Disney, the media conglomerate that owns some of the most popular franchises in the world, such as Marvel, Star Wars, and Pixar, may be considering a major expansion into the video game industry, according to a new report by Bloomberg. The report claims that some of Disney’s top executives have been urging CEO Bob Iger to transform the company from a gaming licensee to a gaming giant by acquiring a major publisher like Electronic Arts (EA).
Disney’s Current Gaming Strategy
Disney has a long history of involvement in the video game industry, dating back to the 1980s. However, in recent years, the company has mostly focused on licensing its intellectual properties to other developers and publishers, rather than creating its own games. The most notable example of this strategy is the Kingdom Hearts franchise, which is developed by Square Enix and features characters from both Disney and Final Fantasy universes.
Disney’s licensing approach has been profitable for the company, as it allows it to earn royalties from the sales of games based on its properties, without having to invest in development and marketing costs. However, it also means that Disney has little control over the quality and direction of these games, and may miss out on some of the potential revenue and fan engagement that could be generated by owning and operating its own gaming studios.
Why Disney May Want to Acquire EA
According to Bloomberg, some of Disney’s deputies have been pushing Iger to consider a bolder transformation of the company’s gaming strategy, by acquiring a major publisher like EA. EA is one of the largest and most successful video game companies in the world, with annual revenues of over $6 billion and a market capitalization of over $40 billion. EA owns and operates some of the most popular gaming franchises in the world, such as FIFA, Madden NFL, The Sims, Battlefield, Mass Effect, Dragon Age, and Star Wars.
By acquiring EA, Disney would gain access to a vast portfolio of gaming assets and expertise, as well as a loyal and diverse fan base. Disney would also be able to leverage its own properties and brands to create new and innovative games that could appeal to a wider audience and generate more revenue. For example, Disney could create games based on its Marvel and Star Wars franchises that could rival or surpass the success of EA’s existing titles in those genres.
Additionally, acquiring EA would allow Disney to enter the fast-growing and lucrative segments of the gaming industry, such as mobile gaming, cloud gaming, esports, and live service games. These segments are expected to drive the future growth of the gaming industry, which is projected to reach $300 billion in revenues by 2025. By owning and operating its own gaming platforms and services, Disney would be able to capture more value from its gaming customers and enhance its brand loyalty and recognition.
The Challenges and Risks of Acquiring EA
However, acquiring EA would not be an easy or risk-free move for Disney. First of all, EA is a very large and complex company that operates in multiple markets and regions. Integrating EA into Disney’s corporate structure and culture would require a lot of time and resources, as well as careful management of potential conflicts and synergies. Moreover, EA has a reputation for being aggressive and controversial in some of its business practices, such as microtransactions, loot boxes, and game cancellations. These practices have often drawn criticism and backlash from gamers, regulators, and media outlets. Disney would have to balance its own values and image with EA’s profitability and innovation.
Secondly, acquiring EA would be a very expensive deal that would require a significant amount of capital and debt. Based on EA’s current market value, Disney would have to pay at least $50 billion to acquire the company. This would be one of the largest acquisitions in Disney’s history, surpassing its previous deals for Pixar ($7.4 billion), Marvel ($4 billion), Lucasfilm ($4 billion), and Fox ($71 billion). Disney would have to justify this huge investment to its shareholders and creditors by demonstrating that it can generate enough returns from its gaming business.
Finally, acquiring EA would expose Disney to more competition and uncertainty in the gaming industry. The gaming industry is highly dynamic and competitive, with constant changes in technology, consumer preferences, and market conditions. Disney would have to compete with other major players in the industry, such as Sony, Microsoft, Nintendo, Activision Blizzard, Tencent, Ubisoft, Valve, Epic Games, and others. Disney would also have to deal with the risks of piracy, hacking, regulation, litigation, and social responsibility that are inherent in the gaming industry.
Will Disney Acquire EA?
The report by Bloomberg does not indicate whether Iger has made any decision or taken any action regarding the idea of acquiring EA. Iger has been noncommittal about his plans for Disney’s gaming strategy so far. However, Iger is expected to step down as CEO in 2023 after leading Disney for 18 years. His successor may have a different vision and approach for Disney’s gaming business. Whether Disney will become a gaming giant by acquiring EA or not remains to be seen.