Disney Planning Sale of Fox Video Game Division

FoxNext was one of the divisions that Disney acquired in its $71.3 billion deal for the Fox assets.

Disney is looking to shed another asset acquired from its recent acquisition of most of 20th Century Fox.

Executives are shopping FoxNext, the video game development unit founded by Fox in 2017, a source with knowledge of the decision tells The Hollywood Reporter. 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 formerly served as an exec at the Disney before moving to Fox in 2013. He wound up back at Disney this year when Disney's $71.3 billion deal for the Fox assets was finalized.

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 concession 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, meanwhile, has been working on upcoming games based on the Alien and Avatar IPs. The company also launched a development fund to help independent game developers in February.

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. There have been several rounds of layoffs since the deal closed 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 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.

Overall, mobile gaming revenue is up over 11 percent over the first half of this year to $29.6 billion, according to a July report from analytics firm Sensor Tower.

Bloomberg was the first to report the news of the sale.