Club Pengiun to Disney for up to $700m, prepare for the casual mmo onslaught

Club Penguin, a casual MMO start-up that was rumored to be on the blocks to Sony for $500m, has sold to Disney for $350m, with an additional $350m on the table based on performance. The deal with Sony broke off in June, and Disney makes a much more natural acquirer in any case.

If you're keeping track at home

• Club Penguin is an amazing consumer web community, with a solid revenue model, that took zero VC money and features nobody from the Valley.
• They are doing about $50m in revenue, have a much better retention rate than Webkinz, and zero advertising (which apparently is going to continue).
• And, just as I thought, the press is quoting a 2005 founding date, when readers know this is no overnight success story.

This should also serve as the irresistible siren call to VCs that will likely make 2008 the year of online gaming. I'm seeing a ridiculous number of business plans built around virtual worlds, virtual goods, and online games, and I'm not even a VC. This will help push even more VCs into funding, and in 6-18 months there will be a avalanche of new ideas in this space. If you thought just making an online multiplayer world, or virtual goods play, is enough to stand out then you might as well be releasing a new user generated video site.

Ah, one more thing.. Myspace went for $700m as well, in a deal that felt big at the time but then felt underpriced a few years later. I wonder who Facebook will be?

Comments

[steve Kane]

club penguin is a rockin' great product. kids love it withon one minute of trying it and parents somehow intrinsically feel its trustworthy and OK -- and so, pay.

congrats to all concerned, and to disney for a smart move

btw, nabeel, your post headline should be "March of the Penguins"

[hunter]

>> If you thought just making an online multiplayer world, or virtual goods play, is enough to stand out then you might as well be releasing a new user generated video site.

But i've worked at both second life and youtube. What if i combined them both? ;-)

[Bart]

youtube in a virtual world?
http://www.faketown.com