Disney invests $1.5B in Fortnite maker Epic Games to build a persistent game universe

Disney is investing $1.5 billion for an equity stake in Fortnite and Unreal Engine maker Epic Games as part of a broader partnership to create a new Disney gaming universe.

The companies plan to create an expansive and open games and entertainment universe. I would say they’re building a metaverse, if the word weren’t so overused late and out of favor with some. They didn’t actually use that word.

Bob Iger, CEO of Disney, announced the investment in an interview with CNBC today. The companies will collaborate on a new games and entertainment universe that will further expand the reach of beloved Disney stories and experiences. It will be a multi-year project, built by Epic Games.

In an analyst call, Iger said, “This marks Disney’s biggest entry ever into the world of video games.” He said it will enable Disney fans to experience the stories they love in new ways, and it’s a way for Disney to meet millennials, GenZ and Gen Alpha consumers where they are — inside video game worlds.

The $1.5 billion transaction is subject to customary closing conditions, including regulatory approvals.
In addition to being a world-class games experience and interoperating with Fortnite, the new persistent
universe will offer a multitude of opportunities for consumers to play, watch, shop and engage with content, characters and stories from Disney, Pixar, Marvel, Star Wars, Avatar and more.

The move into these metaverse-like experiences is interesting as Disney had a metaverse division but closed it and laid off the 50 people involved. Observers pointed to that March 2023 move as evidence that the metaverse was falling out of favor. It turns out that was perhaps a kind of feint, as Disney evidently remains committed to bringing all of its properties together in a kind of metaverse.

Meanwhile, Tim Sweeney, CEO of Epic Games, has been one of the primary supporters of the metaverse, particularly one that should be built as an open and interoperable ecosystem. Sweeney remains the controlling shareholder at Epic Games.

“Our exciting new relationship with Epic Games will bring together Disney’s beloved brands and franchises with the hugely popular Fortnite in a transformational new games and entertainment universe,” said Iger, in a statement. “This marks Disney’s biggest entry ever into the world of games and offers significant opportunities for growth and expansion. We can’t wait for fans to experience the Disney stories and worlds they love in groundbreaking new ways.”

If we’re to think of this in some way, it’s not Disney Fortnite together as a single game. Rather, this is more like a Disney universe that can connect to Fortnite, which is separate. And this is a brand-new project, not something that evolved from older partnerships.

“Disney was one of the first companies to believe in the potential of bringing their worlds together with ours in Fortnite, and they use Unreal Engine across their portfolio,” said Epic’s Sweeney, in a statement. “Now we’re collaborating on something entirely new to build a persistent, open and interoperable ecosystem that will bring together the Disney and Fortnite communities.”

User-generated experiences

Players, gamers and fans will be able to create their own stories and experiences, express their fandom in a distinctly Disney way, and share content with each other in ways that they love. This will all be powered by Unreal Engine.

Fortnite has a tradition of letting fans be creative with their own avatars or purchasing skins for characters. The result is a mix of characters from many different franchises battling with each other in battle royale games. Selling skins for such characters has been at the heart of monetization for Fortnite.

“This will enable us to bring together our incredible collection of stories and experiences from across the
company for a broad audience in ways we have only dreamed of before,” said Josh D’Amaro, chairman of
Disney Experiences, in a statement. “Epic Games’ industry-leading technology and Fortnite’s open ecosystem will help us reach consumers where they are so they can engage with Disney in the ways that are most relevant to them.”

Deepening the Epic Games & Disney relationship

Disney and Epic Games have engaged hundreds of millions of players through Fortnite content integrations, season collaborations, in-game activations, and live events, including the Marvel Nexus War with Galactus, which drew more than 15.3 million concurrent players.

Unreal Engine is used to produce assets and content across the Disney portfolio including in the development of video games like Kingdom Hearts 3 and Star Wars Jedi: Survivor; in cinematic editing and animation for film and streaming; and in the creation of more than 15 Disney Parks attractions like Millennium Falcon: Smugglers Run at Star Wars: Galaxy’s Edge.

This all builds on Epic Games’ participation in the 2017 Disney Accelerator program, which seeks to impact the future of technology and entertainment.

Games industry growth and Disney Games success

Disney said the digital world is growing and evolving with more than 3 billion video game players worldwide who want to move safely and seamlessly between the worlds they love, unleash their own creativity, and experience great gameplay.

Disney said its games business continues to deliver strong results since it shifted to a licensing business model in 2016. At the time, it shut down or sold off its internal game studios.

Now Disney is a games licensor working with external developers and publishers, including on the
best-selling superhero game of all-time, Marvel’s Spider-Man. Licensed games from Disney garnered more than 150 award nominations, wins and other accolades in 2023, including multiple Game of the Year
nominations for Marvel’s Spider-Man 2. Disney mobile games have 1.5 billion global installs, and to date, nine Disney games franchises have each grossed more than $1 billion in sales.

In the U.S., the world’s largest games market, licensed titles from Disney regularly hit the annual top-10 best-sellers list. And Disney does not have an internal game development team that is working on this project.