Extremely Happy Feet: Disney Acquires Club Penguin For Up To $700 million
Michael Arrington
50 comments »
Club Penguin, a social network/virtual world that has been on the market for some time, was acquired by The Walt Disney Company and announced today. An earlier deal with Sony fell apart over valuation and Club Penguin’s policy of donating a substantial portion of profits to charity.
The company, which launched in October 2005, has 700,000 current paid subscribers and 12 million activated users, primarily in the U.S. and Canada.
The WSJ says the purchase price is $350 million in cash. Disney could pay up to another $350 million if certain performance targets are reached over the next couple of years, until 2009.
We mentioned Club Penguin a couple of months ago 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.
I recently spoke to an exec of one of the companies that took a long look at Club Penguin before deciding to pass. They said the charitable donations were a big factor in passing. He also mentioned that much of the success of the company was driven by movies such as Happy Feet. How much longer are penguins really going to be the cool thing, he wondered.
One thousand dollars per user. Wow.
Here’s an offer to any budding virtual world makers out there. Pay me $500 and I will subscribe to your service. You will come out ahead in the end.
Dear GOD! I must be in the wrong business!
Garth,
that’s not a bad idea! you could probably get away with paying $50 for people to join then REALLY clean house when you sell!
It’s only $500 a user. Then another 500 as incentive to maintain or increase their user base.
I’ll admit I’m not looking too close at the subscriber numbers, but I think it’s still a good deal for Disney. Disney pays $350 Mil and gets most of that back in projected profit over 5-7 years. Disney gets a team that knows how to build a successful MMORG aimed at tweens. Disney Interactive’s ability to shift resources can help the Club Penguin team start up a Club Teddy Bear (or what ever the next trendy animal is) faster than either party could have done by themselves. Best of all Disney now has a social network/mmorg for every age of internet user. It starts as young as 2 years old with Disney Playhouse Online and goes, Club Penguin, Toontown Online, Disney XD, Virtual Magic Kingdom, and Pirates Of the Caribbean. Look for a Princess or Fairy themed MMORG to capture the audience of Club Penguin as they mature out of it’s age group.
-John
http://www.thedisneyblog.com
congrats to the little penguins for finding the dumbest money in the room and poaching it
and for john, do you honestly think two year olds use “social networking”???? they just learned to walk. reel in the enthusiasm a bit there dude.
Do cats and dogs use social networks? No. But their human owners / parents sure do.
dammit, where was I?
lol - it’s a cute site, it sells.
i’m looking at screenshots of it, i’d like to join - but it’d look pedophilia for someone other than a kid to join
I wonder if imbee.com will be next? Disney has already invested in them. Social networking for kids. Who knew?!?!?
This is a smart move by Disney.
http://martysmind.net/2007/08/.....isney-duh/
USD 700m divided by 12m registered users equals USD 58.33 per registered user.
Social networking begins right from the early stages of life, traditional it started from playing Catch n Kiss in pre-school/kindy.
My wife did a review on club penguin just last week, http://louisemartinbaker.com/2.....in-review/
If it has my wife hooked it must be good.
It’s not Facebook or Myspace, it’s a movies and merchandise deal.
Tim: Yes, $58.33 per registered user but what you really want to look at is the number of active users rather than registered users. Registered users is fairly (though not completely) meaningless except to press agents. The number of active users is somewhere between 700k and 12 million. Guesstimate: 2-3 million.
Wow. That is a lot of cash…Especially for a site most of us have probably never heard of before.
Club Penguin is fabulous. My daughter loves it and I have been known to secretly sign into my daughter’s account ot play ‘Astro Barrier’. Great fun!
if you build it they will buy it!
however…not many startups can boast $35 million in PROFIT a year.
350million is actually the correct amount based on the old x10 profits buyout model.
With a 5, 7, and 9 year old, Club Penguin is all the rage with each of them and their friends at school. It’s safe (you can’t type free form), it’s fun (lots of games and things to explore), and they love playing together (rare with the age mix). It’s a great move for Disney and a good deal. Now if they only worked on their VMK site - that social networking site is horrible!
It certainly has the right parts to hook the kids into but it seems to have a life cycle before they move on to other sites.. Still with the protected servers with the limited chat to stop the Paedo’s in there talking to the very young kids it seems well set up. Membership is very steep as well , I spend a fortune to keep my kids in puffles.
If Louise’s experience is the norm, Moms becoming kids again to secretly play Astro Barrier at Club Penguin … no wonder this site is a money maker. Kids happy, Mom and dad happy (and they have the money), Disney now happy. Everyone’s happy!!
