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photo illustration of Darth Vader in close-up Source image: Lucasfilm/Disney | Illustration: James Bareham/Polygon

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How Disney took over video games after closing all of its studios

Witness the power of a fully armed and operational licensing business

Making video games is hard — just ask the folks at Disney. After years of trying to make it work with studios across the world, the media giant shut down its game development business in 2016, transitioning exclusively to a licensing model. At the time this decision appeared to be surrender, but over the intervening years it’s begun to look more like brilliance. Today Disney has some of the world’s best game design talent working on its properties, all without having to worry about the actual financial risk of managing teams of hundreds across multiple contents. How did the Mouse pull it off?

The answer is bigger than Disney itself and spans a half decade of fundamental changes to how games are made, sold, and experienced.

For the better part of the last decade, AAA developers have been pivoting aggressively to the “games as a service” model — think Destiny and The Division 2. They don’t want players to just show up, have fun for a few weeks or months, and then wander off to have new experiences. Instead, they want their players to live inside the universes that they’ve created, spending years at a time unlocking puzzles and gobbling up bits of lore, all while grinding for rare weapons and randomized loot. Big games don’t get expansions anymore, they get seasons — and you’d best show up when the season starts to get the most out of your reasonably priced entry fee.

Destiny 2: Shadowkeep image of Guardians protecting a plate
Destiny 2
Image: Bungie

Looking at it from a pragmatic standpoint, the approach makes good business sense. Why pay to create new worlds on a semi-annual basis when you can just remix the environments, enemies, and mechanics over and over again? The fact that heavily engaged players are more likely to spend money on in-game items certainly doesn’t hurt.

These virtual worlds are absolute catnip for marketers — a captive audience, with a detailed demographic profile, that’s used to showing up in the same place online year after year to spend small amounts of money for the privilege of keeping up with the gaming Joneses.

All the while, Hollywood is still in need of its movie tie-ins. So why spend millions to make a dud like Fast & Furious Crossroads when you can wedge a poster for your upcoming film inside a vastly more popular game — like we saw a few years back with Dom’s car in Rocket League?

These kinds of movie tie-ins with established games have been around for years now. The Terminator tie-in with Gears 5 comes to mind. But these tie-ins pale in comparison to what we’ve seen so far this year at E3. Three big examples jump to mind.

Captain Jack Sparrow examines a lockbox in Sea of Thieves
Sea of Thieves
Image: Xbox/Twitch

What we’re seeing is the Fortnite-ification of games, where the most popular titles partner with the most popular movies, TV shows, comics, and musicians for maximum marketing synergy. But back to Disney, which has the ability to go one step further.

Where most games and films are on close to equal footing, Disney is the reigning king of the media world. Every company wants a seat at the table for a portion of its financial feast. And so we see that Disney can pick studios not just as temporary partners but as creative surrogates.

Snowspeeders battle AT-ATs on Hoth in a still from The Empire Strikes Back
The Empire Strikes Back
Image: Lucasfilm/Disney

Chief among those surrogates? Electronic Arts, the second-largest video game publisher in the United States. Even with the disastrous launch of Star Wars Battlefront 2 in 2017, the company cranked out Star Wars Jedi: Fallen Order two years later, followed by Star Wars Squadrons last year. Both were commercial as well as critical successes, and all without Disney doing much more than lending creative support. Rest assured that even more games are on the way.

Now Bethesda — recently purchased by Microsoft, mind you — is getting in on the action. They have Machinegames, the developer behind the wildly successful Wolfenstein reboot, working on a new Indiana Jones game. While we don’t know the launch date, or even the launch window, we do know that there are four movies’ worth of existing content with a fifth one on the way. It sounds like the perfect opportunity to create a rolling franchise that fans of the whip-slinging archeologist might never want to end.

A female Na’vi reaches out toward a reptile creature.
Avatar: Frontiers of Pandora
Image: Ubisoft

Finally, the big E3 bombshell: Avatar: Frontiers of Pandora. Now Disney is working with a third massive publisher, Ubisoft, to create a never before seen corner of James Cameron’s billion-dollar science fiction franchise. While the trailer showed off over the weekend features a section of the Na’vi’s Western Frontier, recall that Avatar 2 is just the beginning. There’s three more sequels on the way between now and 2027. That should leave plenty of time for the team building the technology that underpins The Division, arguably Ubisoft’s most ambitious games-as-a-service franchise, the time to build something within the world of Pandora.

Also on Ubisoft’s drawing board? A story driven, open-world Star Wars game, announced earlier this year.

Mind you, these aren’t just cheap tie-ins — the sort of licensing spam that has, for instance, earned Games Workshop a bad reputation in video gaming circles over the last decade. Nor are these the low-quality tie-ins of the early 2000s or even the mid-budget partnerships of the early 2010s, like Ubisoft’s previous Avatar project.

These are the biggest publishers in the world, each with hundreds of skilled developers at their disposal, and not one of them are on the Disney payroll. Shortly after Disney closed its studios, the company and like-minded partners began to test the waters of leveraging the appeal of their IP to get their beloved characters front-and-center in the most popular games of the moment. No, they don’t have full control of the games, but neither do they have all the burden of expanding into a format in which they have no expertise — an arena that costs hundreds of millions to compete in and has no guarantees of success. (Just ask Amazon and Google.)

Quite a turn for a company that, less than a decade ago, was closing up shop after another failed project.

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