Disney’s Epic investment answers the ‘should we be in gaming?’ question

Disney has previously partnered with Epic to put Marvel and Star Wars skins in Fortnite.

Gaming advertisers expect that Disney’s latest investment will result in new game modes centered around its various IP, as Epic looks to turn Fortnite into a social metaverse platform similar to Roblox. The timing of the investment is more curious on Disney’s part, as it laid off its entire metaverse division in March 2023. Epic also laid off around 830 employees, or 16% of its workforce, in September last year.

Disney and Epic were not available to comment.

“My hunch is Disney will have IP [related content] that comes around,” said John Benyamine, cofounder and CEO of Moonrock Labs. “The amount of IP that they have from universes within Marvel, Star Wars, etc. — it makes Fortnite a pretty smart place [to be].”

Given Disney’s gaming experience and huge swath of IP, gaming advertisers including Benyamine see Disney making an investment of this size as a leap of faith from a major brand in a platform and medium that’s been resonating with young consumers for some time.

Disney CEO Bob Iger confirmed this reasoning in a response to an investor question on the company’s Q1 2024 earnings call on Wednesday.

“When I saw Gen Z and Gen Alpha and even millennials, and I saw the amount of time they were spending in terms of their total media screen time on video games, it was stunning to me, equal to what they spend on TV and movies,” he said. “And the conclusion I reached was we have to be there, and we have to be there as soon as we possibly can in a very compelling way.

“And we just think this is — just as we take our IP from our movies and our television and have them expressed in our parks, this is a great way to do it in games. And for us, it's a way to have skin in the game with them with the investment of $1.5 billion, strengthen a partnership because we have skin in the game, but also build a world where we're actually not creating too much risk for the company.”

Fortnite had 237 million average monthly players in the past 30 days and peaked at 64 million players in one day, according to ActivePlayer.io.

Rachel Rakowski, global head of gaming at We Are Social, imagines Disney creating a virtual theme park in Fortnite.

“It feels right at home with what the actual Disney parks are like, interacting with your favorite characters, stepping into incredible worlds, and all of this is within your reach now, both digitally and IRL,” she said in a written statement. “There's always a mountain to climb in getting audiences to not only believe in the game you're making but want to purchase it as well. With Fortnite being free-to-play across multiple platforms, there's almost no barrier to entry.”

She added that Disney’s investment in Epic isn’t limited to Fortnite — it also gives the media giant access to Unreal Engine.

“I can see a world where Unreal Engine is a huge part of imagineering within their theme parks and maybe even creating experiences that connect the virtual universe and the Disney parks together,” she said. “I could easily see an experience being created where you can go on the Toy Story ride in a Disney park and play against someone on the same challenge, in real-time in the Fortnite Universe.”

Disney’s investment in Epic is a validation for other brands that have been investing in gaming, Moonrock’s Benyaminen said. Given the huge amount of attention the deal will put on the medium, he expects brands to start skipping the ‘should I be in gaming?’ question to instead start asking ‘how do we get to market in gaming?’

Bypassing that initial question may start to accelerate Adland’s ability to answer outstanding questions about what metrics are worth paying attention to on gaming platforms and if it’s possible to tie gaming to sales, he added.

Advertisers have long struggled to attribute their gaming investments to sales, as limited measurement frameworks put them at risk of equating correlation with causation.

Brands have tried to find workarounds — Hilton Hotels launched the first rewards program tied to Roblox gameplay in January — but it remains a work in progress.

It appears Disney is also interested in solving this problem, as Iger hypothesized on the earnings call that there may be opportunities to sell both digital and physical goods through Fortnite.

He also expressed interest in the robust creator economy surrounding Fortnite on social media, much to the approval of gaming advertisers.

“At the core of this deal is Disney’s IP, and what IP needs is eyeballs, engagement and community,” said Irina Shames, chief commercial officer at Loaded and Open World. “Where do you find the community? It’s in the creator ecosystem.”

Alongside Roblox and Minecraft, Fortnite is popular among brands (although not as popular as Roblox). Fortnite typically hosts between five and 20 branded games per three-month season.

So many brands prioritize these three games and platforms that many gaming advertisers have expressed exhaustion at how oversaturated they’ve become, while so many others go ignored.

Disney’s investment in Epic should help it cut through much of the noise on the crowded game. And while it will also likely put even more attention on Fortnite, Brandon Freytag, chief of creator monetization and cofounder of Loaded, sees niche titles benefitting too as the advertising industry puts more attention on gaming overall.

“If you use the example of [the pandemic], when Fortnite had a boom, the entire ecosystem had a boom,” he said.