The New Magic Kingdom: Unpacking the Implications and Technology Behind Disney’s Inevitable Mixed-Reality Future
Learn about how Disney plans to redefine entertainment and usher in a new metaverse era.
Update: Check out my related podcast interview with Ely Santos here!
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The Walt Disney company is doing things no other company on the planet can do. Disney’s list of subsidiaries alone is difficult to comprehend, with the company owning multiple production studios, networks, and companies on the bleeding edge of entertainment from both a storytelling and technological perspective. Franchises owned by Disney constitute a significant portion of entertainment in America, and the last few years has seen considerable consolidation and convergence of the media created and controlled by the company. The rest of the decade will see continued consolidation of the Disney ecosystem, with the company already investing significant resources into spatial technology for usage both at home and within its theme parks.
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While much of the technology that is used by the company’s various subsidiaries is fractured now, we’re seeing the beginning of standards being set that will bleed into usage for at-home XR devices. This article will touch on Disney’s digital roots, where Disney is at today, how it is investing in web3 companies, and how this technology will converge into spatial experiences.If any company can create a rich, immersive metaverse experience with something for everyone, it’s Disney. Let’s see how they’ll do it.
Walt’s Dream: EPCOT and Magic Kingdom
It’s easy to forget just how innovative Disney truly was in the late 60s and early 70s. Although Walt Disney didn’t live to see Magic Kingdom built, his ideas and the general mantra of Disney World was clear. Disney World was to be an extension of what Disneyland was, but more immersive, with more land, rides, and concepts to work with.
Walt’s ideas grew to encompass much more than a simple amusement park. He wanted something that was magical and immersive, a theme park. EPCOT stands for Experimental Prototype Community of Tomorrow, and that’s exactly what it was initially envisioned to be – a planned city utilizing new technology to create a sort of ‘living blueprint of the future’. This utopian autocratic town was to be completely controlled by Disney, and he even lobbied the Florida government to make it happen. The entire experimental city would be connected by a mass multimodal transport system, with no need for cars and an emphasis placed on walking. Once Walt died, focus at the company quickly shifted to creating something more doable, Magic Kingdom. But the concept remained, and EPCOT the theme park eventually opened in 1982. EPCOT remains today as a beautiful vision of a utopia that includes a celebration of the past, cultures around the world, and an embrace of future technology. We can think of Disney’s most ambitious plans in the 1960’s as optimistic augmentations of reality. This theme presents itself in everything the company touches, and it directly relates to how Disney will approach the metaverse.
The Past: Disney Interactive Studios
To understand where Disney is going, we have to look at where it came from. It’s important to note that many of Disney’s digital ventures were dissolved by the parent company and deemed to be failures from a net revenue perspective. While Disney has nailed creating rich immersive theatrical experiences and theme parks, owning and maintaining strong and profitable video game development companies is something that has alluded the company for decades.
Walt Disney Computer Software (WDCS) was Disney’s in-house gaming unit until it was reorganized into Disney Interactive in 1994. In 1997, Disney Interactive decided to reduce its staff and end in-house game development, beginning a decades long saga of Disney licensing out its content to third-party gaming companies. Numerous business units would be phased in and out over the years, with Disney Interactive Studios eventually closing after the cancellation of Disney Infinity. In all, Disney Interactive was responsible for publishing and co-publishing many extremely popular games, most notably the Kingdom Hearts series, The Incredibles (game), Epic Mickey, and my personal favorite…Donald Duck: Goin’ Quackers.
There were plenty of games that were memorable and produced by Disney Interactive, and half a dozen studios that were acquired and subsequently made defunct. Now that Disney owns both the Star Wars franchise and Marvel, one might expect a single large video game producer and publisher that would be created by Disney to handle the broad Disney ecosystem — but that hasn’t happened yet. Production and development is scattered between a number of companies, from Capcom, Sony Interactive, Crystal Dynamics, Kabam, Netmarble Games, Firaxis Games, EA, Respawn Entertainment, DICE, and more. Even though Disney technically owns these franchises, the sheer size of everything has proven to be next to impossible to organize. In 2021, Disney brought back Lucasfilms Games, after shuttering it after acquisition in 2012
Disney’s final in-house huzzah, Disney Infinity, shows how Disney planned to approach an expanded universe. The game was based around a toys-to-life model, the most notable example of a game like this being Skylanders from the mid 2010s. If you’re not familiar with toys-to-life, read about it here. In a nutshell, you’d buy plastic figurines with NFC chips built into them, and scan them into the game using an ‘infinity base’ (an actual base with a usb cable). Each edition of Disney Infinity (1.0 to 3.0) included different characters that could be added into a toy box mode (open world arena) and play set (a self-contained world with its own gameplay). While Disney Infinity 1.0 was a success, and stores had difficulty keeping these phygital items stocked, interest quickly died out. Infinity 3.0 was very much a Disney expanded universe, with Marvel and Star Wars characters being featured prominently. Once Disney decided to shut down Avalanche Studios in 2015, this marked a distinct end to their toys-to-life business.
