Darren Herman

For those of you who do not have kids or nieces/nephews to play with, you probably aren’t too aware of Club Penguin.  However, if you are aware of Club Penguin, you’re probably ultra-aware of the role it plays in your childrens lives.

This week, Disney announced that it completed the sale of Club Penguin for $700M, a price tag that wowed many folks, but when you dig deep into the financials, it only represented a 10x earnings and 5x revenues.  Umair over at Bubblegeneration Strategy Lab, a blogger that I read as often as he posts has a great writeup of the deal.

The argument he poses around this deal is not that of the terms and dealpoints, but around the strategy.  He believes that the acquisition of Club Penguin by Disney does nothing for the brand as it’s current IP (Mickey Mouse, etc) are dying a slow death.  I personally could see Disney opening up “Club Penguin” in the theme park by offering themed rides and areas, but to an extent, I also agree with Umair.  Certainly read his post to learn his rationale as I don’t do it justice.

Something else I really fancy from his posting is:

Secondly, this deal validates, to an extent, the virtual goods revenue model, and puts it squarely in the spotlight.

With the Virtual Goods Summit haven taken place about a month and a half ago and Sparter gaining some momentum, there is a spotlight on this industry and it’s only going to grow.  Disney surely sees this opportunity and has acquired hundreds of thousands of members who purchase virtual goods… recognizing that the lifetime value of a gamer is significant and they’ve only just begun cracking the surface.