When investors think of video-game-maker stocks, names like Activision Blizzard, Inc. (NASDAQ:ATVI) or Electronic Arts Inc. (NASDAQ:EA) come to mind. The former is the outfit behind the popular Call of Duty franchise, and the latter dominates the sports games market.

Those who know the industry well may also add Take-Two Interactive Software, Inc (NASDAQ:TTWO) to the mix, in that it’s the company that keeps the Grand Theft Auto series — the most successful video game franchise ever — continually refreshed.

Epic Games, backed (more or less) by China’s Tencent Holdings Ltd (OTCMKTS:TCTZF), rarely works its way into the discussion, though. It’s just not that kind of player in the video gaming biz.

And yet, Epic Games has managed to turn the video gaming industry on its ear, simultaneously sending powerhouses like Activision and Take-Two scrambling.

Fortunately for owners of Activision Blizzard stock, the company’s come up with a pretty clever counterpunch.

Surprising Success

Ever heard of a game called Fortnite? If you have kids (or if you’re a teacher), you likely have. It’s a free-for-all combat game that’s captivated gamers for a few months now and became the world’s most popular “battle royale” game in March. It became even more popular in March when the mobile version was unveiled.

The free-to-play game was developed by little ol’ Epic Games, sending notice to the rest of the industry that gamers will find a great game, even if it doesn’t come from one of the industry’s icons.

That said, it’s not perfectly clear why Fortnite, an almost cartoonish battle game, has become such a hit. Realistically speaking, though, multiple factors contributed.

One of them is the fact that the cartoonish, less realistic feel makes it appropriate for younger kids. Other explanations include that it’s free to play. Though to enjoy a more customized character or power-ups, players do have to pony up a few bucks.

And they are, just as Epic Games and Tencent had hoped. The game reportedly generated $223 million worth of revenue in March.

It’s not a lot in the grand scheme of things, to be clear. But, it’s a lot for the genre and quite a bit for a game as young as Fortnite is. Unlike other story-based games or sports games, online multiplayer games tend to remain relevant for years at a time and grow into an impressive cash machine.

That’s why more entrenched players felt they had to respond while they could. Activision Blizzard will be one of the first to bring a comparable game to the market.

Activision Counters

The Call of Duty lineup will ring a bell even with non-gamers. It’s been a staple of Activision’s revenue mix for years now, with November’s Call of Duty: WWII being the most recent entrant in the series.

The next game of the franchise is going to be a bit different than the past have been, though. A la Fortnite, Call of Duty: Black Ops 4 will offer lots of battle royale, league play and collaborative options when it becomes available in October.

There’s little doubt the move is in response to the multiplayer game play that Fortnite has rekindled for the industry.

While encouraging to current and prospective ATVI shareholders, it’s unlikely to be an apples-to-apples comparison. Though both games will take place in an open-ended setting and offer proverbial “death matches,” they’re not targeting the same audience.

As was noted, Fortnite is kid friendly and light enough to function on mobile devices. Activision’s Call of Duty games, meanwhile, are aimed at adults due to their graphic violence, and they are best played with a console controller anyway.

That may be for the best. As Benchmark Co. analyst Michael Hickey opined:

“It isn’t the first battle royale game, but ‘Fortnite’ is truly brilliant. Anyone who tries to copy it will fail. All of the other [gaming companies] will try and iterate on battle royale games [but] won’t try and replicate ‘Fortnite.’ That would be suicide.”

Still, in that the two games’ target markets can and do overlap, Activision’s move in this direction is noteworthy, as it may continue down this path with future games.

Bottom Line on ATVI

The development of an open-ended, nonlinear version of Call of Duty isn’t going to save Activision Blizzard, only because it doesn’t need saving. Fortnite certainly made the industry rethink what gamers really want, but Activision’s place at the top of the heap is secure no matter what.

Nevertheless, it’s a development worth putting on investor radars, as the revenue-bearing mechanism that makes Fortnite worth Epic Games’ effort are the same micro-transactions that created something of a gamers’ revolt back in November.

That’s when it became clear that getting the most out of then-new Star Wars Battlefront II would be an expensive venture, requiring lots of in-game purchases and/or time to unlock everything the game has to offer. Maybe the right formula is a free-to-play model with micro-transactions rather than a pay-to-play and micro-transactions model.

Let’s see if Activision has found the winning formula for itself. If it has, look for more of the same beyond the upcoming iteration of Call of Duty.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.