It’s been rumored for a while that Montgomery & Co. is representing virtual world Club Penguin in a sale transaction. It looks like the company is locked in talks, possibly exclusive, with Sony, and the price is “at least half a billion” says a source close to the deal.
We mentioned Club Penguin last month when a competitor launched from IAC called Zwinktopia. The company is killing it - projected revenues of $65 million in 2007 with $35 million in profit. Having nearly 50% bottom line margin is exceptional. The company has around 500,000 active users.
A stumbling block in the negotiations appears to be a disagreement over charitable contributions. Club Penguin donates a significant portion of profits to charity and wants this policy to continue post-acquisition. Sony reportedly isn’t hot on the idea.
Club penguin is a virtual world for young kids. Sony may see significant synergies by tying it into their Playstation platform. Other bidders that were in talks until very recently reportedly include AOL, Disney and Viacom.
This is good news for Club Penguin’s virtual world competitors as well - which broadly includes Second Life, Runescape, Gaia, Habbo Hotel, Cyworld, Neopets, Webkinz and others.
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My kids love Club Penguin. I’m worried that Sony will destroy it.
Hey, You Fu**in wrong Sony is ganna make it better
Thats a valuation of about $1,000 / user. Not a bad deal…
BTW: You are missing a “w” in the image link to http://ww.clubpenguin.com
My 2 nephews visit this website very often to play games and chat with their classmates and schoolmates. I don’t think Sony will destroy it. Sony will likely add more interactive features.
Thanks Sam.
Wow. Those profit margins are awesome.
I’m chearing for Club Penguin here. I hope they either get their way or don’t sell to Sony. As you point out, they made over $30 million last year and if they are donating a percentage of that to charity then thats a lot of money. A lot of money Sony wants to take away from charity and to hell with them (pardon my french).
But that’s just me.
you guys know how club penguin makes majority of their revenue? Through “coins” or advertising?
Will, Club Penguin — which is based in Kelowna, B.C. — has a strict no-advertising policy.
can one company deliver a cradle to grave social network portfolio?
kids begin with club penguin, graduate to playstation, progress to facebook/linked in, and then end the cycle with a seniors site.
i am assuming that sony is looking at club penguin as a way to reach a younger audience in order that they can get them loyal to playstation. also, gives them a way to sell games/electronics to a younger demographic.
who would have thunk that club penguin’s price tag could come close to the myspace purchase price?
sounds like a amazing - idea - operation scheme -
- Why do people sell? .. I mean you get this thing - 1 in a million -
- make a lot of money - then sell ? …. n/m I guess that is the american dream
I guess I’m missing out. I hadn’t even heard of club penguin before. I so thought I was in the loop too.
Montgomery Securities is dead. It must be Montgomery & Co. representing Club Penguin.
Club Penguin is owned by a company called New Horizon Interactive Inc., based in Kelowna, B.C., where I live. I’ve dealt with one of the principals in the company when the company needed to rent a storage unit at Kelowna Self Storage, where I worked, for their (new) CEO’s personal belongings. If true, this would great news for New Horizon and Kelowna.
It would be one of the largest corporate acquisitions for a Kelowna, B.C.-based company, eclipsing by a factor of 100 the buyout of educational software maker Bridges Transitions Inc. and easily beating (by market value) the buyout of privately held HRI Supply by Sysco Corp. in the ’90s. This would make it the second-largest buyout of a Kelowna company, eclipsed (possibly) only by Freightliner’s buyout of former Kelowna, B.C.-based company Western Star Trucks.
Awesome news!
Cheers,
Doug
Michael: Your second paragraph is a bit confusing:
“We mentioned Club Penguin last month when a competitor launched from IAC called Zwinktopia. The company is killing it - ”
Which company is killing what? Is Zwink killing penguin? Is Zwink killing itself?
Can you clarify that?
someone will have to explain to me why the buyout of a canadian company by a foreign corporation is good for the community. great for the owners, maybe but as you can see from the fight over charitable donations, not great for the region.
Club Penguin is has no ads, the majority of their revenue is earned through a monthly subscription rate that allows users to buy exclusive items in the world.
From their parents page:
“Instead of financing our operations through advertising as most websites do, Club Penguin relies solely on paid memberships. By remaining ad-free, we can provide our users a safe haven from marketing.”
Will be very interesting to see if the no ads policy is kept if the Sony deal goes through.
Goodness. 500 million here, 2 billion there, anyone want to buy my site?
