Disney & Epic Games Partner on New Fortnite Universe
Disney bought a $1.5 billion stake in Epic Games, maker of Fortnite, to team up and develop a new expansive video game universe with their favorite characters and stories from Pixar, Marvel, Star Wars, Avatar, and more. This post covers the announcement and our reaction to news of Disney’s latest foray into the video game world.
The news was revealed ahead of Disney’s Q1 FY24 Earnings Call, with the company announcing that Disney and Epic Games will collaborate on an all-new games and entertainment universe that will further expand the reach of beloved Disney stories and experiences. Notably, Disney will invest $1.5 billion to acquire an equity stake in Epic Games alongside the multi-year project.
In addition to interoperating with Fortnite, the new persistent universe will offer opportunities for gamers to play, watch, shop and engage with content. Players 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.
“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.”
“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,” added 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.”
“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, the Chairman of Disney Experiences. (Remember, “Experiences” includes consumer products–so also video games. He doesn’t just run Parks & Resorts.)
D’Amaro added: “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.”
Up to this point, Disney and Epic Games have already engaged hundreds of millions of players through Fortnite content collaborations, in-game activations, and live events. This includes the Marvel Nexus War with Galactus, which drew more than 15.3 million concurrent players.
Here’s a trailer for the Disney x Epic Games partnership:
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. 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.
According to the company, Disney’s games business has delivered strong results since it shuttered Disney Interactive and shifted to a licensing business model back in 2016. Disney is a leading games licensor working with best-in-class 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. Licensed titles from Disney regularly hit the annual top 10 best-sellers list in the United States.
Turning to commentary, we’re fans of this move. An existing games studio made our list of 5 Businesses Bob Iger Should Sell & Buy as an acquisition that Iger needs to make, even though he’s unlikely to actually make it anytime soon due to the company’s debt load. An acquisition would be ideal, since Disney has demonstrated it can’t build its own video game studio.
While this isn’t an outright acquisition of Epic Games, it gives Disney a significant stake in the company and is a meaningful move. In the last decade, the gaming industry has grown consistently, a trend that accelerated in 2020 when everyone was stuck at home. The global games market now has over $185 billion in annual revenue. That sum makes it bigger than Hollywood and the music industry combined!
The world’s biggest current franchises aren’t Avatar, Star Wars, Marvel, Cars, Toy Story, and Frozen. They’re Grand Theft Auto, Fortnite, Call of Duty, Pokemon, Minecraft and Mario. With each passing year, new video game franchises are born or strengthened by crossovers into legacy media.
For all of his dealmaking prowess and success in fostering the growth of Disney’s business units, Bob Iger had failed at establishing the Walt Disney Company as a major player in the video games space. After losing nearly $1.5 billion, Iger shut down the company’s in-house gaming division, Disney Interactive, back in 2016.
Iger also conceded during a 2019 earnings call that Disney is “not particularly good” at self-publishing games, and was satisfied with licensing its IP to third parties, like Electronic Arts. Being satisfied partnering with EA is like outsourcing restaurants to McDonald’s. Sure, it gets the job done and is efficient, but is it really what’s best for the Disney brands?!
This partnership and investment in Epic Games is effectively Bob Iger recognizing the mistake and doing what’s possible to remedy it. While Epic Games wouldn’t be my personal partnership target, that speaks more to my own preferences. Fortnite is undeniably popular with young people, and this will get a wide range of Disney IP in front of a ton of kids in a (debatably) higher-quality environment than what we’ve seen up until now.
One thing I wonder is whether this will come full circle. The concept art at the top showing the universe of content, characters and stories from Disney, Pixar, Marvel, Star Wars, Avatar, etc. looks a lot like a theme park. There’s obviously some artistic liberty being taken, but the idea is that Disney will exist as its own hub, of sorts, in Fortnite with separate games that you launch from within that. In a way, that’s sort of like the company’s castle parks.
It also looks more than a little like the original concept art for the Play Pavilion at EPCOT, which was to be vaguely inspired by Ralph Breaks the Internet and have its own portals, of sorts, into the various worlds of Disney. Play Pavilion plans have been paused for a while, but reviving those with a Fortnite-style skin could certainly make sense–and give that addition instant appeal with younger gamers.
Beyond that, there’s the potential for other full circle integrations with the parks. Imagine a Sorcerers of the Magic Kingdom style game, but based on whatever Disney x Epic Games have in store? Instead of existing in a vacuum and being popular with a subset of diehard fans of that game, that would be actually popular.
The bottom line is that there’s a lot of untapped potential for crossover between the virtual worlds of video games and the largely physical worlds of theme parks. This is already evident in Super Nintendo World at Universal (and other past experiments done by Nintendo), and Walt Disney World could take advantage of this in its own ways.
