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Disney marches on Club Penguin

The House of Mouse is making room to tend to penguins. Disney has agreed to acquire fast-growing kid-targeted social networking phenom Club Penguin for a possible US$700 million. The entertainment giant is immediately forking out US$350 million, and says it could tack on another US$350 million by the end of 2009, if growth targets are met.
August 2, 2007

The House of Mouse is making room to tend to penguins. Disney has agreed to acquire fast-growing kid-targeted social networking phenom Club Penguin for a possible US$700 million. The entertainment giant is immediately forking out US$350 million, and says it could tack on another US$350 million by the end of 2009, if growth targets are met.

What likely attracted Disney is that Club Penguin has seemed to crack the code of making digital platforms pay in the kids space. Since its launch in October 2005, the site has signed on more than 700,000 subscribers who willingly pay the US$5.95 fee every month, and it currently has more than 12 million activated users, primarily between ages six and 14, in the US and Canada. The site will be re-dubbed Disney’s Club Penguin, but will retain its URL (www.clubpenguin.com) and continue to operate from its Kelowna, Canada base.

The company’s three founders, Lane Merrifield, Dave Krysko and Lance Priebe, have joined Disney’s executive ranks and will remain in charge of the operation of Club Penguin, which Disney says it has no immediate plans to change. Merrifield, currently Club Penguin CEO, will become an EVP of Disney’s internet group.

At the same time, Disney reported its Q3 results. Overall revenue was up 7% to US$9.05 billion, and it was a particularly good three months for the company’s TV, consumer products and theme park segments. Revenues at Disney Consumer Products made the most significant gain, shooting up an impressive 23% to US$549 million.

About The Author
Gary Rusak is a freelance writer based in Toronto. He has covered the kids entertainment industry for the last decade with a special interest in licensing, retail and consumer products. You can reach him at garyrusak@gmail.com

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