Disney is making a significant investment in order to strengthen its connection with young audiences by meeting them where they are—in the thriving gaming sector.

The media giant announced a new strategic partnership with Epic Games yesterday that will see the companies develop new games and build a sprawling universe tied to Epic’s popular Fortnite game platform. 

Disney has also taken a US$1.5-billion equity stake in Epic, underlining what CEO Bob Iger described in a CNBC interview as “probably our biggest foray into the game space ever.” He added that the goal is to entrench Disney’s brands in spaces where key demos like Gen Alpha are spending most of their time.

Specific details about the multiyear collaboration are not available yet, but Disney’s Fortnite universe will offer numerous ways for consumers to watch, play, shop and engage with high-profile IPs from Disney, Pixar, Marvel and Star Wars. Fans will also have opportunities to “create their own stories and experiences, [and] express their fandom in a distinctly Disney way,” according to a release.

The deal comes in the wake of a challenging year for Epic, which laid off 830 staffers last fall and sold off two previous acquisitions—music marketplace Bandcamp and kidtech company SuperAwesome.

Disney and Epic already have a history of working together on Fortnite, hosting branded experiences like Marvel’s Nexus War with Galactus (which attracted more than 15.3 million concurrent players) and Find the Force for Star Wars. Disney has also used Epic’s Unreal Engine for projects ranging from animating films and TV series, to developing assets for Disney Parks attractions.

This new partnership was announced on February 7 as part of Disney’s Q1 financial report, with revenue coming in at US$23.5 billion. Flagship streamer Disney+ shed around 1.3 million subscribers—driven in part by subscription price hikes in the fall—but the company also shrunk its streaming losses by nearly US$300 million compared to Q3. 

The entertainment division’s US$9.9-billion revenue contribution was down 7% compared to Q4 2022, but the parks and experiences business was up by the same percentage to US$9.1 billion.

Disney also announced a surprise CG-animated sequel to Moana (2016) that’s slated to hit theaters this November. The franchise already has a live-action feature film adaptation in the works.