So…where is all of this going in 2022? Will Disney create a new gaming studio/publisher and slowly bring Marvel and Star Wars under one umbrella? Can truly great, coherent, consistent content be created when production and development is scattered between dozens of third-party companies? A truly great metaverse experience by Disney will necessarily require reorganization and renewed focus on next-generation gaming. Let’s dig deeper and get a better understanding of just how much Disney is working with.
Disney Today: The Media Behemoth
To hammer home the scope and breadth of Disney, we will make a simple list of IPs and subsidiaries that Disney controls today. Check out this infographic to get a better picture of just how much Disney owns.
In no particular order:
Walt Disney Studios (Disney Pictures, Animation)
Walt Disney Parks (all theme parks, resorts, land, interactive experiences)
Lucasfilms (including LucasArts, Industrial Light & Magic, and Lucasfilms Animation)
Pixar Animation Studios
Marvel Entertainment (including Marvel Studios, Toys, Television, and all publishing)
Fox Entertainment Group (including 20th Century Fox, FX Networks, National Geographic, Fox Sports, Hulu, and countless other studios)
The History Network
ABC Broadcasting Company
ESPN (every network nationally and internationally, including all publishing)
UTV Software Communications
Steamboat Ventures (the venture capital arm of Disney)
This is seriously paraphrasing. I didn’t include the dozens of other broadly associated property corporations, energy companies, construction companies, hotels, and investment LLCs that make up the whole. It’s hard to imagine organizing all of these into a cohesive, understandable ‘thing’. Disney is an American, multinational, mass-media and entertainment conglomerate. It is, however, important to note that Disney doesn’t even rank in the top 50 most profitable companies worldwide.
Maintaining and creating all of this entertainment is expensive! Disney’s operating costs are high (74.608 billion for a 12 month period ending in June 2022). An estimate from Stanford in 2019 claimed that Disney’s parks cost 10 billion dollars per year to run total. A bill was even passed in 1967 in Florida that would have allowed Disney World to build its own nuclear power plant, should the need arise. Today, it does utilize multiple solar panel grids, but it doesn’t come close to covering the costs of electricity. Maybe they should build the plant?
What’s cheaper than running multiple amusement parks? Oh, a streaming service.
The Importance of Disney+
If you’re reading this, there’s a seriously good chance you either pay for a Disney+ subscription or leech off of a friend or relatives subscription. What was initially seen as a bit of a stretch has become something that is extremely obvious, and Disney’s metaverse ventures will play out the same way. With Disney’s streaming distribution deal ending with Netflix in 2019 (and its acquisition of National Geographic and Marvel prior) the company was in a great position to offer its rich catalog of movies and TV shows on its own.
Let’s think back to just a few years ago. When we first heard that Disney was going to offer its own streaming service, I recall hearing many sentiments like:
We’re already paying for Netflix, Hulu, and other platforms, there’s no way I’ll buy Disney+
I don’t see a reason to purchase Disney+, because we already have enough content to watch and enjoy
Disney+ doesn’t have enough content for me to justify spending the extra money
Fast forward to 2022, and Disney now boasts 221 million subscribers, narrowly beating out Netflix’s 220.7 million. Disney+’s launch wasn’t smooth, and there were numerous complaints of technical issues, but that was a minor setback. Disney is generating less revenue per subscriber, but the metrics are still impressive. Netflix had a decade head-start, and is struggling to keep pumping out content people actually want to engage with.