I’ll take a measly 100 grand. Seriously.
http://www.signaldev.com
What is significant about this transaction is that it validates the social networking space for younger children. It proves the proposition that parents are willing to pay for their children to engage in social networking in a safe environment. It also proves that this can be offered very profitably even with a relatively small community base of 500,000 users. Assuming this community grows anywhere near the size of the leading social networks, it will throw off a lot of cash for its investors or owners. My suspicion is that this transaction will draw others into this marketplace.
Mathew:
They advertise, market and sell their own products.
Wow that is interesting. Clearly an under served market online. Get them while they are young! Btw Club Penguin appears twice in the last para.
Club Pengiun can still donate their profits to charity. In this case the charity is “keeping the Playstation 3 afloat”
I hope Sony continues to keep the “free” option that dads like me love
BTW, the math is not working out here - Club Penguin subscription is $6/month, and $58/year, it would need over 1MM paying users for a $65MM revenue…
I would have thought 500K active users included 89% free users, but even we assume all are paying, CP needs to make $10/mo/user…
Any insights?
Club Penguin can say that they are marketing free, but they are still training the next generation of shoppers by rewarding kids with the abilty to purchase clothes, gadgets, houses, and furnishings.
So Sony won’t necessarily need to add traditional advertising. They can do product placements. My kids buy a lot of things for their penguin homes like TVs and sound systems. Sony just needs to put their name on those things and offer other Sony products for purchase.
Club Penguin should not sell their game to Club Penguin. Sony is not going to donate money to kids in Africa to fight against AIDS.
I meant to say Sony, I apoligize.
clup penguin is so much fun…… and i though i knew all the cool websites!!!
So many of the users buy memberships. Also, they have other not as popular “sellers”, like their shop.
Club Penguin is nice, the High likliness sony will add pop-ups, ads, and so much garbage no one would not like to go on it, and Club Penguin is for kids, Club Penguin memberships would be more expensive, and Sony would make it 13+ only, which really pisses me off
I just heard that someone emailed Club Penguin. Their staff says that their rumors just rumors.
I am a fan of club penguin. I also am one of the few people who got the advantage of testing the game before it fulley started. Club penguin does not just get money from memberships. On the website (not the game) there’s a souvineir shop with toy puffles and t-shirts etc. that you can buy with real cash so you can own it in real life.
Yes that is true, but their sales aren’t really great Grant.
i wanna know why the normal penguins dont have more than two puffels
Yeah, the reason Disney mentioned it is to make a show out of it. It would be good….
Don’t sell club penguin!
If you sell it….Sony will crush it!
Thanks,
Ninjaz 101
P.S
Be sure to join http://www.clubpenguintreo.com
I have a weird tingle down my spine,because in reality(I think) most companies just want to have money rolling in their door,so if New Horizion Interactive says yes,then Sony can make it for their Playstation 3 so that more people want to buy it and Sony will be rich.So Sony + Club Penguin + Playstation 3 = money just like that (and btw,i’m a kid).
It’s just a major rumor reported by New Horizon’s Club Penguin Staff.
my friends and i love club penguin. it’s the most funnest game on the computer and it’s safe for kids and i meet new friends on there all over the world which is so awesome. If Club Penguin is sold to sony, then it will be destroyed. I hope that club penguin doesn’t get sold
~Penny3532
owner of http://penny3532.wordpress.com
my friend e-mailed club penguin and they replied saying that they couldn’t answer that question. oh and btw i’m a kid.
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noo dont let sony buy it please i love clubpenguin and if they by it they might mess it up please dont let them buy it couse clubpenguin is my life i live for club penguin
please dont read this it isnt anything to do about cp making money
im with clubpenguin!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
because i love there website i always be in club penguin. my father do me a member but more than a month and clubpenguin make me member more than a month.COME ON CLUBPENGUIN COME ON LETS DO IT!!!!!!!!!!!!!!
i’m with club penguin!!!!!!!!!!
dont let sony take over, u never know what sony will do to club penguin.
so i say stop sony take over something else.
i love club penguin so i go on it every day. and i will sue u if sony destroys
clubpenguin.
hey no need to worry
Yeah, well, IT IS A FALSE RUMOR, I asked club penguin
WHAT THE FUCK IS ALL THIS ABOUT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1
I play Club Penguin and I’m not sure wheter it is being sold or not. Part of me wants it to because I want to see what it will be like but the other hlf likes it as it is.
hi ay know rockhoper pasword
club penguin should have more beautiful things for free
Hey can i have an account plz am i the 100ths subscriber plz can i have 1 its hard to make 1 im poor plz
well i think disney shares money so they keep it open and ad free _—————- how does clubpenguin keep staying open if they give almost all of the money to africa and charites? i bet rocketsnail will re-open and thell make penguin chat then it will get better and get sold to disney and sony will buy it and…