With Disney’s magic, Fortnite is poised to win the metaverse

We can not I use the M-word a lot these days, but the race to build an interconnected virtual world driven by avatars didn't take off last year.

The metaverse, a tech buzzword sandwiched between the NFT and AI hype eras, is still under construction no matter what we call it. And in light of this week's news, one company is increasingly positioned to dominate in the near future.

Epic Games and Disney revealed Wednesday that they are jointly designing a “gaming and entertainment universe” filled with Disney-flavored games to play and things to buy. The multi-year project will deploy technology under the hood of Epic and Fortnite's social gaming ecosystem to bring characters from Disney's vast vault of intellectual property to life. Disney will thus take a stake of 1.5 billion dollars in Epic.

In an image promoting the project, Disney and Epic describe their work together as a series of colorful futuristic islands floating in space with highways separating them and a glowing magical castle in the center, a beacon for printing money. These highways, whether literally or symbolically, will connect to Epic's Fortnite, a hit game that has now grown into a massive online social ecosystem.

The evolution of Fortnite

Fortnite is best known as a third-person shooter in which 100 players invade a shrinking virtual island and fight to be the last man standing. The game is famous for its zany maximalism and encourages players to dress up in custom “skins” that can be obtained through gameplay or purchased through Epic's lucrative virtual gift store. In Fortnite, you can, as Darth Vader, roll over your enemy in a giant hamster wheel, launched through the attic of a suburban home. Your enemy could be dressed as Goku from Dragon Ball Z, Ariana Grande, or Meowscles, a shirtless cat (an Epic original).

In its early days, Fortnite was about as ubiquitous and popular as a game can be. Streamed gameplay regularly attracted hundreds of thousands of viewers on Twitch, where a cottage industry of professional Fortnite players emerged, all laser-focused on Epic's polished battle royale. In 2020, the game already had more registered players than the population of the United States. In 2023, gaming has seen something of a resurgence and 100 million people logged in last November.

Anyone who still thinks of Fortnite solely as a wacky battle royale will be surprised to learn the extent of Epic's true ambitions.

Fortnite's big, chaotic deathmatch may still be headlining, but Epic has been gradually expanding its flagship title into something much closer to a platform or marketplace than just a standalone game. Over the years, Fortnite's psychedelic seasonal events, Travis Scott kaiju concerts and user-generated sandbox worlds everyone alluded to these great projects.

In December, Epic simultaneously launched three new games in the game: Lego Fortnite, a hybrid Minecraft/Animal Crossing survival game, Fortnite Festival, a rhythm game from the studio behind Rock Band, and Rocket Racing, a fast-paced racing title from the creators of Rocket League.

This list of new games was already ambitious, but the surprise news of Disney's arrival on Fortnite (or the other way around) is on another level. Disney invested in Epic through its accelerator program in 2017 and licensed several of its Marvel and Star Wars characters to Fortnite as skins, but this week's news – and the $1.5 billion investment that accompanies it – signal much deeper and longer-term play.

Disney needs Fortnite

With Fortnite, Disney finds itself in an interesting position because it needs something it probably couldn't do better itself.

Epic Games is light years ahead of many of its peers when it comes to smooth online multiplayer gaming. Running smooth and fast simultaneous instances of detailed virtual worlds for many millions of people is both technically complex and expensive. Any Fortnite player could be forgiven for not realizing this, as Epic's core experience works flawlessly the vast majority of the time, allowing people on all devices to play and chat together instantly . Fortnite looks and moves as good as it does thanks to Epic's Unreal Engine 5, which Disney partner Square Enix will also use for Kingdom Hearts IV, the latest game in the hit franchise featuring featuring Disney characters.

In the announcement, Disney CEO Bob Iger called the Epic partnership “Disney's biggest ever entry into the world of gaming.” Because everything the two companies offer will be interoperable with Fortnite, Disney could also instantly gain Fortnite's 100 million monthly players without needing to build a player base from scratch.

The benefits will also extend the other way, and Fortnite might be able to surpass Roblox's own numbers, which are currently at least double her own. Disney, like Lego, will also broaden Fortnite's appeal beyond the audience that plays Battle Royale and other Fortnite shooters. Fortnite offerings in other genres could attract younger and older players and expand the game's appeal to more women, who are currently enjoying the rise of comfortable gaming, and parents looking for family titles.

Fortnite's business model is also critical to the potential success of the collaboration with Disney. Games in the Fortnite ecosystem are free to play, and the company makes money through brand licensing partnerships and in-game purchases like skins, dances, and emotes, which rotate through its virtual store daily .

If the popularity of Fortnite character skins from Disney-owned franchises like Star Wars And wonder Everything indicates that players will be eager to collect their favorites and show them off on Fortnite's skillfully animated avatars. From Elsa and Mickey to Princess Leia and Iron Man, Disney's vast character vault is a nearly infinite resource with unlimited revenue potential for both companies.

State of the Metaverse

Meta may have gone to the trouble of renaming itself after the Metaverse, but in solving the future, the company formerly known as Facebook has moved the equation backwards. Focusing on VR hardware, a market the company had mostly cornered after buying Oculus in 2014 for $2 billion, Meta found itself with a solution that required a problem: a how without what. Apple's new Vision Pro, while technically very impressive, could hit a similar adoption wall.

While Meta was obsessed with making its Oculus acquisition a mainstream consumer product, companies like Epic, Roblox, Minecraft maker Mojang and others were developing avatar-driven virtual worlds where people loved spend time. It's important to note that these worlds are widely available and hardware-agnostic, meaning a PlayStation 5 player could go head-to-head in combat against someone on a PC or even an iPhone (despite the complex standoff of 'Epic with Apple).

Horizon Worlds was Meta's answer to these experiments – creepy legless avatars and all – but by then several million people were already invested in a virtual world that suited them, sans headset. These social gaming worlds are all extremely sticky and people love to hang out there, express themselves through virtual shopping, and generally do it all without VR.

In light of their success, Epic, Roblox, and Mojang have all cleverly positioned what we once thought of as games rather than platforms. Fortnite, Roblox and Minecraft all host user-generated content, sometimes called UGC – a not very useful acronym that means players can also upload their own game modes and virtual goods there for other players to try or buy. This content is very, very popular: according to Epic, 70% of Fortnite players play user-created content in addition to the core experience. This is what people think of when they talk about Roblox. For these companies, user-generated content costs nothing, keeps players coming back, and can generate revenue effortlessly.

Fortnite, Roblox, Minecraft, and other avatar-based virtual worlds can coexist, but Fortnite has some unique advantages. While its peers rely on their nostalgic look, Fortnite's high-fidelity graphics and sophisticated animations (so sophisticated that they sparked more than one lawsuit over dance moves) are more scalable and more brand-friendly . Minecraft and Roblox are power stations in its own right, but the former is more of a game than an ecosystem and the latter will need to prove that it can retain its young core users as they age. Meanwhile, Epic has a deep understanding of how people want to express themselves online and the technical prowess – and now partnerships – to make that possible.

Online multiplayer games are not generally considered social networking in the traditional sense, but the two categories are converging. As the Fortnite Cinematic Universe expands to include Lego, Rock Band, and now Disneyverse, Epic is quickly drawing players into this new era.

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