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Club Penguin Migrates to Walt Disney Internet Group

The Walt Disney Co. has acquired Club Penguin, one of the fastest-growing online virtual worlds for kids. Since its launch in October 2005, award-winning Club Penguin has grown to more than 700,000 paid subscribers, achieving this subscriber and user growth with very limited marketing efforts, relying mostly on strong product and word-of-mouth awareness among kids. The site has more than 12 million activated users, primarily in the U.S. and Canada

One of the fastest growing online destinations for kids 6-14, the site features animated penguin avatars that inhabit a snow-covered virtual world, conversing with other users, taking part in group activities and creating and furnishing a virtual home with currency earned inside the game.

Club Penguin will be called Disneyâs Club Penguin, but will retain its URL (www.clubpenguin.com) and remain based in Kelowna, British Columbia. The companyâs three founders, Lane Merrifield, Dave Krysko and Lance Priebe, will join Disney and remain the senior management team of the unit. Merrifield, Club Penguinâs ceo, will become an evp of The Walt Disney Internet Group (WDIG), reporting to WDIG president Steve Wadsworth. There are no immediate changes planned to the operation or business model of Club Penguin.

âWe have been actively searching for an organization that not only shares our values and concerns for children, but also has the ability and desire to help us bring Club Penguin to more children throughout the world. Weâve found that partner in Disney,â said Merrifield, one of Club Penguinâs three founders. âAs a former employee of Disneyland, Iâve always had a great respect for what Walt created. When he first envisioned Disneyland, he wanted to create a safe place that he and his daughters could enjoy. In the process of creating Club Penguin, we shared that passion and often pulled from Waltâs vision in the hope of creating a unique place online that we would be comfortable letting our own children visit.â

âThis 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,â said Bob Iger, Disney president/ceo. âClub 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. Just as with our own Disney.com, kids love Club Penguin and parents trust it; and we are proud to welcome the creative team of Club Penguin into Disney. 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.â

âWhat Lane, Dave and Lance have achieved in creating such a large community around this incredibly engaging, immersive environment in so short of a time is phenomenal,â Wadsworth said. âWe welcome their unique culture, and both we and they are excited about seeing what can come from combining their innovations with Disneyâs brand strength and entertainment assets, global reach, and our No. 1 position with kids and families in Disney.com. We expect to continue Club Penguinâs strong growth well into the future, especially by targeting markets outside of North America and through promotion on our Disney-branded platforms.â

Club Penguin is the latest in a year of successes in the Disney-branded online space. In early 2007, new Disney.com debuted, which remains the No. 1 site for kids and families. The new Disney.com offers all things Disney in one place on the Web, including videos on demand, games (including virtual world MMOGs), as well as aspects of community, social networking, user-generated content and creation of individual media lists, all in an environment designed for kids with safety in mind.

Disney was one of the first companies to enter the virtual world space for kids and families with the introduction of Disneyâs Toontown Online in 2003, the first massively multiplayer online game for kids and families. Disney will launch Pirates of the Caribbean Online later this year, and, in 2008, will debut Disney Fairies, a virtual world aimed at girls and based on Tinker Bell and her friends, which builds upon the popular Disneyfairies.com site that launched in January 2007. DisneyFairies.com allows users to create, outfit and name fairy avatars, as well as obtain and decorate a home for the avatar, all in the world of Tinker Bell. Nearly 2.5 million Fairies have been created on the site.

Disney plans to develop a Disney-branded connected entertainment network that allows users to access Disney-branded content, including virtual worlds and Disney.com games and videos, any time and anywhere, as well as communicate with each other across platforms, through a Web-based hub connected with PCs and mobile devices.

Club Penguinâs user base has been primarily located in the U.S., the U.K. and Canada. By leveraging Walt Disney Internet Group resources and experience, Club Penguin plans to create international versions in Europe and Asia, as well as in the Americas.

Club Penguin, like Disneyâs other virtual worlds, features a velvet rope model of usage. While users can play for free for an unlimited time and enjoy a portion of the virtual worldâs geography and functionality, a user must subscribe in order to achieve status rank in the game, take advantage of certain features or make purchases of in-game goods, such as furnishings for an avatarâs igloo home. A subscription is $5.95 a month or $57.95 a year. Club Penguin also generates revenue from sales of merchandise online, such as plush versions of penguinsâ pet puffles, t-shirts and gift cards.

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