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Disney Plans Sale of Video-Game Unit Acquired From Fox

Christopher Palmeri

(Bloomberg) -- 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.

The business, founded two years ago, makes free-to-play mobile games based on entertainment properties, such as the hit Marvel Strike Force, which took in more than $150 million in its first year. FoxNext also has games in the works based on “Avatar” and “Aliens.”

Free-to-play titles, which make money by convincing players to buy things in the game, are among the fastest-growing areas of the video-game industry. Zynga Inc. and closely held Jam City Inc. -- two players in the genre -- are among the companies that have been acquiring design studios and entertainment licenses.

Senior Disney executives, including direct-to-consumer chief Kevin Mayer, discussed keeping the company, with Chief Executive Officer Bob Iger concluding that he no longer wants to be in the business of making video games. Disney declined to comment.

Disney, like many 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 shuttered.

Since then, Disney has largely been licensing its characters and brands to game-makers, such as Electronic Arts Inc., which is releasing a “Star Wars” title in November. Iger reiterated the strategy on a February conference call.

“We’ve just decided that the best place for us to be in that space is licensing and not publishing,” Iger said.

FoxNext is one of several odds and ends Disney picked up as the result of its $71 billion Fox deal. They include investments in the Dutch soccer league Eredivisie and Moby Group, which bills itself as Afghanistan’s largest media company. Disney recently completed the sale, ordered by federal regulators, of Fox’s regional sports networks.

The company also inherited a piece of sports betting site DraftKings Inc. even though Iger has said he doesn’t want to be in the business of gambling.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Rob Golum

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