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Disney Buys Stake In Epic Games, Sets Entertainment Partnership Around Fortnite

Disney will invest $1.5 billion to acquire an equity stake in Epic Games alongside a multiyear collaboration on a new games and entertainment universe focused on Fortnite to expand the reach of Disney stories and experiences.

“In addition to being a world-class games experience and interoperating with Fortnite, the new 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,” said a press release announcing the news. “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.”

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The collaboration will be powered by Unreal Engine.

On a call after quarterly earnings, Iger said that he began looking into games soon after his return to Disney in the fall of 2022, meeting with Parks & Experiences chief Josh D’Amaro and his team. “And the first thing they showed me was demographic trends. When I saw Gen Z, and Gen Alpha, and even Millennials, and I saw the amount of time they were spending, in terms of their total media screen time, on video games, it was stunning to me — it was equal to what they spend on TV and movies. And the conclusion I reached was, we have to be there. And we have to be there as soon as we possibly can in a very compelling way.”

He said Disney had seen success when its characters and franchises showed up on Fortnite. Iger knew Tim Sweeney. So they met “we started a discussion about, what if we create a gigantic Disney World that could live next to Fortnite and be completely interconnected with it? A world where people could play games that we create, could create their own games, could watch. You can imagine the creation of short form videos, or maybe we even use the platform to actually distribute some of our content. People that could interact with one another, and ultimately, some form of shopping as well. Obviously, there’ll be some there the opportunities to buy digital goods, but maybe even at some point in physical goods.”

“And I just think that given the demographic trends, and given the success of Fortnite … we think, just as we take our IP, from our movies and our television and have have them expressed in our parks, this is a great way to do it in games. And for us, it’s a way to have skin in the game with them. The investment strengthens the partnerships because we have skin in the game, also ,,, we’re actually not creating too much risk for the company. So as we see it, this is the best of all worlds in many respects, from a business venture perspective, and certainly great for consumers who love to interact with our characters already in video game format. So I’m really thrilled about it.”

“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 Disney CEO Bob Iger. “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.”

Tim Sweeney, CEO and Founder, Epic Games, said “Disney was one of the first companies to believe in the potential of bringing their worlds together with ours in Fortnite … 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.”

D’Amaro said 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.”

The investment and new collaboration is an expansion of the work the two companies already do together. 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.

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