Disney shares surged after-hours trading Wednesday as it announced better-than-expected earnings and its biggest push into video games yet. The media giant will acquire an equity stake worth $1.5 billion in Fortnite developer Epic Games of Cary, North Carolina to create an interlinked gaming universe around Fortnite battle royale game.
Disney to Take $1.5B Stake in Epic Games
Disney stock was thrust upward in after-hours trading following better-than-expected earnings and an announcement of an enormous investment in Fortnite maker Epic Games. Disney will partner with Epic to establish an interlinked gaming universe within Fortnite – marking their most substantial move into video games yet.
Disney CEO Bob Iger has long sought ways to extend Disney content’s reach in digital spaces where young people spend an increasing portion of their time. Iger recently announced an agreement with Epic that will see Disney take an equity stake worth $1.5 billion and offers significant growth potential, calling this deal their biggest entry into gaming and “biggest entry into world of games and offer significant growth potential.”
Disney will gain an equity stake in Epic’s Unreal Engine platform through this deal, likely already using it to develop video games itself; an expanded relationship could open the doors for further collaborations and create additional opportunities.
Disney Will Work with Fortnite Maker on Content
Bob Iger, Disney CEO, states that Epic Games’ new partnership with Disney will enable access to their vast intellectual property library and will result in “world-class games experiences interoperating with Fortnite.” In other words, Disney characters will be appearing within an online game experience.
Epic and Disney are joining forces to develop an “all-new games and entertainment universe,” according to a joint press release. They will create a “persistent universe” powered by Epic’s Unreal Engine for maximum fun and engagement for their audiences.
Details regarding this venture remain sparse, however according to Disney’s press release the Disney-Epic universe will offer gamers the ability to “play, watch, shop and engage with content, characters and stories from Disney, Pixar, Marvel Star Wars Avatar.” It marks Disney’s biggest foray into gaming since they have already established a small presence with character skins for Fortnite as well as Lego Fortnite Rocket Racing and Fortnite Festival as available games this year.
Disney Says It Will Create a “Games and Entertainment Universe”
Disney CEO Robert Iger believes his company’s partnership with Epic Games will expand their presence in gaming. Iger said “this marks Disney’s largest entry into video game industry and offers significant growth potential,” in a statement issued to shareholders.
Details regarding their collaboration remain scarce, but it is expected to involve creating an immersive virtual world within Fortnite’s existing open ecosystem, dedicated to content from Disney, Pixar, Marvel Star Wars and Avatar.
Tim Sweeney, the founder of Epic Games, has long advocated for a metaverse to unite various franchises into one space. Already, he has secured major partnerships for Epic with Lego and Harmonix (maker of Rock Band). Furthermore, Tim has long campaigned against Apple and Google app store fees; ultimately leading his company into court action to fight this effort. It appears this partnership may finally bring Tim’s vision to fruition.
Disney Says It Will Create a “Persistent Universe”
Disney and Epic are joining forces on a multiyear project that will produce “a new persistent universe, world class games experience, interoperating with Fortnite”, according to an announcement made by both companies.
Details remain limited, but the pair has announced plans to create an experience where fans can play, watch, shop and engage with content, characters and stories from Disney, Pixar, Marvel Star Wars Avatar. Both companies envision this universe being used by Gen Z and Gen Alpha as an outlet to socialize while spending time gaming worlds.
Disney is no stranger to gaming, but this investment represents its biggest venture yet into this sector. Additionally, this marks a dramatic change for Epic; previously focused solely on Fortnite but expanding to user-generated content creation and brand collaborations in recent months. They plan on continuing using Unreal Engine platform for projects ranging from cinematic editing and theme park attractions like Millennium Falcon ride found within Star Wars: Galaxy’s Edge.
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