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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

August 1, 2007 at 3:24 PM

B.C. Web company cashes in with Disney

You can hear the ka-ching sound all the way down here in Seattle, after Kelowna, B.C.-based Club Penguin sold to Disney today in a deal worth up to $700 million.

Disney is buying Club Penguin as part of a bigger effort to develop online portals based on franchises, such as a pirates site that blends games, video and advertising.

I wonder how much the 60-person company will interact with Disney’s Internet team in Seattle’s Smith Tower. If immigration issues weren’t so sticky, I’d be guessing that they might combine at least some of the operations.

Club Penguin is interesting all by itself. It has proved that you can build a big subscription service catering to kids. The 2-year-old company has more than 700,000 subscribers paying $5.95 a month, plus more than 12 million “activated” users.

In the announcement, the site was described as “one of the fastest growing online destinations for kids ages 6 to 14. The site features animated penguin avatars that inhabit a snow-covered virtual world, converse with other users, participate in group activities and create and furnish a virtual home with currency earned inside the game.”

Disney’s paying $350 million in cash for the company, and giving it the option of another $350 million if it hits growth targets.

That’s a lot of cash, but Disney boss Bob Iger is hot for online properties. I covered his presentation at CES in January, which sounded like his quote in today’s announcement:

“This acquisition is consistent with our strategy of leveraging technology to create and deliver high-quality entertainment around the world and our commitment to investing our capital to generate growth and value for our shareholders/ Club Penguin embodies principles that are of the utmost importance to Disney — providing high-quality family entertainment and fostering parental trust. The founders have woven together new technologies and creativity to build an incredibly compelling, immersive entertainment experience for kids and families. … Combining the creativity and knowledge of the Club Penguin team with our existing Disney Online assets will help us further achieve our objective of establishing clear leadership in the kids and families online virtual worlds space around the globe.”

Comments | More in | Topics: Games & entertainment, Web

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