Many of the same sentiments will be said once Disney’s metaverse efforts consolidate and (in all likelihood) are contained within the Disney+ ecosystem. The entertainment, breadth of options (choosing between movies, tv, and games), and social aspects will be too good to ignore for many consumers. If Disney+ has already beaten out Netflix, one can only presume that the expansion of Disney+ will result in the most popular subscription on the planet. Remember, Disney owns ESPN and Fox Sports as well. We’re not just selling immersive experiences to children, we’re also selling premium immersive sports experiences.
What is ‘Next Generation’ Storytelling?
This is how Disney is describing its foray into the metaverse. Wearables for at-home use will be used to ‘transcend the physical and digital barrier’. In June of 2022, Disney hired Erin Green (formerly at Meta for VR) as VP of communications for next generation storytelling and consumer experiences. This area of the business is focused on creating new experiences using storytelling to expand engagement, in a world where physical and digital experiences are becoming more interconnected.
Speaking of a new level of engagement, let’s take a moment to consider one of Disney’s most recent next-generation experiments…
Star Wars: Galactic Starcruiser Adventure
In a sense, the immersive ‘metaverse’ of the future is already here, tailored for specific experiences and available only to those who can afford it. We’re talking about the Galactic Starcruiser Adventure, a two night, live-action role-playing choose-your-own-adventure experience located in Disney’s Hollywood Studio in Florida. This is already extremely popular, and bookings initially sold-out through most of this year when the experience first went live.
To get a better picture of what this looks like, check out this full tour here.
What does this include?
2-night stay in a cabin/suite
On-going immersive entertainment
Food and beverage on the ‘starcruiser’
In a nutshell, you stay in a cabin that makes it seem as though you’re on a starcruiser, and the entire thing is set up as if you’re in space. You arrive at the ship by taking a launch pod to the starcruiser, go through orientation, and roleplay and take part in immersive story moments on the ship. Disney even encourages you to dress the part, purchasing appropriate Star Wars themed apparel at shopDisney. The dining is also thoroughly bizarre, and what you might expect. Try out various intergalactic dishes that are amalgamations of foods you usually eat on Earth. It’s like Medieval Times, except it's 6,000 dollars for two people for two nights, you play a part in the story, it's Star Wars themed, and you can’t leave (kidding).
In a world where people love role-playing games, LARPing, and MMOs, it comes as no surprise that this is popular and will continue to be popular. Disney owns IPs that people actively want to be engaged with and immersed into. Sure, it’s not an actual metaverse, but this concept has proven that people will pay top dollar to be immersed in their favorite universe.
This program is where we start to see more of Disney’s future plans becoming clearer, especially with web3. Disney’s site puts it best when it comes to the aim of the program: ‘The Disney Accelerator provides participating companies with investment capital, access to co-working space at Disney's creative campus and mentor support and guidance from top Disney executives, entrepreneurs, investors and other notable business leaders from the entertainment and technology communities.’
The types of companies that Disney is targeting are companies that are venture-backed, growth-stage, and future-focused. Every year, the program takes place over the summer and concludes with a demo day in October. All of the IP developed by participating companies is retained by that company (not Disney), although it is important to note that Disney has acquired participating companies in the past.
Each of the companies Disney has backed this year could easily be the focus of its own article. I’ll briefly summarize each company here for the 2022 cohort.
Flickplay: a Web3 social app where people can capture NFTs in the real world and create videos with them in AR. Build the social rank of your NFTs and access real-life utilities tied to them.
For Flickplay, interacting with FlickyGang (the NFT collection) and owning a Flicky unlocks social experiences through FlickPlay. Flickplay includes social ranking with a ‘Social Value Graph’, so the more videos you make with your NFTs and the comments they receive, the higher your value on the social graph. You can imagine how Disney could utilize this tech to create something similar with characters from the Disneyverse. We could see this sooner rather than later.
Inworld: Inworld AI provides a developer platform for creating AI-powered virtual characters to populate immersive realities including the metaverse, VR/AR, games, and virtual worlds.
Inworld is an incredible developer platform. In a nutshell, you can create intelligent virtual characters by explaining how the character should be by describing it in natural language. They’re essentially customizable chat-bots that can take the place of NPCs in video games. Instead of programming each individual NPC, you just use the inworld app, utilize the flexible API, and go. This software is easily worthy of its own separate deep dive, which I intend to do regarding it and GANs (generative adversarial networks) in the near future.
