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

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

We may not be using the M word much these days, but the race to build an interconnected avatar-driven virtual world didn’t take the last year off.

The metaverse, a tech buzzword sandwiched in between the hype eras of NFTs and AI, is still being built, regardless of what we’re calling it. And in light of news this week, one company is increasingly positioned to dominate the near future.

Epic Games and Disney revealed Wednesday that they are designing an “entertainment universe” together full of Disney-flavored games to play and things to buy. The multiyear project will deploy Epic’s under-the-hood technology and Fortnite’s social gaming ecosystem to bring characters from Disney’s vast intellectual property vault to life. Disney invested $1.5 billion for a chunk of Epic in the deal.

In an image promoting the project, Disney and Epic portray their work together as a series of futuristic colorful islands floating in space with highways running between them and a Magic Castle glowing in the center, a beacon of cash-printing possibility. Those highways, whether literally or symbolically, will connect with Epic’s Fortnite — a hit game that’s now evolved into a massive online social ecosystem.

Fortnite’s evolution

Fortnite is best-known as a third-person shooter where 100 players swarm a shrinking virtual island and fight to be the last man standing. The game is famous for its goofy maximalism and it encourages players to dress in custom “skins,” which can be obtained by playing or buying through Epic’s lucrative virtual swag shop. In Fortnite, you can, as Darth Vader, roll over your enemy in a giant hamster wheel, slingshotted through the attic of a suburban foursquare home. Your foe might be dressed as Goku from Dragon Ball Z, Ariana Grande or Meowscles, a buff shirtless cat (an Epic original).

In its early days, Fortnite was about as ubiquitous and popular as a game can be. Streaming gameplay routinely drew hundreds of thousands of viewers on Twitch, where a cottage industry of pro Fortnite players emerged, all laser-focused on Epic’s polished battle royale. By 2020, the game already had more registered players than the population of the United States. In 2023, the game saw something of a resurgence and 100 million people logged in last November.

Anyone who still thinks of Fortnite solely as that goofy battle royale will be surprised to learn the extent of Epic’s true ambitions.

In recent years, Epic has steadily been expanding its marquee title into something much more akin to a platform or marketplace than a simple stand-alone game. Over the years, Fortnite’s psychedelic seasonal events, kaiju Travis Scott concerts and user-generated sandbox worlds all hinted at these grand plans. In December, Epic tripled down by simultaneously launching three new games within the game: Lego Fortnite, a Minecraft/Animal Crossing hybrid, Fortnite Festival, a rhythm game from the studio behind Rock Band, and Rocket Racing, a fast-paced racing title from the makers of Rocket League.

That slate of new games was already ambitious, but this week’s surprise news that Disney is coming to Fortnite (or the other way around) is on another level entirely. The two companies already have a relationship; Disney first invested in Epic through its accelerator program in 2017 and has licensed several of its Marvel and Star Wars characters to Fortnite as skins, but the new $1.5 billion investment signals a much deeper long-term play.

Disney needs Fortnite

With Fortnite, Disney is in an interesting position of needing something it probably cann’t do better itself.

Epic Games is light-years ahead of several of its peers on seamless online multiplayer gaming. Running smooth, fast, simultaneous instances of detailed virtual worlds for several millions of people is both technically complex and expensive. Any Fortnite player can be forgiven for not realizing that because Epic’s core experience runs perfectly the vast majority of the time, enabling people across devices to play and chat together instantly. Fortnite looks and moves as well as it does thanks to Epic’s Unreal Engine 5, which Disney’s partner Square Enix will also use for Kingdom Hearts IV, the latest game in the hit franchise featuring Disney characters.

In the announcement, Disney CEO Bob Iger called the Epic partnership “Disney’s biggest entry ever into the world of games.” Because whatever the two companies come up with will be interoperable with Fortnite, Disney also stands to 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 leapfrog Roblox’s own numbers, which are currently at least double its own. Disney, like Lego, will also widen Fortnite’s appeal beyond the audience that plays battle royale and Fortnite’s other shooting-centric games. Fortnite offerings in other genres can bring in players both younger and older and expand the game’s appeal to more women, who are currently enjoying the rise of cozy gaming, and to parents looking for family-friendly titles.

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

If the popularity of Fortnite character skins from Disney-owned franchises like Star Wars and Marvel is any indication, players will be eager to collect their favorites and show them off on Fortnite’s slickly animated avatars. From Elsa and Mickey to Princess Leia and Iron Man, Disney’s vast vault of characters is a near-endless resource with limitless revenue potential for both companies.

State of the metaverse

Meta may have gone to the trouble of renaming itself after the metaverse, but when solving for the future, the company formerly known as Facebook got the equation backward. By focusing on VR hardware, a market the company mostly had cornered after buying Oculus in 2014 for $2 billion, Meta wound up with a solution in need of a problem — a how without a what. Apple’s new Vision Pro, while technically very impressive, may hit a similar adoption wall.

While Meta was obsessing over building its Oculus acquisition into a mainstream consumer product, companies like Epic, Roblox, Minecraft-maker Mojang and others were developing avatar-driven virtual worlds where people loved spending time. Importantly, those worlds are widely available and hardware agnostic, meaning that a PlayStation 5 player can square off in a fight against someone on a PC or even an iPhone (Epic’s complex standoff with Apple notwithstanding).

Horizon Worlds was Meta’s answer to those experiences — creepy legless avatars and all — but by then several millions of people were already invested in a virtual world that suits them, no headgear necessary. These social gaming worlds are all extremely sticky and people love hanging out in them, expressing themselves through virtual purchases and generally doing the whole thing sans VR.

In light of their success, Epic, Roblox and Mojang all smartly positioned things we once thought of as games instead as platforms. Fortnite, Roblox and Minecraft all host user-generated content, sometimes called UGC — a not very helpful 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-made content in addition to the core experience. Its what people think of when they talk about Roblox. For these companies, user-generated content doesn’t cost anything, keeps players coming back and can bring in low-effort revenue.

Fortnite, Roblox, Minecraft and other avatar-based virtual worlds can co-exist, but Fortnite boasts some unique advantages. While its peers lean on their nostalgia-heavy looks, Fortnite’s high-fidelity graphics and sophisticated animations (so sophisticated they’ve sparked more than one lawsuit over dance moves) are more future-proofed and brand friendly. Minecraft and Roblox are powerhouses in their own right, but the former is more of a game than an ecosystem and the latter will need to prove it can retain its young core users as they age up. Meanwhile, Epic commands a deep understanding of the ways people want to express themselves online and the technical prowess, and now partnerships, to make it possible.

Online multiplayer games aren’t social networks in a traditional sense, but the two categories are converging, with games becoming more like social networks and social networks increasingly full of games. As the Fortnite cinematic universe expands to include Lego, Rock Band and now Disney, Epic is poised to introduce a huge swath of new players to a virtual world that’s as much about who you’re with as it is about what you’re doing — and wasn’t that the promise of the metaverse all along?

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