Social networks

At least it won’t be called Club Mouse

As was widely rumoured a couple of months ago, Club Penguin is being acquired, but not by Sony, who was said to be deep in takeover talks with the company when I last wrote about it. Instead, the wildly successful virtual world for kids — which was started by three guys from Kelowna, B.C. as a side project about a year and a half ago — is being bought by The House That Mickey Built.

At the time of the Sony rumours, Disney was said to be interested in buying Webkinz, another Canadian-built virtual world for kids. According to the Wall Street Journal and PaidContent, the price tag on the current deal is $350-million cash plus an “earnout” of $350-million based on future performance. That’s a pretty handsome return on a little over a year’s worth of work, and from what I have been told — by at least one VC who was kicking himself for not being able to get in on the deal — ClubPenguin.com had not taken any substantial venture capital money whatsoever. The Globe did a story on the guys who created the site last fall.

Further reading:

Staci at PaidContent has a good overview of the deal (so does the Journal) including some comments from Disney CEO Bob Iger, and points out that members of Club Penguin are pretty protective of the site (which carries no advertising of any kind). Mike Arrington says that previous talks with Sony and others got derailed in part because Club Penguin donates a chunk of its profits to charity.