Disney invests $1.5 billion in its own metaverse

Disney has announced an investment of $1.5 billion in game maker Epic Games, which is expected to lead to the creation of a new virtual Disney universe. A virtual world where users can play games, shop, and communicate with each other sounds familiar as Zuckerberg tried to sell this a few years ago, calling that world the metaverse, which, it should be added, did not succeed.

Bob Iger, Disney’s CEO, says that this decision is based on the fact that an increasing number of young people play video games.

More than 90 percent of Generation Alpha and Gen Z, which includes everyone born after 1996, played games during a six-month period last year, according to a report by NewZoo. Moreover, more than half of that group, plus millennials, spent money on games on a monthly basis last year and are more likely to buy from brands represented in games, the report adds.

– When I saw how much time they spend on video games, I was surprised. The conclusion I came to was that we need to be there, and as soon as possible – said Iger.

Iger described the planned virtual Disney World as something that lives alongside Fortnite, the popular game made by Epic Games, and is completely connected to it. Characters encompassing Disney’s intellectual property – including Pixar, Marvel, Star Wars, and Avatar – would appear in this new virtual universe. Users will be able to play games produced by Disney, create their own games, watch short-form content, and purchase digital goods, said Iger. He also outlined the idea of distributing long Disney content within the online ecosystem.

Not a metaverse, but still is

Disney has not provided a release date for any of its planned products with Epic. Its shares rose six percent after the earnings report, to $105.79, after they reported better-than-expected earnings and forecasted profit growth in the coming year, which is mainly a result of cost-cutting.

Iger’s proposal sounds eerily familiar to Mark Zuckerberg’s idea of the metaverse, on which Meta has lost more than $46 billion in recent years, so they have now shifted focus to AI business.

However, there are several key differences that make Disney more prepared for success in virtual reality, believes Brian Mulberry, a portfolio manager at Zacks Investment Management.

– The fact that Disney has a huge amount of character recognition and brand loyalty makes it immediately more accessible, as well as the diversity of ages that would be interested in that experience – said Mulberry.

Additionally, Disney has already partnered with Apple last week, announcing future integrations with Apple’s new augmented reality headset, Vision Pro.

Besides having a much clearer starting point for its virtual world than Meta, Iger has notably avoided using the term ‘metaverse’, which has become synonymous with high spending and unfavorable results. At its core, Disney is taking its strategy from theme parks and applying it in the digital world.

– Adding Disney characters to Fortnite also serves as advertising for Disney characters 24/7 on the most popular gaming platform on the planet – said Mulberry.

Disney characters have already appeared in Fortnite, including Jack Skellington from The Nightmare Before Christmas.

– This is the best of all worlds from a business perspective and certainly excellent for consumers who love to interact with our characters in the video game format – said Iger.

Disney has been developing video games in-house for years but abandoned most of that effort in 2016 after failing to create a single hit game. Instead, it began licensing its intellectual property to game publishers, such as Epic Games.