player feedback is important. It chooses people to participate in beta tests before a game is released, hoping they will spot bugs and become evangelists.

Analysts think early insight from players can be valuable but caution there are risks. Negative reviews can sink a game before it's done.

Still, Battlegrounds was the second-most watched game as of August this year on Twitch, Amazon.com Inc.'s video-streaming service, behind Tencent Holdings Ltd.'s "League of Legends." That is a strong indicator of buying interest, analysts say.

Because Battlegrounds was released as an early-access game on Valve Corp.'s Steam service, players expect significant changes and glitches. They haven't minded: On Sept. 16, Battlegrounds reached a record 1.3 million concurrent players on Steam, putting it ahead of established games such as "Grand Theft Auto V."

It isn't unusual for a new game to draw attention, but there is more at stake now, since players increasingly spend more time with fewer games, said Evan Wingren, an analyst at KeyBanc Capital Markets Inc.

For publishers of established games, any lost engagement is less opportunity to drive sales of high-margins virtual goods such as new maps, weapons and missions. Last year, such add-ons for console games hauled in more than $1.3 billion in revenue, the research firm IDC estimated.

"Everyone's got to make a competitive response now," Mr. Wingren said. If they don't, they risk losing consumer engagement over the long run."

Write to Sarah E. Needleman at sarah.needleman@wsj.com

(END) Dow Jones Newswires

October 01, 2017 07:14 ET (11:14 GMT)

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