Why Disney’s $1.5 Billion Investment in Epic Games Is a Smart Move

Disney’s strong entry into the world of Fortnite (Epic Games) can be a game changer for metaverses, movies and theme parks. After all, this is the world of intellectual property.

Article by Matt Craig for Forbes US – translated by Flora Lucas

After returning as Disney CEO in late 2022, Bob Iger called a meeting with two senior executives to talk about video games. It’s an area the company has largely avoided since 2016, when it spun off the Disney Interactive Studios division that was once losing about $200 million a year. However, Bob Iger’s assistants came armed with demographic data and other statistical trends that indicated the sport had become too popular to ignore.

“When I looked at Gen Z, Gen Alpha and Millennials and I looked at how much time they were spending on video games in terms of total screen time, I was amazed to see that this time was almost as much time as they spent in front. In television or movies,” Bob Iger said during Disney’s earnings conference call on February 7. “I concluded that we had to be there, and as soon as possible, very convincingly. »

Disney invested $1.5 billion Fortnite

That same day, Disney announced its big move: the company would invest $1.5 billion in developers. Fortnite, Epic Games, in exchange for a small stake in the company and a promise to create a digital world based on the company’s intellectual property. Terms of the agreement have not been disclosed, however Information The report reports that Epic Games’ valuation fell to $22.5 billion, down significantly from a peak of $31.5 billion in early 2022. After the announcement, which was tied to a new sports television venture involving ESPN, Fox and Warner Bros., Disney shares rose 11%.

“They’re the kings of passive entertainment, and they’re very good at parks, but they’ve been less successful at interactive,” says Jason Chapman, founder and managing partner of gaming investment firm Convoy Ventures. “These worlds, if successful, can generate more reusable entertainment and engagement and monetization mechanisms than film. So I think this is probably a really good investment for Disney, which desperately needs to figure this out because its audience is getting older. »

Consistency of Fortnite, a battle royale game with 70 million active monthly users, has been undermined in recent years by collaborations with pop culture intellectual property owners. Players can create in-game character “skins” based on sports stars, rappers, and fictional characters from the Marvel Expanded Universe and Disney’s Star Wars. It is likely that this license will continue, and one can imagine that the intellectual property will be transferred in the other direction, towards the cinematic universe. Fortnite Or a TV series in the future.

A much broader partnership than a simple exchange of intellectual property

The new partnership, however, implies much more than a simple exchange of intellectual property. Tim Sweeney, CEO of Epic Games, which is worth an estimated $4.1 billion, said in a statement that the plan is to “build a consistent, open, interoperable ecosystem that will bring Disney and the Disney communities together.” Fortnite ” Although Bob Iger’s public comments have strategically avoided the term “Metaverse,” his vision of a “new continuous universe” in which people can “play, watch, shop and engage,” sounds familiar. Its aim is to create Fortnite Who can live next door Fortnite And be completely connected to it” is a fascinating dream, but one that is not yet technically possible.

In short term, we can get similar results LEGO Fortnite, a gaming experience published on the Fortnite Creative Marketplace by Epic Games in collaboration with Lego Group, whose parent company Kirkby invested $1 billion in Epic Games in April 2022. The Lego “map” (as Epic Games calls the new game builds. ) saw massive success after its release in December, peaking at more than 2.4 million concurrent players. However, it has proven more difficult to maintain a high player count on the platform, where popularity changes rapidly, like viral trends on TikTok. A month after launch, LEGO Fortnite The average was 100,000 players. As of this week, nearly two months after launch, that average is closer to 40,000, still among the ten most popular games on the service, but a fraction of what the main battle royale modes are. Fortnite Reach anytime.

Instead of developing a digital Disney World, the two companies could collaborate on multiple game maps for some of Disney’s iconic properties. They can, for example, create a map Pirates of the CaribbeanMap Toy Story and so on, only interconnected in the sense that each of them can be selected by players from a menu Fortnite However, each of these projects takes a lot of work to build and will require additional investment from Disney, Epic Games and, possibly, other third-party developers. After all, developing a game can take several months. LEGO FortniteFor example, Kirkby’s investment was launched more than a year and a half after it was announced.

Disney Fortnite is unlikely to launch before 2025

Experiences at Disney, according to Jason Chapman Fortnite could launch before mid-2025, and given that in-game monetization tools are still in their infancy, he predicts it will be years before the company sees a significant return on investment.

In the meantime, the massive cash infusion allows Epic Games to continue pursuing its Metaverse dreams. The company laid off more than 800 employees in September during the transition Fortnite (which represents the majority of Epic Games’ revenue, estimated at six billion dollars) from a simple video game to a global ecosystem with thousands of games. Epic Games currently offers its millions of users access to a stripped-down version of its professional game development software, Unreal Engine, and shares a small portion of its revenue with its creators. The goal is to ensure that the next Fortnite-sized success happens on its platform, whether it’s created by Epic, everyday players or, now, Disney.

“Our ultimate ambition remains the same: to build a metaverse-scale digital ecosystem,” said Sax Persson, Executive Vice President of Ecosystems. Fortnite From Epic Games Forbes In November. “And Fortnite is a logical place for us to start, but it’s about building a billion people. It’s not about staying size Fortnite. It’s about getting much, much bigger. »

The challenge Fortnite It is yet to be resolved to diminish its reputation as a shooter royale. Love the maps LEGO Fortnite Or Rocket Racing, another IP-based collaboration that debuted in December and fell under 20,000 players this month, proves that it’s still difficult to maintain diverse genres, especially ones that don’t involve firearms. Epic Games’ ultimate success in this arms race with other platforms like Roblox And Minecraft lives up to Disney’s ability to break the mold with its beloved characters and millions of fans around the world.

“Epic, as a company, is more than the risks associated with it today Fortnite “, Jason Chapman explains. “I think they are afraid, and they should be, because the intellectual property of eight-year-olds today is undiscoverable. Fortnite Interesting in six years. It’s the best way for Epic Games to de-risk its current offering, and it can do so with a group that has dominated intellectual property content for the past century. »

Also Read: Epic Games Wants Fortnite Back On South Korean App Store After New Law, But Apple Refuses

Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button