The Walt Disney Company and Epic Games have announced a major alliance to collaborate on all-new games and what the companies are calling a new "entertainment universe." As part of the agreement, Disney will also invest $1.5 billion to acquire an equity stake in Epic Games.
The deal is notable in that it marks Disney’s biggest ever investment in games and will provide Disney with a new platform for showcasing its characters, brands and stories. It also builds on a longstanding relationship between Disney and Epic Game's Fortnight that goes back to Epic Games’ participation in the 2017 Disney Accelerator program.
While Disney and others have backed away from some of their metaverse efforts, the agreement will see the creation of a metaverse-like “open entertainment universe” with Fortnight that 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.
In this entertainment universe, the companies said 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. This will all be powered by Unreal Engine.
In a call with analysts, Disney CEO Bob Iger said: “Our new relationship with Epic Games will create a transformational games and entertainment universe that integrates Disney's world-class storytelling into Epic's cultural phenomenon, Fortnite, enabling consumers to play, watch, create and shop for both digital and physical goods.”
“This marks Disney's biggest entry ever into the world of video games and offers significant opportunities for growth and expansion,” Iger said during Disney’s fiscal Q1 2024 earnings call. “The new immersive universe will allow fans to unleash their own creativity and experience the Disney stories in worlds that they love in groundbreaking new ways.”
Iger also stressed the growing importance of games among younger audiences and the opportunities the deal will create to reach them. “Younger audiences in particular are huge consumers of video games,” he said. “In fact, among millennials, Gen Z and Gen Alpha, a significant amount of time spent on screen-based platforms is playing video games. This new universe from Disney and Epic provides us with a tremendous opportunity to not only meet more consumers where they are, but to allow more audiences to cultivate a bond with Disney's iconic brands and franchises, including Marvel, Star Wars and much more.”
The agreement expands an existing relationship between Disney and Epic Games. In the past, 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.
“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 Tim Sweeney, CEO and founder, Epic Games. “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.”
In the past, Unreal Engine has been 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.
With more than 3 billion video game players worldwide, Disney also said the agreement will further expand its existing games business, which shifted to a licensing business model in 2016.
Currently, Disney is a leading games licensor working with 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, the company said.
