August 29, 2007, 12:00 AM

Disney’s Club Penguin buy is part of a march to an online network

The recent addition of online virtual world Club Penguin to Disney’s existing online assets will further the company’s objective of establishing a branded, connected entertainment network online.

The Walt Disney Co.’s recent acquisition of Club Penguin fits Disney plans to develop a connected entertainment network online that allows users to access Disney-branded content, including virtual worlds and Disney.com games and videos, anytime and anywhere, Disney says. The network is expected to enable consumers to communicate with each other across platforms, through a web-based hub connected with PCs and mobile devices such as cell phones and game platforms.

The Club Penguin addition continues a busy year for Disney online. In early 2007, the company relaunched family entertainment-oriented web site Disney.com. Tapping broadband-based technologies, the new Disney.com offers videos on demand and games, as well as aspects of social networking, user-generated content, and creation of individual media lists, “all in an environment designed for kids with safety in mind,” Disney says.

Since its start in October 2005, Club Penguin has grown to more than 700,000 current paid subscribers. The site has more than 12 million activated users, primarily in the U.S. and Canada, and targets children ages 6-14. The site features animated penguin avatars -- animated characters that represent users -- 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.

Club Penguin users can play for free for an unlimited time and access a portion of the virtual world’s geography and functionality, but they 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 avatar’s igloo home. Subscriptions cost $5.95 a month or $57.95 a year. In addition to subscriptions, Club Penguin also generates revenue from sales of merchandise online, such as plush toys, T-shirts and gift cards.

“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,” said Bob Iger, Disney president and CEO.

The site will be dubbed Disney’s Club Penguin, but will retain its URL, ClubPenguin.com. The company’s three founders, Lane Merrifield, Dave Krysko and Lance Priebe, will join Disney and remain the senior management team of the unit. Merrifield, Club Penguin’s CEO, will become an executive vice president of The Walt Disney Internet Group reporting to group president Steve Wadsworth.

Other online products slated for launch include Pirates of the Caribbean Online later this year and, in 2008, Disney Fairies, a virtual world aimed at girls and based on the Peter Pan movie character Tinker Bell and her friends. The virtual world builds on the 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. To date, nearly 2.5 million “Fairies” have been created on the site, Disney says.

The Walt Disney Co. has four business segments: media networks, parks and resorts, studio entertainment and consumer products. Disney Shopping Inc., a division of Disney Consumer Products, is No. 60 in the Internet Retailer Top 500 Guide.

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