Disney cut its metaverse division less than a year ago but is now looking like it’s teaming up with Epic Games to build one after all.
Walt Disney Co. is acquiring a $1.5 billion equity stake in Epic Games to build what it’s calling a “persistent universe” — less than a year after shuttering its metaverse division.
In a Feb. 7 statement, Disney said the multiyear project — subject to regulatory approval — would be a game experience that interoperates with Epic’s flagship game Fortnite. The project will be a “games and entertainment universe,” allowing users to “play, watch, shop and engage with content, characters and stories” from Disney’s assets.
Epic Games founder and CEO Tim Sweeney said the two will “build a persistent, open and interoperable ecosystem,” while Disney CEO Bob Iger said it “marks Disney’s biggest entry ever into the world of games.”
Disney added that “players, gamers, and fans will be able to create their own stories and experiences.” Epic’s game engine, Unreal Engine, will power the so-called universe, but no details were shared on a launch date for the metaverse-like project.
Disney’s move comes less than a year after it razed its metaverse division in March 2023, cutting around 50 staff in a bid to slash operating expenses. A year before that, it was approved for a patent for a “virtual-world simulator in a real-world venue.”
Epic’s Sweeney has long been bullish on the metaverse and has poked fun at the notion that the “metaverse is dead,” citing the 600 million monthly active users across multiple metaverses in May last year.
However, four months later in September, Epic slashed its headcount by 16% — around 830 staff — saying unrealistic expectations of metaverse-inspired revenue caused it to spend “way more” money than it could afford.
Epic has collaborated on similar projects before. In April 2022, it got $2 billion from Sony and LEGO Group holding company KIRKBI to build a metaverse — which eventuated into the open-world survival game LEGO Fortnite.
The partnership announcement comes on the same day as Disney’s first-quarter 2024 earnings after a series of big box office and streaming flops last year.
Disney pulled in $23.6 billion in revenue for the quarter ending Dec. 30, 2023, narrowly beating estimates by Wall Street analysts at Zacks. Still, its revenue growth remained flat as it posted $23.5 billion for the same quarter a year ago.
Disney said it would pay a dividend of 45 cents a share, a 50% increase compared to its last paid in January. Its share price closed flat on the day at around $99 but jumped nearly 7% to over $105 in after-hours trading on Feb. 7, per Google Finance.