August 02, 2007

Disney Coughs Up a Nearly a Billion Dollars in the Race to Grab Virtual Tweens - Acquires Club Penguin

Having just paid the monthly renewal fee for Club Penguin today, I was interested to see that Disney just nabbed the tween-based social networking site for $350 million with another $350 million to follow if earnings targets are met.


All this time we thought the high-value social networking sites like FaceBook and MySpace that we old people started crashing was where the action is. Ha ha ha. The Internet's getting younger every day, friends.

Jenna, soon to be 10, first heard about Club Penguin from a friend at the beginning of summer. I've watched all summer as she's given out her penguin's name to one friend after another, telling kids who didn't know about the site to meet her there.

On Club Penguin, kids get their own penguins and a variety of objects for free. A monthly subscription of $5.95 (which we pay--making it the ONLY social networking site I give actual hard currency to) gives the kids personalization options, like the ability to decorate their own house, buy special items, etc.

At the beginning of the summer, I had never heard of Club Penguin. Today, our daughter and all of her friends are on Club Penguin. In fact right now, as I write this, they're IMing and skating around the rink like little furbies on steroids.

SO why did I -- expert on social networking and Internet savvy mom -- decide that club penguin was worth six bucks a month?

First of all, the range of activities for the kids is expansive. Ships come every so-many weeks and bring new games for them to play. She's learning tons about how to navigate online spaces. She takes pride in the intricate details of the houses she has built. She can play with her real world friends even when I don't have time to drive her around. I can work in relative peace. But MOST of all? It has a great safety record.

The kids go through a very good tutorial about what is okay and not okay on the site. They are empowered to alert the site of any other member who breaks the rules. So far, I have not seen problems, although it will be interesting to see if the site changes in any way now that the hand of Disney is inserted.

All of this is to say, I just told Jenna: Disney bought Club Penguin for $350 Million! And she ran off and called a friend and said, "Disney just bought club penguin--guess how much!? $350 MILLION DOLLARS!" And that friend just ran and told her brother. News is spreading fast.

Some fast facts about Club Penguin:

Score another one for the Canadians - Club Penguin is the brainchild of British Columbia-based New Horizon Interactive.

Club Penguin has 12 million users, 700,000 of which, like me, pay. [OMG a business model!]

Club Penguin as the third most popular virtual world, while Second Life ranks 12th. Webkinz, the other site my daughter belongs to, is number 2. (Webkinz business model may be even more lucrative, with a realworld merchandising component involved since kids have to buy the stuffed animal to get a code for their online experience.)

Average age users are between 6 and 14.

From a financial perspective, Disney gains $4.95 for every dollar it spent month one. If there are 700,000 users paying $5.95 each, and Disney pays $700,000 out of pocket, well, help me with the math.

Sounds like a WIN-WIN to me.

Grown-ups, lets get busy.


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