Lockerverse: the cultural hub of web3. The Lockerverse platform empowers iconic and emerging athletes, entertainers, artists, designers, and brands to tell culture-defining stories. Lockerverse also provides fans unique access, digital and IRL experiences, content, and community.
This is a little bit more unclear. Lockerverse is going to be a cultural hub. My guess is it will be some sort of platform enabled through token-gating that brands can use instead of Discord. It’s worth noting that part of the team comes from Lucasfilm, which might be why this startup was picked for this cohort.
Red 6: by blending augmented reality and artificial intelligence and using both the indoor and outdoor space around us as a medium, Red 6 has redefined the limits of how the world will experience, share, and interact with its information. This solution to a significant and compelling military use case provides the right pathway to a much broader, ubiquitous AR future and with it, the inevitable consumer market.
Red 6 is a startup that uses AR to train fighter pilots. Because the company has experience building flying simulations, perhaps Disney will utilize it in some capacity to build flight simulators for theme parks, or even to create more immersive software for at-home experiences. You’d expect a startup like this to get more attention from a defense contractor, and not Disney, but this is the way the future is going. Maybe aspects of this tech will be incorporated into a Star Wars simulation?
Polygon: a decentralized Ethereum scaling platform that enables developers to build scalable user-friendly dApps with low transaction fees without ever sacrificing on security.
So much has been written about Polygon, so I won’t talk too much about it here. It’s really saying something that Polygon is in the cohort, considering how much it is already utilized and how popular it is within the web3 community at large. You probably know where this is going: low fees, utilizing Ethereum, seems like a great choice for Disney if it ever chooses to build more in the web3 space. Why it chose Polygon this year and not Immutable X remains unclear, but there must be a deeper reason behind this decision.
Obsess: an Augmented & Virtual Reality software platform for experiential shopping. Our proprietary technology enables brands and retailers to serve 3D 360 shopping experiences on their websites, mobile apps and social channels via our 3D Commerce Cloud.
Obsess makes it easy to create branded virtual stores that integrate with your existing ecommerce platforms, like Shopify. As you may have noticed from their website, they separate sections specifically for selling NFTs and creating branded experiences within Roblox. While Obsess is impressive, they are definitely an example of a startup that can utilize the extra funding to continue to create better tools for crafting retail experiences. I encourage anyone interested in Obsess to check out their metaverse guidebook here.
Stop and think about how each of these companies could be utilized by Disney to create more immersive experiences. Flickplay could result in creating a whole new way to interact with consumers and create more engagement with Disney. Inworld could support the creation of increasingly immersive games, with characters that are more unpredictable with less pre-canned speech. Obsess could be the tool Disney uses to create digital twins of its iconic stores. Red6 could be used to make even more immersive at-home flying experiences.
Now that we’re talking about more web3 startups, let’s chat briefly about Disney and NFTs.
Compared to the other immersive tech discussions we’ve already had, the role so far of NFTs within Disney’s brand strategy for web3 is relatively minor. Disney dropped its first ‘Golden Moments’ collection in November of 2021 on the VeVe Marketplace (built on the Immutable X, an L2 for Ethereum), and it was very popular. These golden rotating statues consist of brand OGs like Walt Disney and Mickey, but also include Star Wars, Marvel, and Pixar NFTs. Disney even owns The Simpsons (2-day immersive Springfield experience anyone?), so there’s truly something for everyone in this collection.
How does this tie into Disney’s other offerings? It doesn’t, at least not yet. There’s no immediately obvious overlap. It is notable only in the sense that it is important to recognize that Disney isn’t placing all of its eggs in the NFT basket. Perhaps these Golden Moments pieces will be used in some capacity for a future cohesive metaverse. Given the amount of brand IP that Disney controls, it would make more sense in the future for Disney to have NFTs bought and sold within its own proprietary applications. In that instance, NFTs would likely be called ‘collectables’, and would integrate seamlessly with other aspects of (at present) proto-metaverses (more of a life-sim with RPG elements) like Disney Dreamlight Valley.
More of Disney’s plans were illuminated at the beginning of the year. Walt Disney CEO Bob Chapek has been transparent about Disney’s goals in both the short and long-term:
“Our company is truly unique in that we have a significant presence in the physical world, as well as media entertainment assets in the digital world.”
