Disney’s $1.5B Investment in Epic Games Signals Paradigm Shift in Entertainment Industry

The latest move by Disney is a stark reminder of the increasing popularity of video games. Disney did have a division that dealt with video games, namely Disney Interactive Studios. However, once the revenues stopped coming and the company constantly suffered close losses amounting close to $200 million, the writing was pretty much on the wall. Disney had no other option than to turn away their attention while shutting down the wing completely in 2016. Now, fast forward to 2024 and Disney has reportedly invested a whopping $1.5 billion into Fortnite makers, Epic Games! 

Surely, it sounds too good to be true. But the reality, as it stands, is that even with a few setbacks, the gaming market is only getting bigger and better. Still, such a huge amount of investment coming from Disney poses a few questions. Who is the mastermind behind the idea? Is this a smart move? And what prompted such a move? 

Disney’s ‘Epic’ entry into the gaming front 

It all started the day Bob Iger returned to the helm as the CEO of Disney back in 2022. He incubated in his mind the idea of capitalizing on the gaming market. Thus, immediately after taking up responsibilities, Iger met with a couple of higher ups of the company to discuss with them his vision, backed by statistics and demographics. Thankfully, he was able to convince the company about the boost the gaming market is generating at the moment. 

Speaking about how he envisioned the plan, Iger stated, “When I saw Gen Z and Gen Alpha and even millennials, and I saw the amount of time they were spending in terms of their total media screen time on video games, it was stunning to me, equal to what they spend on TV and movies… And the conclusion I reached was we have to be there, and we have to be there as soon as we possibly can, in a very compelling way.” Surely enough, the $1.5 billion investment materialized and with it, the stocks of Disney saw a significant boost of 11%. 

Although the exact terms and conditions of the deal were not made public, a few pointers can be noted from a report published by Forbes. The report stated that in exchange for the money, Disney would demand a token stake of equity in the company. They also promised Epic Games about expanding and exploring digital worlds based on exclusive intellectual properties from Disney. 

With the deal now done, the next question is – Is the deal a smart move for Disney? 

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Disney & Epic Games: An intelligent move? 

The flagship product of Epic Games, Fortnite has over 70 million active users per month. What makes the game more appealing are the IPs that help users use skins as per their choice in the game. These skins range from rappers, sports entities, fictional characters, and even entities from the extended universes of Star Wars, Disney, and Marvel. 

However, with the new deal, the two companies can form a persistent metaverse where users can “play, watch, shop, and engage.” Although this might take some time to materialize, game maps are a possibility that would have a huge potential in the long term. 

Imagine users being able to play in a ‘Pirates of the Caribbean’ map or a ‘Toy Story’ map. The taste of success has already been there since Fortnite had a similar collaboration with Lego. Users flocked to the game to access the Lego map, which resulted in 2.4 million users playing the game in one month. 

However, the challenge Epic Games has faced is the constant loss of its active users with time. This is an area that can be bolstered with the latest collaboration. Bringing in exclusive Disney characters and maps periodically will keep the users intrigued and could thereby make this deal a win-win situation for both parties. 

What are your thoughts on Disney splashing such a huge amount on Epic Games?

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