Boardwalk Times: Stories from the Seashore - Should Disney Buy A Video Game Company?
The Walt Disney Company has dominated the industries of film, TV, theme parks, consumer products, and even streaming. Yet, one industry has always eluded the Mouse House. Video Games.
Welcome back to Boardwalk Times: Stories from the Seashore! In this month’s newsletter, we will be discussing if Disney should buy a video game company and all the wild scenarios. Plus a quick recap of Boardwalk’s 5th anniversary and as always LINKS OF THE MONTH.
Should Disney Buy A Video Game Company?
The Walt Disney Company has conquered the entertainment world with an iron fist for almost 100 years. Yet, there is one booming industry that the Mouse has yet to figure out.
Video games.
Disney CEO Bob Chapek has had a rocky start to his tenure and that’s putting it lightly. Chapek could end up reshaping Disney through its metaverse efforts and by extension getting into the booming video game industry.
Disney has continued to license its valuable IP to third parties within the video game and interactive media world. Disney used to license its valuable IP to Netflix and others before realizing that they would be better off creating their own streaming service. Could this also apply to gaming?
Disney Parks should be the biggest example of why keeping your IP in-house leads to success. Look at Universal Studios Orlando— another newsletter for another time— and why owning beloved IP is vital (Some of Universal’s biggest IP is stuff they don’t own like Harry Potter from Warner Bros. and Nintendo).
Disney has a history of failing at games. Like Club Penguin (acquired for $700 million and then shut down ten years later), Playdom (acquired for $563 million and later shut down years later), and the entirety of Disney Interactive Studios (which closed in 2016). Disney also owned and shuttered nine video game studios from 2005 to 2016.
“We’ve found that we haven’t been particularly good at the self-publishing side.”— Bob Iger
"Disney has shown in the past that they don't understand the game business when handling it from the inside with projects such as Disney Infinity,” said Boardwalk Times gaming contributor Giovanni Delgadillo. “I think their current strategy of licensing its IP is working quite well.”
Disney is doing well with licensing but one has to assume there is someone in Burbank looking at the potential M&A opportunities. If there was a time to be bold for Chapek this would be the time. Especially as Hollywood eyes gaming. Venture capital firm Griffin Gaming Partners believes Hollywood pushing into video games will be inevitable. Netflix has been buying up studios to supercharge its efforts into gaming as well.
Post 21st Century Fox deal and coming off of pandemic times, Disney’s balance sheet isn’t in a good position for a large-scale acquisition. Yet, Chapek may still pursue this as it would be one of his first big defining moves. Roblox and or Epic Games being acquired by Disney would create fascinating combinations and synergy opportunities that would provide Disney a gateway into video games, interactive media, and most importantly the metaverse.
Disney’s strategy is to license its beloved IP to different video game studios. Square Enix just recently did Guardians of the Galaxy and Insomniac’s Spider-Man has been loved by fans. In development, Ubisoft is working on an Avatar game, a Marvel Midnight Suns game from Firaxis Games (2K), Wolverine from Insomniac, and Indiana Jones from Bethesda’s Machine Games.
Plus you got Star Wars expanding its gaming footprint. Jedi Fallen Order 2 and Star Wars first-person shooter game from Respawn Entertainment, Star Wars: Eclipse from Quantic Dream, Knights of the Old Republic remake from Aspyr Media, a story-driven open-world Star Wars game from Ubisoft Massive, and a new Star Wars action-adventure game from Skydance New Media. Skydance New Media is also working on a narrative-driven, action-adventure game for Marvel.
“Now that (Disney) licenses like Star Wars are open to any publisher willing to take the risk,” says Delgadillo. “Now we have well-known studios with high reputations giving us AAA projects and Disney can leave it to them to deal with the hassles of video game development.”
There are probably countless other Disney IP video games that haven’t even been announced yet. Also, this doesn’t include its crossovers with games such as Fortnite and others.
The licensing of IP makes a ton of sense for Disney, and it’s not a bad strategy.
“It’s impossible to believe that Walt Disney would say the fastest growing, most creatively ambitious and changing media category—the one that every generation adopts more often and more wholeheartedly—is one that it’s OK for us not to be good at.”
