Less than a year after closing its Metaverse division, The Walt Disney Company acquires a stake in Epic Games for 1.5 billion dollars to create a “persistent universe”.

• Disney and Epic Games are working together to create a “persistent universe” in the games industry.
• Disney’s $1.5bn investment in Epic Games will be used to develop a game that works alongside Epic Games’ popular game Fortnite.
• The multi-year initiative will allow users to play, watch, shop and engage with Disney-owned content, characters and stories.
• Disney CEO Bob Iger and Epic Games CEO Tim Sweeney want to build a lasting, open and interoperable ecosystem.
• The project will run on Epic’s Unreal Engine and a release date has not yet been announced.
• Disney’s decision comes less than a year after the Metaverse operation was closed in March 2023 and around 50 employees were made redundant.
• The partnership coincides with Disney’s results for the first quarter of 2024, following the company’s successful start to 2023 at the box office and in the streaming sector.
• Disney plans to increase its dividend by 50% to 45 cents per share compared to the last payout in January.

In a statement on 7 February, Disney announced that its multi-year project, subject to regulatory approval, will be a game that will partner with Epic’s flagship Fortnite. The project will be a “gaming and entertainment universe” that will allow users to play, watch, buy and engage with content, characters and stories from Disney’s assets.

Disney CEO Bob Iger explained that this is Disney’s biggest entry into the world of gaming, while Tim Sweeney, creator and CEO of Epic Games, said the two would build a sustainable, open and interoperable ecosystem.

Players and fans will be able to create their own stories and experiences. The so-called world will run on Epic’s Unreal engine, but no release date has been announced for a Metaverse-like project.

Disney made the decision less than a year after closing its Metaverse business in March 2023 and laid off about 50 employees to cut operating costs. A year earlier, the company had received approval to patent “a simulator for a “virtual world in a real location”.

With 600 million monthly active users in multiple metaverse worlds in May 2023, Epic’s Sweeney was long optimistic about the metaverse, deriding the idea as a dead world.

But four months later, in September, Epic Games laid off 16% of its workforce, or about 830 employees, saying the company had overspent based on incorrect assumptions about the revenue generated by the metaverse.

Epic had already been working on related projects. In April 2022, parent company Lego Group, Kirkbi and Sony invested 2 billion dollars in the project to create the Metaverse world, which spawned the open-world survival game Lego Fortnite.

The announcement of the partnership coincides with Disney’s results for the first quarter of 2024, after the company launched a series of highly successful cinema films and streaming offerings in 2023.

In the quarter ending 30 December 2023, Disney generated revenues of USD 23.6 billion, slightly exceeding the forecasts of Wall Street experts Zack. However, given that USD 23.5 billion was generated in the same quarter of the last year, revenue growth stagnated.

Disney announced that it will increase its dividend by 50% to 45 cents per share compared to the last payout in January. According to Google Finance, the share price rose by almost 7% to over USD 105 in after-hours trading on 7 February, after closing the previous day at around USD 99 per share.