It's official! Club Penguin has been acquired by Disney for a whopping $350 million with bonuses and incentives that could be worth up to $350 million more. Supposedly Disney outmaneuvered AOL at the last moment. We talked a few months ago about how Sony was in talks with them at a valuation of $450 million. The site has 12 million users and 700,000 subscribers paying anywhere from $6 a month to $58 a year. The amazing thing about this site unlike many others that have been bought is that it is a cash cow. The site has margins of 50% with about $30 million in revenue. Talks with Sony and other media companies interested in buying it supposedly fell apart because the Penguin donates a substantial amount of profits to charity.
I think that Disney got a steal here. If you think about the MySpace acquisition about 3 years ago which Fox also stole at $580 million Disney will have a lock on the child market. And unlike Second Life, these are real paying users. I'm not sure how integrated the Penguin will be with other Disney properties and I don't know how good of an idea it will be to do that, but just the fact that you have the attention of 12 million people (I'm assuming mostly kids) is superb. Again, not to bash Second Life, or even Joost, or other download services, but it goes to show you how important it is to keep your product within the confines of the Web. Club Penguin is flash based. Kids don't need to worry about viruses or any other kind of malware and they are able to access their accounts from anywhere - versus any of the software based programs which force you to download onto the local computer. Viacom purchased Neopets in 2005 for $160 million (a very good deal, good job Sumner!) and now there appears to be a showdown between Disney and Nickelodeon for the kid market. What will happen? I'm not sure. But this space dominated by others like Webkinz and Habbo Hotel will be an area to watch.
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