Disney Invests $1.5 Billion In Epic Games To Create A Persistent Digital Universe For Its Brands

The Walt Disney Company is investing $1.5 billion in Fortnite developer Epic Games, makers of the popular gaming and animation software Unreal Engine.

Disney CEO Bob Iger announced the news yesterday, calling it “probably our biggest foray into the game space ever.”

Today, buoyed by the announcement and a strong Q1 earnings report, Disney shares were up 7% in pre-market trading. That’s got to be good news for Disney’s board of directors, who are currently fighting off activist investor attempts to unseat them.

Disney’s investment will make the company a minority shareholder in Epic Games alongside Chinese media giant Tencent, which owns 40% of the developer, and Sony, which owns over 5%.

According to a release, the Epic partnership will see the development of a Disney Universe that will operate alongside Fortnite while also being completely interconnected with the game. Disney offered a rudimentary description of its plans:

In addition to being a world-class games experience and interoperating with Fortnite, the new persistent universe will offer a multitude of opportunities for consumers to play, watch, shop and engage with content, characters and stories from Disney, Pixar, Marvel, Star Wars, Avatar and more. Players, gamers and fans will be able to create their own stories and experiences, express their fandom in a distinctly Disney way, and share content with each other in ways that they love. This will all be powered by Unreal Engine.

Epic and Disney already have a longstanding and productive working relationship, having collaborated on Fortnite content integrations, seasonal content, in-game activations, and live events like the Marvel Nexus War with Galactus, which drew more than 15.3 million concurrent players worldwide.

Disney and companies that license Disney properties also routinely use Epic’s Unreal Engine for a wide range of projects. The software was used on video games such as Kingdom Hearts 3 (developed by Square Enix) and Star Wars: Jedi Survivor (developed by Respawn Entertainment), to edit and animate parts of Disney films and series, and to create content for more than 15 Disney Parks attractions.

During a CNBC interview, Iger explained Disney’s motivation for the investment, saying:

When you look at demographic trends and where Gen Alpha and Gen Z and even millennials are spending their time in media, it’s pretty dramatic in terms of the amount of time spent on games. In fact, it’s almost equal to, in some demographics, equal to or greater than, how people are spending their time on movies and television.

In a release following the announcement, Epic Games founder and CEO Tim Sweeney added:

Disney was one of the first companies to believe in the potential of bringing their worlds together with ours in Fortnite, and they use Unreal Engine across their portfolio. Now, we’re collaborating on something entirely new to build a persistent, open, and interoperable ecosystem that will bring together the Disney and Fortnite communities.