This is more or less obvious. It’s hard to go a few days at a time engaging online without encountering something that Disney owns or maintains, and you’d be hard pressed to meet someone that dislikes everything the company does (although these people do exist, I’ve met a couple of them).
Bob goes on to say ‘Our efforts to date are merely a prologue to a time when we’ll be able to connect the physical and digital worlds, allowing for storytelling in our own Disney metaverse.’
Disney + will eventually be reappropriated to be the platform consumers engage with to enter Disney’s metaverse. Parks, movies, and games will all come together into a single cohesive digital experience, without constraints.
Unreal Engine, Film, and Immersive Experiences
So many things Disney is doing are tying into one another. Although this technology has now been used for numerous other releases, we’ll briefly touch on Industrial Light & Magic (ILM)’s usage of Epic Games’ Unreal Engine (UE). For context, Industrial Light & Magic is the motion picture visual effects company that was initially founded by George Lucas in 1975, created when Lucas first began production of Star Wars. ILM was acquired by Disney as part of its purchase of Lucasfilm in 2012. Since 2012, ILM filmography credits have increasingly included television. ILM most recently worked on Disney+ shows like WandaVision, Loki, Obi-Wan Kenobi, and The Book of Boba Fett.
Most notably, ILM used UE to create landscapes (first with The Mandalorian). 2019 marked the first usage of real-time rendering with UE and digital displays to create a virtual set. This virtual set is known as StageCraft and its soundstage known as ‘The Volume’. ILM’s usage of UE has been in the making for quite some time, with director Jon Favreau both realizing the potential utility of a video wall in virtual productions and pushing for it to be used.
This technology solves a number of problems with cinematography that are outside of the scope of this article, but it essentially allows for live actors to be shot with computer-generated backdrops that would otherwise need to be added in post-production. This transforms the set from being purely a green screen experience and the entire CG background can be manipulated in real-time.
What does this mean for the future of interactive experiences? First, since the inception of the original StageCraft, two more have been built, so we’ll see the production of more media utilizing this technology. Second, because ILM is utilizing UE, it is conceivably possible that the software and assets for these television shows and movies could be reappropriated for usage within a VR headset, or used within an immersive experience at one of Disney’s parks. In the long term, we might expect to see the sets of movies being used for video games and other experiences. After all, Unreal Engine was designed with video games in mind first. StageCraft is blurring the line between video games, television, and movies. The first major motion picture where you play as the main character has yet to be written. If such a project is taken on, technology like StageCraft will be utilized to make it happen. Is it a game or a movie? It’s a combination of both, it’s an immersive experience.
Disney Dreamlight Valley
While we’re on the subject of proto-metaverses, the recent release of Disney Dreamlight Valley is important to note. It’s a hybrid game between a life simulator and adventure game, and players can interact with both Disney and Pixar characters.
The game was developed by Gameloft, and it utilizes Unity engine to make the magic happen. Although the game was released into early access it does not currently have multiplayer, but it will in 2023. If Disney can nail creating a multiplayer life simulator, this may be the logical first step in proving out the viability of an immersive metaverse featuring Disney’s iconic IPs later in the decade.
Everything from character selection to the in-game options and menus feels like a meld between Meta’s Horizon Worlds, The Sims, Animal Crossing, and (on some level) Kingdom Hearts. Avatars in the game are highly customizable, and the game has received surprisingly positive feedback over the last couple of weeks. It’s available on a ton of platforms. Check it out here.
No, it doesn’t contain any web3 or NFT elements. But it does speak to some of Disney’s intentions for the future. The game is available on Switch, Windows, Xbox, PS5, and eventually MacOS. Gameplay for multiplayer will be cross-platform, and will also feature cross-progression (ex: play on a Switch, keep playing the same instance on your Steam account, etc).
This game really nails a lot of the reasons why people play games. It has sandbox elements, it is highly customizable, it allows you to interact with some of your favorite Disney characters in a unique storyline, and it will eventually have social/multiplayer elements. Fans of Animal Crossing and The Sims will find themselves at home here.
