Disney’s $1.5B stake in Epic smells like just another metaverse game.

Disney's $1.5B stake in Epic smells like just another metaverse game.



Less than a year after closing its Metaverse division, The Walt Disney Company is acquiring a $1.5 billion equity stake in Epic Games to build what it calls a “continuing universe.”

In a statement on February 7, Disney said the multi-year project – which has a regulatory license – will be a gaming experience that will collaborate with Epic's flagship game Fortnite. The project will be a universe of games and entertainment that will allow users to “play, watch, buy and engage with content, characters and stories” from Disney properties.

Epic Games co-founder and CEO Tim Sweeney said the two will “build a continuous, open and interoperable ecosystem,” while Disney CEO Bob Iger said it “marks Disney's biggest foray into the world of games.”

“Players, players and fans can create their own stories and experiences,” Disney added. Epic's game engine, Unreal Engine, will power the universe, but no details were shared on the launch date for the meta-opposite project.

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Disney's move comes less than a year after it spun off its Metaverse division in March 2023, cutting about 50 employees to cut operating costs. A year before that, a patent was granted for a “virtual-world simulator in real-world space.”

Epic's Sweeney has long been a bully against the Metaverse and poked fun at the notion that “the Metaverse is dead” by citing 600 million monthly active users by May 2023.

Yet four months later, in September, Epic cut its headcount by 16 percent — to about 830 employees — after unrealistic expectations of variable-incentive revenue led it to spend “more” than it could.

Epic has collaborated on similar projects before. In the year In April 2022, Kirkby received $2 billion from Sony and Lego Group holding company to build Metaverse, which led to the open-world survival game Lego Fortnite.

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The partnership announcement comes on the same day as Disney's first quarter 2024 earnings after a string of big box office and streaming hits in 2023.

Disney reported revenue of $23.6 billion for the quarter ending December 30, 2023, beating Wall Street analysts' Zacks estimates. Still, revenue growth remained flat after posting $23.5 billion for the same quarter a year ago.

Disney said it will pay 45 cents a share, a 50% increase compared to what it paid at the end of January. Its stock closed the day at around $99, but rose 7% to $105 in afternoon trading on February 7 on Google Finance.

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