Posted by: Blue Heavens | 2 August, 2007

Walt Disney acquires Club Penguin for $700 million – Bubble?

I can say I’m an ardent follower of Jeremiah Owyang’s blog, and of course I’ve learnt of the acquisition of Club Penguin by Walt Disney for a whopper $700 million here. The main thing that caught my attention in his article is the word “Bubble”. This is one helluva word that internet entrepreneurs fear the most, when the word “Burst” appears right after it.

Well of course the amount in this acquisition is simply ridiculous from an onlooker’s perspective, but you certainly cannot omit the numerous possibilities that lie in the purchase of Club Penguin. Disney did not just simply buy the game, but the rights to the characters, the players, the parents, and the influence over them. Imagine the profits when Disney starts branding the penguins; You’ll see Club Penguins merchandise flooding stores all over the world, you’ll hear kids everywhere talking about it, you’ll soon be viewing Club Penguins cartoon shows on your television, and even on the big screen! Imagine how much Disney would make, having bought an established “online toy” which is probably a fast-growing infant to them that they see a lot of potential in.

The success of Club Penguin lies in a few factors, the gameplay, the cute portrayal, no cost to start playing, the online virtual world that is to kids what SecondLife is to grown-ups. Ultimately, the main power of the game lies in its platform, Flash, of which it is portable to the different and numerous online game platforms on the internet. Just from a personal experience, I have younger relatives (aged 8 to those as old as 18) demostrating to me how the game is played. The interesting thing is that they didn’t know what the address of the main game site is, but they accessed it thru Miniclip, supposedly the largest online gaming network, and apparently the most popular online game site right here in Singapore.

I still think that there’s gonna be a bubble, but it will take a while for the common folks to start throwing in money blindly after the lesson they had 7 years ago.

Here’s some info on the acquisition:

Anyone interested in reminiscing in the dot com timeline can come here.

A later article here states the acquisition as $350 million, but notice the discrepancy between the amount in the sub header and in the body of the article. So which one is true??

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Responses

  1. Unlike the first wave, companies were being bought for ‘future’ valuation.

    Now this time, at least we know that Club Penguin is making money, as kids are spending money every month, for subscriptions and virtual (non existent) goods.

    Let’s see what happens

  2. Yup, most of the companies that survived the crash actually had offline revenue. Those were the days of future valuation.

    But is Club Penguin worth $700 million? I would say the excess of this money over the actual valuation would be for future valuation, that where the glimpse of the Crash 2.0 comes from. But hey, Disney is no online media and content company.


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