He’s right. Walt would’ve wanted to conquer this media category. It may be easier to let other people handle it but at the end of the day, there is some massive potential in owning the entire operation. The video game industry may fascinate Bob Chapek as it could make him stand out from his predecessor who didn’t think Disney should be heavily involved with gaming. If Disney wants to portray itself as a tech company now what better way to make that happen than to acquire a video game/metaverse company?
Can Chapek risk a billion-dollar acquisition? It depends. Disney doesn’t even like to spend capital expenditures at its theme parks right now. I don’t see them dishing out billions for a video game company unless the perfect fit comes along. Chapek may take the big swing anyways because he may feel like he has nothing left to lose. If Chapek made a video game studio acquisition it could be looked back on like the Marvel and Pixar deals or it could turn out to be like Infoseek and Maker Studios.
It all depends on how serious Chapek is about Disney getting into the metaverse and becoming a tech company. After all, it seems like gaming is the gateway. I think we should look at a few of these video game company candidates and see how they would fit in the Disney equation. Let’s run through some scenarios. Some are more far-fetched than others.
Disney acquires Bandai Namco: Variety VIP suggests Disney goes after Bandai Namco, home of Pac-Man. The video game company is also the developer of Elden Ring. Bandai Namco also owns the anime studio Sunrise, which created Cowboy Bebop. Anime is another type of content that Disney wants to get in on. Look at Star Wars: Visions. This deal could end up being two birds for one stone type deal. Bandai Namco I’m sure would love the treasure trove of Disney IP to use in video games, and Disney would love Bandai Namco’s institutional knowledge and well-known IP like Pac-Man.
Bandai Namco’s market cap: $16 billion
Disney and Nintendo?: Maybe if things were different, Disney would’ve been able to unite Mario and Mickey under one roof. Disney would’ve also gained even more treasured intellectual property and an entry into creating game consoles. The price tag would be $59 billion based on Nintendo’s market cap. So, this would be a 21st Century Fox-sized purchase if it did happen.
It’s extremely unlikely Nintendo would sell and even if this scenario came true it wouldn’t make a ton of sense considering Nintendo is currently working with Universal Studios on films and theme parks. But still one could imagine it!
Disney acquires EA: EA has a market cap of $34 billion. That’s still a ton of money for Disney to shell out but many have suggested the combo of Disney and EA. Disney’s ESPN integrating with EA Sports would be a synergy fantasy, and Disney has a relationship with EA due to its Star Wars license. The Hollywood Reporter even speculated EA could be a bold play for Disney.
“The other thing that crosses my mind is EA, and Ubisoft in my opinion would be the only gaming companies that would be able to bring such a vision to life,” said Boardwalk Times gaming contributor Dani Birwari. “For example, EA has worked on Star Wars Jedi: Fallen Order and anyone that has played that game can tell. It was well put together with an amazing storyline.”
Disney acquires Ubisoft: A smaller studio with only a market cap as of this writing of $4 billion. I would like to point out that $4 billion tends to be the lucky dollar amount for Disney acquisitions (Marvel and Lucasfilm).
Ubisoft also has some interesting IPs like Assasin’s Creed, Far Cry, Rabbids, Just Dance, Ray Man, and more. My only hang-up is that Ubisoft seems fine on its own. They are also getting into themed entertainment with Storyland Studios. This seems like an ambitious company that wants to control its own destiny but who knows plans can always change.
“As for Ubisoft has put together such an amazing library over the years, and the studio has just got very good at what they do,” said Birwari. “It’s incredible the games that come out from their studios.”
Disney and Epic Games: The combination would marry iconic IP and Fortnite. Plus Epic Games is considered a metaverse play. Epic Games was also part of the Disney Accelerator program. There is history there but also it would be a massive deal. Disney would also be acquiring the creators of the Unreal Engine, the virtual set rendering software, which was used on The Mandalorian. Disney would have to pay owners Tencent and Tim Sweeney a lot of money, so it’s unlikely but never say never.
Epic Games market cap is around $32 billion.
