Disney set to buy $1.5B stake in Epic
The Walt Disney Co. said it will invest $1.5 billion for a stake in Epic Games, the creator of Fortnite and Gears of War, marking the company’s biggest bet so far on the video game industry as CEO Bob Iger enacts a wider plan to revive earnings.
The two companies announced a partnership that would expand the licensing of Disney brands within Fortnite and create “a transformational new games and entertainment universe,” according to a news release. Disney said the new universe will allow people to “play, watch, shop and engage with content, characters and stories from Disney, Pixar, Marvel, Star Wars, Avatar and more.”
The Wednesday announcement came as Disney bettered Wall Street’s expectations for its first-quarter earnings, trimming losses at its streaming services and stabilizing subscribers.
“This marks Disney’s biggest entry ever into the world of video games, and offers significant opportunities for growth and expansion,” Iger said in a statement, adding that changes the company implemented last year are now “bearing fruit.” He told CNBC in a televised interview that Disney has pursued a “minority stake” in Epic Games.
In the interview, Iger said the investment in gaming is “an important step when you look at the demographic trends, and you look at where Gen Alpha and Gen Z and even millennials are spending their time in media.”
Gen Z spends more time each week playing games on consoles, smartphones and computers than watching TV or movies, according to an analysis by YPulse, a market research group focused on younger generations.
Fortnite, an online multiplayer game franchise known for chaotic battles, creative open worlds and comical avatars, was first released in 2017. It skyrocketed to popularity, with online counters recording millions of players at a given time, including a record 44.7 million simultaneous players in November.
A video announcing the partnership, posted by Fortnite’s YouTube channel, showed an animated universe that connected brands such as ESPN and Marvel together, with appearances from popular characters such as Elsa from the animated musical film “Frozen,” Captain America and Darth Vader.
Disney and Epic have already drawn in hundreds of millions of players through Fortnite collaborations. Marvel’s “Nexus War with Galactus” attracted more than 15.3 million concurrent players, Disney said.
Iger started his second stint as Disney’s chief executive officer in 2022, and has been focusing on turning around the media giant’s fortunes as box office failures and its costly foray into streaming services hurt profits in recent years.
“Just one year ago, we outlined an ambitious plan to return to a period of sustained growth and shareholder value creation, and our strong performance this past quarter demonstrates we have turned the corner and entered a new era,” Iger said in a post-earnings statement Wednesday.
Disney also announced that its streaming platform, Disney Plus, will run an exclusive cut of Taylor Swift’s “Eras Tour” concert film starting March 15.