Beyond that, I don’t have much more to add that we didn’t just cover a couple of weeks ago in Disney’s Biggest Weakness: Why Mickey Mouse Should Be More Like Mario. That was an article advocating for something exactly like this, and discussed how time spent with video games and mindshare is a really big deal. The average kid is not just consuming more video game content, but actively engaging with it. It’s occupying their minds and imaginations in a way that passive entertainment like movies and streaming simply are not.
It was surprising to me that this hasn’t been more important to Disney, a company that has historically recognized the significance of its theme parks as integral to brand affinity. Those immersive spaces forge fans and reinforce relationships with movies and other media. However, they also have huge barriers to entry in cost and location. They may seem dramatically different (to you), but video games offer a somewhat similar sense of immersiveness. There’s a reason why the Mushroom Kingdom was so easy for Universal Creative to translate to a theme park.
Ultimately, that’s why this partnership with Epic Games is a good move for Disney. Even if you don’t play Fortnite, and I suspect most of you do not, it is incredibly popular with younger generations. The creation of a Disney universe (think sorta like Disney Infinity, minus the toys) in that world will be huge for the future of Disney, and will likely ramifications for Parks & Resorts and much more. It’ll be interesting to watch develop!
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Your Thoughts
What do you think? Is Disney partnering with Fortnite maker Epic Games a good move? Should Disney develop its own video games studio from the ground up, or just stick to licensing? Is the company investing resources into video games, or is it just another money pit or distraction for Disney? Any questions? We love hearing from readers, so please share any other thoughts or questions you have in the comments below!
Yawn. This is really their response to Epic Universe? Disney needs to stick with what they do best – fantasy and princesses.
This is no more their ‘response’ to Epic Universe than the new ESPN streaming partnership is. Disney is a big company.
So a week after the big announcement about Epic Universe, Disney makes an unrelated acquisition that will just happen to have the effect that they will come up in internet searches for “Epic Universe.” Yeah, I’m sure that never crossed their minds.
Honestly, if Iger really set this up this deal in less than a week, he’s brilliant *and* bonkers *and* all-powerful.
Aaron, I’m sure Disney, like the rest of the world, has known EU was coming for years, and has been setting up this deal- and you can bet they timed their announcement.
The idea that Disney invested in Epic Games just because their name is “Epic” is silly. Star Wars and Marvel have licensed computer games for decades, and there’s no reason to discontinue that just because they are part of Disney now. On the Epic side, Fortnite has 650,000,000 registered users, most of them under 24, which represents a good target demographic for both Marvel and Star Wars. As for the term “Universe”, Marvel has been using the term “Marvel Cinematic Universe” for more than 15 years. This deal just makes good business sense and is what Iger is known for.
If Iger spent $1.5 billion on an SEO play that won’t even work, he’s an idiot.
Epic Games is the largest privately held gaming company in the world by revenue, and the market is very excited by this move. If Disney held this announcement back, then the company would be opening itself up to lawsuits given the obvious stock price manipulation. As for “years,” while Chapek might have been silly enough to try and hide that, his incompetent attempts to cover up mounting Disney+ losses rather than changing direction proves that he wouldn’t have the ability to do that on multiple levels. Finally, Disney made the “Epic Mickey” game over a decade ago, yet fortunately no one’s saying Universal ripped the name off them.
If they made a Fortnite theme amusement park that is like Free Guy the movie in the real world that would be awesome! Add some roller coasters and other rides. That would totally combat with the new epic universe!!
I feel quite foolish. Looking at game companies, I liked Epic Games for its success and independence, but also its ownership of the Unreal Engine, which is used not only by Epic’s various studios but many other game makers, too. Still, it completely escaped me that more than 15 Disney attractions were created with it!
I assume they’ll announce a new valuation for Epic Games soon, but right now it looks like Disney probably owns more than Kirkbi (Lego and about half of Merlin Entertainment) but not as much as Sony. At the last valuation, the CEO owned over half of the company, with Tencent at 40%, Sony just over 5%, and Kirkbi around 3%.
Honestly, I don’t know how they got to that number. I knew that Disney Parks has used Unreal Engine because it was mentioned in the press releases for Smugglers Run, but I don’t know where else it’s been used. Possibly some of the scenes in Star Tours? If so, do you count that 4 times? Iron Man Experience at HKDL would also make sense, as would visuals in other sceen-based attractions. I still can’t get to 15, though. I’m guessing there are brief bits in pre-shows and queues here and there, too.
You think there is any chance that this leads to a name change to the new universal park, I doubt they want people to search epic and get directed to Disney
Wow, Disney is really increasing their connection to the Research Triangle area of NC. They’ve been hiring tech. people for Disney Entertainment in Morrisville for the last couple of years, last month they announced a new community in Pittsboro, and now a major investment in a Cary company.
