Disney Invests $1.5 Billion in Epic Games to Develop Interactive Gaming Universe
Summary:
Walt Disney Co. is investing $1.5 billion in Epic Games to create a "sustained universe" which will engage with Epic's Fortnite. The gaming universe will allow users to interact with Disney content, while Disney hopes its audience will also create their own experiences. The ambitious project comes after the shutdown of Disney's metaverse division in March 2023. The news coincides with Disney reporting Q1 2024 earnings, with revenues of $23.6 billion, a slight increase from the same quarter the previous year.
The Walt Disney Company is set to invest $1.5 billion in Epic Games to develop what is being termed as a "sustained universe". This follows Disney's decision to close down its metaverse division less than a year prior. In an announcement made on February 7, Disney clarified that the project, which is awaiting regulatory clearance, will feature a gaming experience that interacts with Epic's primary game, Fortnite. It intends to create a digital domain encompassing gaming and entertainment whereby users can "appreciate, shop, and engage with Disney-owned content, characters and plots”. Epic Games’ founder and CEO, Tim Sweeney, mentioned that jointly, they aim to form a consistent, accessible, and interoperable ecosystem. Simultaneously, Bob Iger, Disney’s CEO, stated that the venture marked the company’s largest foray into the gaming world. Disney affirmed that players and fans would have the opportunity to design their own experiences and narratives. The Universe project will utilise Epic's game engine, Unreal Engine, however, the launch date remains undisclosed. Disney's business decision surfaced less than a year following the dissolution of its metaverse division, approximately in March 2023, in an effort to scale down operating costs and terminating the employment of circa 50 workers. Notably, the year before, it gained approval for a patent for a "real-world venue virtual-world simulator". Epic’s Sweeney has consistently been optimistic about metaverse and scoffs at the idea of the "demise of metaverse", referring to May of the previous year's data of 600 million regular users across numerous metaverses. But, by September, Epic reduced its worker count by 16%, or about 830 employees, blaming unrealistic projections of metaverse-driven revenue which led to a higher spending than feasible. Previously, Epic partnered on related initiatives, such as the $2 billion it received in 2022 from Sony and LEGO Group's parent company, KIRKBI, which contributed to the creation of the open-world LEGO Fortnite survival game. This joint venture news arrived on the same day Disney disclosed its 2024 fiscal first quarter earnings, following several box office and streaming setbacks a year prior. Disney reported quarterly revenues amounting to $23.6 billion as of December 30, 2023, slightly surpassing Zacks analysts' expectations. However, its revenue demonstrated static growth, recording $23.5 billion during the same quarter the year before. Disney announced a per-share dividend of 45 cents, reflecting a 50% surge compared to its prior payment in January. The company's stock closed at approximately $99 per share and surged nearly 7% to more than $105 in after-hours trading on February 7, as per Google Finance data.
Published At
2/8/2024 4:57:07 AM
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