Disney’s AR Vision
At the beginning of 2022, it was widely reported that Disney had filed a patent on December 28th, 2021 for a ‘virtual world simulator’, consisting of a processor, projection device, and tracking system. Given the nascency of the technology, we can be led to presume this combination of technology might first be used in Disney’s theme parks, adding to the immersiveness of rides, experiences, and shows. Visitors would be surrounded by the virtual experience, with no need for headsets. Just like with other immersive tech, it’ll probably be showcased in an upcoming ride or experience at one of Disney’s parks, and then refined for use elsewhere.
Disney really wants to make immersive experiences accessible, without requiring headsets. If you check out the patent here you’ll notice that one of the chief concerns from Disney regarding wearables is having to sanitize them and constantly have people in their parks put them on and take them off. The other major concern is the isolating nature of headsets stating ‘requiring the use of an AR enabled personal device to enjoy a virtual environment effectively precludes multiple users from sharing the same experience’. If an AR experience can be projected and rendered according to the vantage point of each user, many of the annoying problems of AR (like its inability to actually provide a true 3D virtual experience) can be solved.
This patent would be entirely impractical for home-usage, which leads us to our next talking point: What will the at-home Disney metaverse experience look like for consumers?
Disney Movies in VR
This is a part of the article where we don’t have to speculate. Disney is already investing in adapting its movies to be more immersive and watchable in VR. As Disney’s site plainly states ‘Disney Movies VR is your ticket to full immersion into the many Disney experiences optimized for virtual reality.’ We know the company often prefers to own processes from start to finish, and the current iteration of Disney Movies VR is a prototypical example of what this will become. Within the Gear VR/GO app, you can choose from different scenes from Disney movies and become ‘a part of the action’. This application was first released in 2017, and lacks most of the elements one might consider essential for a metaverse (it’s just a glorified movie watching app).
Don’t just take my word for it. Take a look at the app here.
With Disney’s Remembering: The AR Experience, we get a sneak peek into how Disney intends to use Disney+ to continue to offer value and expand upon the platform. This immersive reality app is a short film you can experience if you have a Disney+ subscription and a compatible iPhone/iPad. Check it out here.
Somewhat related but fun: If you have a headset, try out Virtual Disney World. It’s a collection of VR videos captured at the parks by a mega fan. Check it out here.
The Disney Headset
Given all of the above, the question remains: what is Disney going to do for bringing next-generation immersive experiences to Disney fans? We know that Disney intends to bring to life an augmented virtual world simulator that will likely be used in its parks, but the ‘Disney headset’ remains unclear. Will Disney partner with Apple or Meta to bring next-generation content to consumers? There have been no reports of Disney hiring engineers to build an in-house VR unit, and it seems unlikely that the company could build something that innovative without the internet catching wind. Given all that we know about Apple’s upcoming headset, my guess is that Disney would create Apple-exclusive XR content, and include that content initially in the base price of Disney+. If Apple’s headset becomes extremely popular, we might see a renewed push by Disney to create an immersive Disneyverse.
For now, the likely high costs of the base model VR unit by Apple will mean that such an immersive experience would remain out of reach for most consumers. As of September 2022, Oculus Pro (Cambria) will cost easily 1K+ at launch, so even if it is a fantastic experience, hardly anyone will own it. Perhaps an experience will be developed that is more platform agnostic, similar to how Disney has approached Dreamlight Valley. In any event, we are likely a few years away from an experience that exhibits the level of cohesiveness commonly associated with the metaverse.
Technology and innovation has been at the forefront of everything Disney has done for the last 50 years, with no signs of slowing down. With the meteoric rise of Disney+, the company has proven that it can profit and reduce its margins by focusing more on digital sales. Recent public statements this year have made it clear that Disney knows that at-home wearables in combination with subscriptions could push the company to a whole new level, creating subscriptions that aren’t just convenient, but deemed essential for families.
Disney is investing into web3 social apps, AI, AR, and may choose to build with Polygon in the coming years. Although Disney hasn’t done much with NFTs yet, it has a solid foundation to continue should it decide to. CEO Bob Chapek actively wants Disney+ to be the ‘must-have’ portal into the metaverse, interacting with Star Wars, Marvel, and all of the other beloved Disney characters created throughout the last century. Because Disney owns ILM, we could very well see more immersive XR experiences that blur the line between movies and games. There is so much potential, and the company is just getting started. Once at-home VR becomes mainstream, the possibilities for what Disney can build is limited only by its ability to organize. This is the start of something truly magical.
To infinity…and beyond!
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