Disney acquires Roblox: This would be expensive but it’s a gaming and metaverse play. As of January 2022, Roblox has 42.3 million daily users. The addition of Disney IP would just probably attract more users. Maybe Disney could do virtual attractions in Roblox?
Roblox’s market cap is around $24 billion.
Disney acquires Take-Two: Disney would be acquiring a video game company with studios such as Zynga, 2K, and Rockstar Games. The potential intellectual property would include Grand Theft Auto, Bioshock, Borderlands, NBA 2K, and WWE 2K. Zynga is a mobile game developer that was just recently acquired by Take-Two. This is a possibility. But after looking at the IP it seems unlikely.
Take-Two’s market cap is around $16 billion.
Disney acquires Square Enix: Disney has worked with Square Enix on Kingdom Hearts. Kingdom Hearts 4 is coming soon. Square Enix’s market cap is $4 billion. The lucky number for Disney is $4 billion when it comes to acquisitions. Square Enix is also the home to Final Fantasy and Dragon Quest. Square Enix also recently did Guardians of the Galaxy.
“Although I think that these are all perfect companies that Disney can maybe either collaborate with or acquire to help them build future games. Nothing will compare to Disney maybe creating and having its own in-house studio,” said Birwari. “Some of my favorite games that were produced by Star Wars now under Disney obviously were from the Lucasfilm Games studio. So a Disney studio like that would be awesome.”
Disney attempting to have its own in-house studio again would be fascinating as it would carry on that Walt Disney innovative spirit. Another factor in this video game M&A is that Disney currently has licensing rights at multiple studios so maybe an acquisition isn’t possible because of that. Also if you wait a few more years, all these companies’ valuations will skyrocket or be bought by other gaming conglomerates.
At the end of the day, Disney and Chapek have some big decisions to make. It would be a massive undertaking but I believe if Disney wants to be more of a tech/metaverse company they will eventually need a stronger gaming partner. Time keeps flying by and Chapek’s contract expires in February 2023, now would be the time for some big moves.
Boardwalk Times 5th Anniversary Lightning Round Recap
Boardwalk Times celebrated its 5th anniversary earlier this month. Here are some of the brief highlights. (Full article here)
Boardwalk Times Podcast Network expanded to eight podcasts (This is the Waycast, Multiverse of Marvel, The Zach Perilstein Show, Composing Culture with Giovanni Delgadillo, The Discussion with Elizabeth Pfeiffer, Under the Lamp: The Process Behind Pixar, Muppet*Podcast 3D, and My Favorite Attraction).
Boardwalk video series Easter Egg Hunt and Boardwalk Baking Corner are in development along with other videos and video series.
Boardwalk’s multimedia effort continues with everything from new newsletters in development to Twitter Spaces.
Boardwalk Times is now on Ko-Fi. If you want to support the future of Boardwalk.
Listen to this… 🎙
Knight Fever, a Moon Knight after-show podcast, is available on Apple Podcasts, Spotify, and other providers. Check it out if you love great analysis, insane theories, and references to Bee Gees’ 1977 hit “Night Fever.”
LINKS OF THE MONTH
— Did you know Disney almost acquired UFC for $4.3 billion back in 2016? (CNBC)
— Dick Clark Sends Video Proposal to Michael Eisner: Imagine If The Beatles Took Over Disneyland? (WDWNT)
— Ironically on the month we discuss video games, three people are arrested over an unofficial Club Penguin website. (Polygon)
— Blue Sky Studios employees create one final shot on their own terms.
— Rumor Alert: Encanto may take over Tarzan’s Treehouse at Disneyland (Theme Park Insider)
— Five Features That Disney+ Needs To Add (Boardwalk Times)
— Ant-Man carrying around A Bugs Land in Avengers Campus is a fantastic easter egg for us Disney Parks nerds. (Nerdist)
— Lightyear is Toy Story character Andy’s Star Wars. His toy was likely based on a spinoff cartoon. Are we betting on a Toy Story-themed post-credit yet for Lightyear? (Gizmodo)
Thank you all for reading and supporting Boardwalk Times: Stories from the Seashore.
We will see you next month! Please follow us on social media @BoardwalkTimes and visit boardwalktimes.net for more commentary, news, and opinions on the worlds of Disney and themed entertainment.