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Summary:

Sony is in advanced talks to buy the two-year-old kids focused social gaming ( ClubPenguin, paidContent.org has learned. We have confirmed t…

Sony is in advanced talks to buy the two-year-old kids focused social gaming ( ClubPenguin, paidContent.org has learned. We have confirmed the talks from senior insiders, but have not been able to confirm the potential price. The talks are exclusive, but still ongoing and could break down, and I’m sure they could have other competitive bid from others.

ClubPenguin is a massive multiplayer online game for children developed by New Horizon Interactive, a software firm based in Kelowna, BC in Canada. It was launched in Oct 2005, and has grown to about 4.5 million visitors in March. Using cartoon penguin avatars, players can converse, play minigames, and participate in other activities with one another in a snow-covered virtual world. The service is subscription-based (about $6 a month), and also has additional e-commerce/shop revenues. A detailed description of the company is here on Wikipedia.

From what we know, the site/service does not have any investment money in it yet. As to what fit it has with Sony, could be a good distribution vehicle for some of Sony Pictures’ kids-focused shows. Or, it might be that it becomes a part of Sony Computer Entertainment America, the gaming unit, which runs the Playstation franchise, or more likely, the Sony Online Entertainment division, which runs Everquest and others. Both Disney and Viacom (though Nickelodeon) have plays n this kids gaming/avatar space: Disney recently relaunched an existing virtual-reality site under a new name: Disney Xtreme Digital (DXD), and Nickelodeon launched its entry, Nicktropolis.com, at the end of January. Nick also bought Neopets in 2005 for about $160 million.

Staci adds: Rafat held back on the numbers when he broke this earlier today but we have some additional information that puts the price in the $450 million range. Some people were intent on floating a $500 million number but our sources peg the price at around $450 million, which would be a 7.5 multiple based on this year’s projected revenue of about $60 million. The self-funded company is already profitable and, according to our information, is operating at about 50 percent margin — ie $30 million in profit this year.

So what could hold the deal back at this point? According to one source, Sony is trying to get a handle on churn. We’ve also been told the founders are interested in committing some profits to charity and Sony wants to be sure its margins are protected. Why Sony? The subscription base is appealing as are the prospects of fitting it in with Playstation and possibly PSP. No obvious ad potential.

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  1. Amit Chowdhry Thursday, May 17, 2007

    Definetely a company that deserves the money.

  2. Melvin Simpson Thursday, May 17, 2007

    I'm just a little dubious about a site that is focused on two-year-old kids – a difficult market to monetise… :-)

    "Sony is in advanced talks to buy the two-year-old kids focused social gaming…"

  3. I"M ONLY 9 AND WHY ARE THEY TRYING TO BUY IT???????????? :-(

  4. hey. I am a Club Penguin player, and I don't care if sony buys it, as long as they don't make any huge changes to it. I have a Club Penguin tip/rumor/secret revealing site of my own (www.yayp.wordpress.com) and i don't want to have to re-do the whole site because sony makes too many changes to CP.
    I enjoy playing Club Penguin, but I do see some room for improvement, and if Sony can make those changes, then i'm all for it. Sony is great at game-making, so i don't see how they can mess up, unless they try to change it too much, too quickly.

  5. Howdy!
    I am also a member of club penguin, named Cppd Officer.
    Well, I emailed CP support and they said
    they had no itention of selling their small-town big-money business.
    If they ever did sell it, SONY would have to sign a contract stating that
    they would give a large portion of the profits to charity.
    Thats what ClubPenguin is. A site that gives to charity, and fun to all
    kids of all race, color, sex, age, etc. But seriously, SONY wouldn't
    but it just because they have a lot of money. I know nintendo wouldn't
    buy it after all the money they spent advertising the Wii and Gameboy Micro.
    Oh well. We'll just have to wait 'n' see. :)

    ~~Lil' Alex (Cppd Officer)
    Visit http://cppd.wordpress.com today!

  6. i am a paid member i will never quit club penguin.the only way your going to get me to like sony is if member prices go down.

    ps.NINTENDO IS WAY BETTER THAN YOU SONY!!!!!!!

  7. hey i have a wii too

  8. Hello. I have a site just like Yaypuffles. I really do care if they buy it because I have a PSP and I'm hoping once they but it that they will connect it to the PSP so I can play it everywhere. I am really hoping they buy it, and make some big changes because CP (Club Penguin) has been a little boring sometimes.

  9. O, and SONY IS WAY BETTER THAN NINTENDO! Nintendo has lower tech and lower prices, while Sony has technology from 2012 and higher prices.

  10. Oh s***, those mother f-s! Why is SONY after (mmorpg)???? This is fu***** bad!
    Well I hate SONY now!!!!!!!!!!!!!!!! I swear to god!!!!!

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