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From NYTimes [nytimes.com]:
Disney said it would pay $350 million for Club Penguin, a virtual community... More than 700,000 users now pay $5.95 a month to customize penguin characters and then chat and play games with other “penguins.”
“Kids are starting to go to the Internet first, so it is important for us to operate in that space,” Robert A. Iger, Disney’s chief executive, said in an interview.
Three daddies in British Columbia are paid $350 Million for the site, plus another $350 Million if they meet performance targets in two years. Not bad for a site created two years ago.
What's interesting is that it doesn't seem as if the site was promoted using keywords to rank organically on search engines. Not sure if they did any PPC, but it looks like they built a good website and promoted it to their demographic, and word of mouth took it from there.
Ahhh . . the irony of all those PCs, powered by electricity from coal fired power plants, playing virtual penguin . . as the polar ice caps melt away.
Somewhere in this moment of great success is the evidence of an inexorable decline.
"We now return to your regular programming . . . "Oooo! Ahhh! Wow!"
Let's say it takes $10M (which is way too much) to build a quality site. In fact, that number becomes "noise" when you're thinking about $350 million.
That means Disney is willing to pay $500 to aquire each of the 700,000 members that are paying $70 a year in fees. That's insane. Something's not right.
She was not interested in the "chat" aspect, but she liked the little games that your penguin can find as it waddles around the glacier. We played the games, and earned coins. nice! with the coins, you can dress up your penguin by adding clothing, hats, accessories etc. then when you want to buy a hat for your penguin... bam! gotta be a member - go ask your parents for $5.95.
Now, for a kid so young she can barely read (her penguin kept saying things like "xcfghui" and "MOM" and "vvvvvvvvvvvvv", and the other penguins said "You're Weird" and walked away), the site doesn't seem to pose any privacy threat. And it's cute. Every screen has a little icon showing that conversations are moderated... but are they really? who can tell.
Sadly, the penguin thing is SO 1996. Seriously, was it just me or were you confronted by penguins everywhere you went? warent thar like 5 movies made that year starring penguins?
IMHO $350M is a big number, but it's a good buy for Disney. Wait a few weeks and watch as the branded commercial messages start to smother the glacier. Disney could have spent that dough making a new feature-length animated picture which would have attracted a fraction of the repeat-watching audience.
also ... Club Penguin is entertainment that can't be pirated and redistributed. Piracy is crippling Disney's movie distribution and DVD sales.
Talk about brand loyalty - he can't wait to show his friend who have not yet heard about it.
5 year olds contributing to viral marketing - Its scary, but it is an awesome product...
[edited by: engine at 9:21 am (utc) on Aug. 6, 2007]