Disney is dropping a cool $1.5 billion to invest in Epic Games

The Walt Disney Company is acquiring a massive stake in Fortnite and Unreal Engine developer Epic Games. The company announced today that the two companies will "collaborate on an all-new games and entertainment universe that will further expand the reach of beloved Disney stories and experiences."

The collaboration is described as being a "multi-year project." While Disney doesn't use the word "metaverse" in its announcement, it does describe the project as a "persistent universe" that 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."

"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," said Epic Games CEO Tim Sweeney. "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."

For context, the company spent $4 billion to buy Star Wars and Indiana Jones producer Lucasfilm Ltd. (and, by proxy, then-game developer/publisher LucasArts) in 2012. The announcement does not state what the valuation of Epic Games will be following this investment.

Disney is bringing some much-needed cash to Epic Games

Epic Games and Disney have been building a close relationship over the last few years. The multi-media corporation has promoted its various properties in Fortnite and adopted Unreal Engine as the beating heart of its on-set virtual production pipeline on Disney+ shows like The Mandalorian.

In one notable moment, Disney introduced a plot point from Star Wars: The Rise of Skywalker into a promotional in-game event in Fortnite. The film references a message from Emperor Palpatine that could only be heard in the online game.

The relationship has been a business boon for both corporations, but despite the Disney offerings, Epic Games still laid off employees in 2023 following declining revenue in Fortnite.

It will be fascinating to see how Disney interfaces with Epic Games' vision for a creator-driven economy. The company is notoriously strict about how its properties are used in adaptations and by third parties, and the wild west of monetizing user-generated content may not align with its strict vision for its characters.

It's definitely not every day you hear an entertainment conglomerate and a game engine studio talk about building a "persistent universe." This investment may indeed mark a sea change in the world of game development.