Entertainment conglomerate Disney has announced plans to invest $1.5 billion for an “equity stake” in gaming conglomerate Epic Games. The financial partnership will also see both companies “collaborate on an all-new games and entertainment universe that will further expand the reach of beloved Disney stories and experiences,” according to a press release issued late Wednesday.
A short teaser trailer announcing the partnership promises that “a new Universe will emerge,” allowing players to “play, watch, create, [and] shop” while “discover[ing] a place where magic is Epic.”
In announcing the partnership, Disney stressed its long-standing use of Epic’s Unreal Engine in projects ranging from cinematic editing to theme park experiences like Star Wars: Galaxy’s Edge. Disney’s new gaming universe will also be powered by the Unreal Engine, the company said.
Content and characters from Disney’s Marvel and Star Wars subsidiaries were some of the first third-party content to be included in Epic’s mega-popular Fortnite, helping establish the game’s reputation as a major cross-media metaverse. Disney says that its new “persistent universe” will “interoperate with Fortnite” while offering games and “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.”
While a $1.5 billion investment sounds significant on its face, it only represents a small portion of a company like Epic, which was valued at $32 billion in a 2022 investment by Sony. Since 2012, nearly half of Epic has been owned by Chinese gaming conglomerate Tencent (market cap: $356 billion), an association that has led to some controversy for Epic in the recent past.
Here we go again
In announcing the new Epic investment, Disney CEO Bob Iger called the partnership “Disney’s biggest entry ever into the world of games… offer[ing] significant opportunities for growth and expansion.” But this is far from Disney’s first ride in the game industry rodeo; on the contrary, it’s a continuation of an interest in gaming that has run hot and cold since Walt Disney Computer Software was first established back in 1988.
That publisher, which operated under several names over the years, mainly published lowest-common-denominator licensed games based on Disney properties for dozens of platforms. Disney invested heavily in the Disney Infinity “toys-to-life” line starting in 2013 but then shut the game down and left game publishing for good in 2016. Since then, Disney has interacted with the game industry mainly as a licensor for properties such as the Sony-published Spider-Man series and Square Enix’s Kingdom Hearts 3.
After acquiring storied game developer LucasArts in 2012 (as part of a much larger Star Wars deal), Disney unceremoniously shut down the struggling game development division just six months later. But in 2021, Disney brought back the Lucasfilm Games brand as an umbrella for all future Star Wars games.
While today’s announcement doesn’t include any specific mention of linear TV or movie adaptations of Epic Game properties, the possibility seems much more plausible given this new financial and creative partnership. Given the recent success of linear narratives based on video game properties from Super Mario Bros. to The Last of Us, a Disney+ streaming series targeting Fortnite‘s 126 million monthly active players almost seems like a no-brainer at this point.
Disney’s stock price shot up nearly 8 percent to about $107 per share in 15 minutes of after-hours trading following the announcement, but has given back some of those gains as of this writing.