Disney invests $1.5bn in Fortnite maker Epic Games to create new ‘universe’

Disney has announced a $1.5bn move into video games, striking a partnership with Epic Games, the publisher of Fortnite, and agreeing to take a minority stake in the business.

The Hollywood giant said it would build a “games and entertainment universe” with Epic for fans of its key franchises, including Pixar, Marvel and Star Wars.

Bob Iger, chief executive of Disney, said the deal would amount to its “biggest entry ever into the world of games, and offers significant opportunities for growth and expansion”.

It came as the Magic Kingdom released its latest earnings. Grappling with lackluster box office returns and unease over its expensive push into streaming, it has been under pressure.

But Disney claimed it had “entered a new era” on Wednesday after posting a sharp rise in profits and announcing a hefty dividend for shareholders. The company was boosted by record returns in its global resorts division.

Profits at Disney rose 49% to $1.91bn in the three months to 31 December, on a flat revenue of $23.5bn. The company, under pressure from Wall Street, has been scrambling to cut billions of dollars in costs.

“The stage is now set for significant growth and success,” claimed Iger, as he attempts to tamp down a battle for control of the Magic Kingdom. He is hoping to ward off a boardroom invasion by the activist investor Nelson Peltz, ahead of a showdown in April.

On a conference call with analysts, Iger announced that Taylor Swift’s Eras Tour concert film would land on Disney+ next month, with five additional songs not shown during its run in movie theaters.

Disney shares rose 7% during after-hours trading. Its deal with Epic is subject to regulatory approvals.

Tim Sweeney, founder and CEO of Epic, said: “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.

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“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.”

Fortnite is one of the world’s biggest online gaming platforms, with more than 350m accounts. Its owner, Epic, was founded by Sweeney in 1991.

Disney released its earnings a day after it was announced that its ESPN business would team up with Fox Corporation and Warner Bros Discovery to launch a sports-focused streaming platform. Their joint venture will draw upon the companies’ broad portfolio of professional and collegiate sports rights, which include the National Football League, National Basketball Association, Major League Baseball and Fifa World Cup.