The Walt Disney Company is making a significant move by acquiring a $1.5 billion equity stake in Epic Games, signaling its entry into what it terms as a “persistent universe.” This decision comes less than a year after Disney closed down its metaverse division.
In a statement released on Feb. 7, Disney outlined its plans for a multiyear project, contingent upon regulatory approval, which will involve building a game experience that integrates with Epic’s flagship game Fortnite. Described as a “games and entertainment universe,” the project aims to offer users the ability to “play, watch, shop, and engage with content, characters, and stories” from Disney’s extensive portfolio of assets.
Epic Games’ founder and CEO, Tim Sweeney, expressed enthusiasm about collaborating with Disney to construct a “persistent, open, and interoperable ecosystem.” Disney CEO Bob Iger characterized this partnership as Disney’s most significant foray into the gaming world to date.
Disney further emphasized that players, gamers, and fans will have the opportunity to create their own narratives and adventures within this universe. While Epic’s Unreal Engine will power this endeavor, specific details regarding a launch date for the metaverse-like project were not disclosed.
Disney’s recent move follows its decision to disband its metaverse division in March 2023, which resulted in the termination of approximately 50 employees in an effort to reduce operating expenses. However, prior to this, Disney had obtained approval for a patent related to a “virtual-world simulator in a real-world venue.”
Epic Games, led by Tim Sweeney, has maintained an optimistic stance on the metaverse concept despite challenges. Sweeney has refuted claims that the “metaverse is dead,” pointing to the substantial user base across various metaverses in May 2023. Nevertheless, Epic underwent significant staff cuts in September 2023, attributing the downsizing to overly ambitious revenue expectations inspired by the metaverse concept.
Epic Games has previously engaged in similar partnerships. In April 2022, it received a $2 billion investment from Sony and the Lego Group’s holding company, Kirkbi, to develop a metaverse, resulting in the creation of the open-world survival game Lego Fortnite.
The announcement of the partnership coincides with Disney’s first-quarter earnings report for 2024, following a series of underperforming releases in 2023.
Disney reported a revenue of $23.6 billion for the quarter ending Dec. 30, 2023, narrowly surpassing Wall Street analysts’ estimates. Despite this, its revenue growth remained stagnant compared to the same quarter the previous year.
In response to its financial performance, Disney declared a dividend of 45 cents per share, marking a 50% increase from the previous dividend paid in January. The company’s share price experienced minimal movement during regular trading hours, closing at approximately $99. However, it surged by nearly 7% to over $105 in after-hours trading on Feb. 7, according to Google Finance.
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