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Disney Invests $1.5B in Epic Games, With Plans to Create New Universe Featuring Franchise IP

In a major initiative, The Walt Disney Co. and Fortnite studio Epic Games will create a new “games and entertainment universe” that brings Disney characters from franchises like Star Wars, Marvel, Pixar and Avatar together.

Disney CEO Bob Iger announced the partnership in an interview on CNBC on Wednesday. The new experience will be interoperable with Fortnite and powered by Epic’s Unreal Engine.

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Disney is also making a $1.5 billion equity investment into Epic Games to support the multiyear project.

Iger described the project as “a huge Disney universe that will be for gaming and for play, and for watching and even for shopping for digital goods, and maybe ultimately physical goods that will live alongside Fortnite, but be completely interconnected with Fortnite.”

“This represents probably our biggest foray into the game space ever, which I think is not only timely, but an important step when you look at the demographic trends and look at where Gen Alpha and Gen Z and even Millennials are spending their time in media,” he added. “It’s pretty dramatic in terms of the amount of time spent in games, in fact some demographics are equal to or greater than how people are spending their time on movies and television.”

Disney has historically licensed its IP to third-party game studios, though it has a history with Epic Games, with Epic participating in a 2017 Disney accelerator, and with the companies partnering on bringing some Disney characters to Fortnite in the past. (The story prelude to 2019’s Star Wars: Rise of Skywalker, for instance, was first teased in the game.)

The company also described the new universe as something more akin to a social network, saying that “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.”

“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 of 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.”

The Epic investment is subject to closing conditions, including regulatory approvals.

On the company’s earnings call, Iger discussed his thoughts on why the company was investing in video games.

“We’ve we’ve tried our hand at video games in a number of different directions,” Iger said. “And actually the one that ended up being the most successful for us was the license, and in fact we’ve licensed I think $9 billion franchises, including the Spider Man franchise, which is the most successful video game last year.”

“I just think that given the demographic trends, and given the success of Fortnite… they’re experiencing a really a great year of both customer satisfaction and growth as they return to some of their roots,” he continued. “We just think as we take our IP from our movies and our television shows and 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 companies also released a teaser video:

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