In a strategic move aimed at tapping into the burgeoning gaming market, Disney revealed on Wednesday plans to invest $1.5 billion in Epic Games, the creators of the popular game Fortnite.
This collaboration is set to pave the way for the development of a virtual Disney universe within Fortnite, featuring beloved Disney characters alongside an array of interactive experiences.
Disney’s CEO, Bob Iger, cited the overwhelming engagement of young people in video games as a driving force behind the decision to partner with Epic. According to data from NewZoo, over 90 per cent of Generation Alpha and Generation Z—comprising individuals born after 1996 — were engaged in gaming activities over a six-month period last year.
Moreover, a significant portion of these demographics, including millennials, demonstrated a propensity to spend money on gaming content and showed a heightened inclination towards brands featured within games.
Expressing his astonishment at the amount of time younger demographics dedicate to gaming, Iger emphasized the necessity for Disney to establish a presence in the gaming sphere.
Describing the envisioned virtual Disney World as seamlessly integrated with Fortnite, Iger outlined plans for a multifaceted digital ecosystem. This ecosystem is slated to encompass Disney-produced games, user-generated content creation tools, short-form entertainment offerings, digital merchandise, and the potential distribution of long-form Disney content within the platform.
While specific release dates for these collaborative endeavours were not disclosed, Disney’s stock experienced a notable 6 per cent increase in after-hours trading following the earnings report, buoyed by better-than-expected profits and optimistic profit forecasts driven by cost-saving measures.
Comparisons have been drawn between Disney’s foray into the virtual realm and Meta’s vision for the metaverse, a concept characterized by immersive digital experiences encompassing various aspects of life.
However, analysts suggest that Disney’s strong brand recognition and widespread appeal across diverse age groups position it favourably for success in this endeavour.
Brian Mulberry of Zacks Investment Management highlighted Disney’s extensive catalogue of iconic characters and its established partnerships, particularly with tech giant Apple, as key factors contributing to its potential success. The collaboration with Apple, including ventures such as sci-fi streaming experiences on the Vision Pro augmented reality headset, further underscores Disney’s strategic positioning in the digital landscape.
In contrast to Meta’s struggles with the metaverse concept, Disney’s approach draws parallels to its successful theme park strategy, leveraging popular content to drive revenue across various platforms.
By integrating Disney characters into Fortnite, the company aims to capitalize on the game’s massive user base as a means of promoting its cinematic and merchandise offerings.
Disney’s history in the gaming industry, marked by a shift towards licensing its intellectual property following internal development setbacks, underscores the significance of its partnership with Epic Games. Epic’s track record, which includes collaborations incorporating Disney’s Star Wars characters into Fortnite, positions it as a suitable ally for Disney’s digital expansion efforts.
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