Why Disney still needs Epic Games

Samantha Masunaga, Los Angeles Times on Apr 1, 2026

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LOS ANGELES — It was just two years ago that Walt Disney Co. placed a massive bet on Epic Games.

At the time, the Burbank media giant announced a “games and entertainment universe” with the “Fortnite” developer to expand the reach of Disney’s franchises, particularly among the young people who play the online game. Disney also made a $1.5 billion investment in the company for a minority stake of an undisclosed percentage.

Recently, however, Epic Games has faced major financial challenges.

Last week, the Cary, North Carolina-based company said it was laying off more than 1,000 employees and slashing $500 million in costs. As The Los Angeles Times reported, Epic Games Chief Executive Tim Sweeney attributed the cuts to a downturn in “Fortnite” user engagement that began last year. After the layoffs, a little more than 4,000 people will remain at the company. (The company has its Los Angeles lab in El Segundo at NantStudios’ virtual production facility, which was founded by Times owner Dr. Patrick Soon-Shiong.)

In spite of the upheaval, Epic Games President Adam Sussman said the company is still committed to the Disney universe, saying in a statement that the vision is “unchanged” and the developer is “excited” about the progress that’s been made. Sources close to Disney confirmed the recent Epic Games layoffs would not affect Disney’s project there.

That’s good news for Disney because the House of Mouse has become increasingly entwined with the game developer.

Let’s start with this universe connected to “Fortnite.” The online game, which has a variety of modes, allows players to fight one another, build forts and explore the virtual world.

It’s unclear what role Disney characters will play in the game, as details have been sketchy. But Disney Chief Executive Josh D’Amaro, who championed the deal with Epic Games when he ran the theme parks division, plainly wants to attract “Fortnite’s” young audience.

Disney has a key advantage over other studios given its strong intellectual property and recognizable franchises, including “Frozen,” “Star Wars,” Marvel’s “Avengers” and Pixar’s “Toy Story.”

Although the company can reach viewers of all ages through its television shows and films, the aim is to cultivate long-lasting relationships with fans across Disney’s businesses, including theme parks, cruise lines and stores.

“There’s nothing quite like it,” D’’Amaro said of Disney’s relationship with fans during a prerecorded message at the company’s annual shareholders meeting this month. “And all these years later, that connection has never been more relevant or more powerful than it is today.”

By building a universe where young people can interact with Disney characters, play games and shop, the company can strengthen ties with its next generation of fans.

Already, other brands have been trying to capitalize on the popularity of “Fortnite,” including Nike, Lego and even fried chicken chain Popeyes, all of which have done collaborations with the game.

Though “Fortnite” is seeing a decline in user growth, the partnership still carries benefits for Disney, Eric Handler, media and entertainment analyst at Roth Capital, told me.

“‘Fortnite’ still has a mass audience of young boys and males, so it’s a great way to reach young people,” he said. “That’s been very challenging to do otherwise.”

Beyond “Fortnite,” Disney also relies on Epic Games’ Unreal Engine — a powerful 3D computer graphics creation tool — to produce shows such as “The Mandalorian” and create more than 15 theme park attractions, including the Millennium Falcon: Smugglers Run ride in the Star Wars: Galaxy’s Edge land at Anaheim’s Disneyland Resort and Walt Disney World in Florida.

In film and TV production, Unreal Engine allows crews to transform a wall of LED screens into fantastical and interactive backdrops. That ability allows film crews to create an arid desert landscape without, say, going to Tunisia, as George Lucas did for “Star Wars,” or to shoot scenes with perfect lighting at any time of day.

As the technology advances due to artificial intelligence, the field of virtual production is only going to ramp up — and with it, Disney’s need to continue collaborating with Epic Games.