Walt Disney Co. plans to sell FoxNext, the video-game business acquired with the purchase of 21st Century Fox’s entertainment assets earlier this year, according to people familiar with the matter.
FoxNext, founded in 2017 and added to Disney’s business portfolio as a result of the $71 billion purchase of Fox, creates free-to-play mobile games using licensed entertainment IP, most notably “Marvel Strike Force,” a hit that has made more than $150 million since its launch last year.
Both The Hollywood Reporter & Bloomberg are reporting this news. Disney representatives did not immediately respond to request for comment. FoxNext declined comment.
Largely known for developing mobile titles such as Marvel Strike Force and Futurama: Worlds of Tomorrow, FoxNext is led by president Salil Mehta, who was a former executive at Disney before moving to Fox in 2013. He ended up returning to Disney this year when Disney’s $71.3 billion deal for the Fox assets was finalized.
According to Bloomberg, direct-to-consumer chief Kevin Mayer discussed keeping the company with Disney’s CEO Bob Iger. Iger, however, concluded that he no longer wants Disney to be in the business of video games and agreed to sell it off. Senior company leadership considered retaining the division, but Disney CEO Bob Iger ultimately decided against doing so. No timetable for selling FoxNext was given.
The decision to sell the division comes as Disney has backed away from internal development of gaming titles. During an earnings call in February, Disney CEO Bob Iger made a rare consession in regards to the company’s past forays into the gaming industry. “We’re obviously mindful of the size of that business but over the years we’ve tried our hand at self-publishing … and we’ve found that we haven’t been particularly good at the self-publishing side,” he said, noting the company would be focusing on licensing its many marquee brands in the future rather than publishing its own titles.
FoxNext, in the meantime, has a number of projects in the pipeline including upcoming games based on the Alien and Avatar IPs. The company also launched a development fund to help independent game developers in February.
Disney, like many other entertainment giants, has a checkered history in video games. In 2016, the company shut down its Infinity line of toys and games and many of its game studios. Club Penguin, a once popular online game, was also terminated.
Disney has largely been licensing its characters and brands to game-makers following that point, such as Electronic Arts Inc., which is releasing a “Star Wars” title in November.
The video game division was one of a number of assets that Disney acquired in its purchase of Fox earlier this year, including the Fox film and TV studio, the FX networks, National Geographic, Indian TV giant Star India and Fox‘s 30 percent stake in streaming service Hulu. Since the deal was concluded, Disney has laid off a number of people including in August when more than 60 jobs were eliminated in Disney’s media distribution division.
Iger said in the company’s most recent earnings call that the performance of Fox’s film studio was “well below where it had been and well below where we’d hoped it would be when we made the acquisition.”
Mobile games have been increasing in popularity thanks to the freemium model where plays can play the game for free, but also add extras available to purchase to enhance the experience whether if it’s a customized item, existing power-ups or specialized power-ups not made available in standard play.
Mobile gaming continues to be inquisitive market. In 2015, Activision Blizzard spent $5.9 billion to acquire Candy Crush studio King, while Chinese conglomerate Tencent spent $8.6 billion on Clash of Clans maker Supercell in 2016. Los Angeles-based studios such as Scopely and Jam City have also built businesses in licensing IP from Star Trek, Family Guy and Harry Potter for mobile games.
According to a report conducted back in July by analytics firm Sensor Tower, overall, mobile gaming revenue is up over 11 percent over the first half of this year to $29.6 billion.
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