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Wednesday, May 22, 2024

Disney to buy $1.5 billion stake in Cary-based Epic Games

Walt Disney Co. announced Wednesday that it would buy a $1.5 billion stake in video game maker Epic Games and expand its relationship with the Cary-based company.

The two companies said they will collaborate on new games and entertainment in a multi-year project.

Disney and Epic have already been collaborating, including in the development of video games such as “Kingdom Hearts 3” and “Star Wars Jedi: Survivor.” They have also worked together in cinematic editing and animation for film and streaming, and in the creation of more than 15 Disney Parks attractions such as “Millennium Falcon: Smugglers Run” at Star Wars: Galaxy’s Edge.

“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 in a statement. “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.”

Sweeney owns a majority of Epic Games shares, while China’s Tencent Holdings Ltd. has a 40% stake. The company was valued at $31.5 billion in April 2022, when Sony and the parent of LEGO each invested $1 billion. At that valuation, Disney would own a 5% stake.

The partnership will focus on using Unreal Engine, a series of 3D computer graphics game engines developed by Epic Games, which was first showcased in the 1998 first-person shooter video game “Unreal.”

Epic Games participated in the 2017 Disney Accelerator program, which seeks to impact the future of technology and entertainment.

“This marks Disney’s biggest entry ever into the world of games and offers significant opportunities for growth and expansion,” said Disney CEO Robert Iger in a statement. “We can’t wait for fans to experience the Disney stories and worlds they love in groundbreaking new ways.”

Disney said the transaction is subject to closing conditions, including regulatory approvals.

Epic Games laid off about 16% of its workforce, or about 900 workers, in September. The company also sold Bandcamp to Songtradr, a music marketplace company supporting artists.

 

Chris Roush
Chris Roush
Chris Roush is executive editor of Business North Carolina. He can be reached at croush@businessnc.com.

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