And what’s not to like about penguins?? I petted one during an Artic tour at SeaWorld in Orlando. It was fabulous. Warning: they squirt poop in a backward horizontal stream. Stay in front …
$60M revenue & 50% profit margin … which means their cost is $30M …
What kind of cost does Club Penguin have? Server & bandwidth costs $30M? They don’t seem to be doing ad/marketing campaign at all …
Would anyone know?
Impressive numbers. You can only assume that they will grow as well, so seems like a good move for disney.
Forgive me for being dense, but what is the source of revenues ? Subscriptions, ad revenues or sale of virtual stuff?
First we had ‘Happy Feet’ and now this news about this Disney - Club Penguin deal. Penguins seems to be popular among kids and their parents
This is awesome news for a company based in my hometown and current residence of Kelowna, BC! Interestingly, it’s also among the biggest buyouts of Kelowna-based companies, perhaps the second-largest ever eclipsed only by Freightliner’s buyout of Western Star Trucks. Even Sysco’s buyout of HRI Supply was smaller. This is huge.
Cheers,
Doug
wow, good for them! i heard that they all headed to a pub after the deal was finalized, *burp* sweet. party o =)
i bet that adultfriendfinder.com founder andrew conru dreams of a similar valuation in a buyout…dreaming is the first step to self actualization.
life is good.
CP & Disney are working together. Disney havent bought it!
If you don’t have kids btwn 7-12, then you may not know about this site. But, until not too long ago it was the big thing with my kids. They still visit it, though not as much since they’re always involved with many things. But, here’s a post I had shared with friends about Club Penguin:
http://videosmom.typepad.com/v.....he_ne.html
$700M for a virtual penguin world…only in the US!
Penguins? Cool? …Linux?
They will always be cool in my book.
I have to tell you, my daughter is now 2yrs-7mths, her first movie theater experience was Happy Feet almost 8mths ago now. She still talks about it and recognises all the imagery, music, the lot - Club Penguin is right up there with Ronald McDonald!
I don’t know how they do it but that stuff is gold, scary but gold.
As a developer for Disney Internet Group, I can only say one thing…
Who doesn’t love penguins??
We are guessing that there will be a mad rush for the other kids sites now like Webkinz and Habbo.
http://www.bizorigin.com/2007/.....eens-rule/
Tying Club Penguin’s success to Happy Feet is ridiculous. The site pre-dated and post-dated the movie by a long shot.
Anyone with kids will tell you (a) the site is great, safe fun and (b) kids get tired of it pretty quickly.
Kids change peer groups damn near every year, and Club Penguin dies like Friendster not because of a movie, but because people move on.
Of course, like aging rock stars, has-been web sites like Friendster are apparently big in Japan. Which you’d think would be a natural for the Tamagotchi-like Club Penguin.
Kelowna, eh? Not bad. When I hear about a start-up in Vernon getting bought out, it’s time to head back home and retire.
@38. I agree, my kids barely use it nowadays. Club Penguin was used alot during the winter season to chat with friends and cousins. But, in addition to the change in peer groups, they prefer doing sports and other activities during the other seasons (Spring through Fall). However, there’s the Disney marketing machine. I’m sure they’ll make a big push on the Disney Channel, which is popular with tweens.
@37 It will be interesting to see anyone going for Webkinz especially.
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First of all, tuxee5, do not spam a mature and intelligent discussion with all your ‘ZOMG I KIN HACK FER U!!!!!!’ talk. It’s not needed.
A very shrewd business move by Disney. I believe Club Penguin’s success can be traced back to when it was first advertised on Miniclip.com back in March last year. I would guess that a very large proportion of its userbase found out about it by logging on to Miniclip, where it has remained as the most played game for about a year now. Both companies will be able to prosper as a result of Disney’s investment.
The best thing about Club Penguin is that it is fun to play for children and adults of all ages, as shown by the comments from other people here. It is incredibly safe compared to other social nextowrking sites, because you, the parent can control what your child says and/or does.
sc: Club Penguin generate all their revenue through subscription (which are $6 per month) and the sale of online merchandise. They make no money through on site advertising, as the money from subscriptions cancels the need for that.
As for the idea that Club Penguin will go out of fashion; it’s been going strong since October 2005, so you would expect it to keep going strong, but then again, who knows what the future will bring…
Dude, You are so wrong! Movies and Hollywood are history. The internet and Miniclip.com are the new Hollywood. The Internet drives trends now not the the old timers and their tired, non interactive movies.