I think that you’ve missed the bigger part of the equation; any investment/partnership with Epic Games is a de facto integration with the Epic Games Store. This gives Disney a direct to consumer option for any Disney gaming IP, along with all of those glorious micro-transaction dollars. “Epic Game Store Exclusive” is a phrase despised and dreaded by most PC Gamers, but it’s a powerful tool. Integration with Epic Games Store gives Disney a direct digital store front to sell Disney branded games, along with all of the user gameplay data on the back-end that can be leveraged to better tailor future content and marketing. That’s all in addition to partnering with a game studio that has a better feel for actually making games than Disney Co. Think of this deal like the early co-op rollout of Hulu, but with gaming and digital assets…
Beyond knowing that it’s reviled, Epic Games Store is admittedly a bit of a blind spot for me because I play on PS5 and Switch. Do you really think it’s that significant here? I figure Disney just wants to tap into the colossal Fortnite userbase and (and its glorious microtransaction dollars) and that’s what this deal is about. I guess I’m skeptical of Disney doing anything else exclusive through that storefront–but again, blind spot.
The potential is huge, assuming Disney has significant control over the relationship and they don’t waste the data collection and experience optimization opportunities, like they did when Magic Bands first came out. Epic Game Store would give them the digital store front infrastructure and distribution systems to direct sell their branded games. It’s also a functioning system that mostly works, which is far superior to having the Disney IT folks try and build a system; we all know how that would turn out. I can’t stress this enough: control of a functioning digital distribution system for gaming.
As for Disney avoiding any exclusive releases on the Epic Games Store platform, why should they avoid it? They already do exclusive releases on Disney+ and Hulu. Epic Game Store access isn’t pay-walled, so the exclusivity on the part of the purchaser is only a matter of another digital sign-up. At least until the “Epic Disney Digital+ Online Service Subscription” rolls out. Making some Disney branded game titles EGS exclusive would be nowhere near as onerous as putting a major NFL playoff game behind a streaming service pay-wall.
Last point about the deal in general is that I expect Disney to have a LOT of leverage and control in this deal. Epic Games has been in BAD financial straits for some time and didn’t have a good way out of their conundrum. Making this investment now, when Epic is at its most vulnerable, is going to maximize the bang for the buck as far as control goes.
Full disclosure: I despise EGS and consider most of their retail practices to be reprehensible. But this deal just makes so much sense for Disney, especially at the fire sale price that Epic was at.
I don’t see Epic Games Store exclusives being a huge component of Disney’s strategy here. Disney is not going to want to miss out on all of the money from console game sales, which is a huge portion of video game revenue.
In terms of your list of the world’s biggest franchises, what is that ranking based on? Pokemon lives in a world of its own as a mega-franchise (and was a trading card game before a video game) but as far as I can tell, Marvel films have made more money collectively than any of the other game franchises you mentioned. And in terms of brand awareness, I’d be shocked if more people worldwide had played a Call of Duty game than had seen a Star Wars movie. Your overall point is well taken, though
— one of my kids LIVES in Fortnite and just WATCHES movies and TV shows. However, the other kid plays some Roblox here and there but mainly wants to watch shows like “Wednesday” and the High School Musical series over and over. Disney has captured one of these audiences but now has the chance to grab both.
Sorry, but my inner middle-schooler couldn’t see this comment and not chime in to point out that Pokemon started as a game first, quickly followed by the trading card game once the initial Game Boy games proved massively popular. 🙂
I’ve tried Fortnite, but cannot do shooters except on a PC (I”m old), but my daughter played it some just this week – it’s still going strong. The Spiderman games for PS4/5 were exceptional.
The first thing I thought when I read the announcement was, wow, I didn’t know Iger was a DTB reader! Super excited to see where this partnership leads. With this and the sports streaming partnership, it really seems like some major mistakes are being corrected. That plus improvement on the profitability of Disney+ bodes well for the company soon being able to turn their attention back to the Parks and Resorts to start on that $60 billion of investment.
Wow, I am surprised to see this move so soon after your article on the subject. Apparently the company was thinking along the same lines. I’m excited to see how this develops.
Speedstorm is my addiction from Disney these past couple years. I started with Beta version and then bought the founders pack. It is Disney’s version of Mario Cart racing and I think it is even better. About to start a new season tomorrow with The Little Mermaid theme. I have been trying out the new tracks while waiting for the start. It is completely different than past seasons and completely worth starting. I have noticed the changes each season and Disney has definitely stepped up their gaming. I also love Kingdom of Hearts. I can’t wait for Disney Fortnite. I enjoy watching and experiencing their gaming adventures!!!!!! Good job Disney on their future investment.