Fortnite Is So Popular It Beats Out HBO As Netflix's Biggest Competitive Threat

Netflix might be the king of streaming, but what some might find surprising is which services the company views as its biggest business threat. Rather than name another streaming media service, Netflix said it primarily competes with Fortnite for screen time, and loses. How's that for being frank?

"We compete with (and lost to Fortnite) more than HBO," Netflix stated in a letter to shareholders. "There are thousands of competitors in this highly fragmented market vying to entertain consumers... Our growth is based on how good our experience is, compared to all the other screen time experiences from which consumers choose."

Netflix said it currently earns around 10 percent of television screen time in the United States, and less than that on mobile screens. In other countries, the company conceded it is even lower "due to lower penetration of our service."

The shout out to Epic Games and its massively popular Fortnite game might be surprising at first glance, but it shouldn't be. Fortnite is a huge success—according to Nielsen's SuperData, Epic Games raked in $2.4 billion in 2018 from Fortnite. The battle royale shooter also ranks as the most-viewed esports game.

"The games and interactive media industry grew 13 percent in 2018 as Fortnite disrupted the status quo. The red-hot battle royale title generated the most annual revenue of any game in history and popularized gaming video content (GVC) among mainstream audiences," SuperData stated in its most recent report.

As for Netflix, the company is holding its own, in terms of financial performance. The company grew its revenue 35 percent to $16 billion in 2018, and nearly doubled its operating profits to $1.6 billion. Netflix attributed its success to "high member satisfaction," which helped the company grow its subscriber-base to 139 million paying users.

It will be interesting to see if Netflix can build on its momentum in the wake of upcoming price hikes. Netflix recent announced it is raising prices in the US, with its most popular plan jumping to $13 per month, versus $11 per month.