Kara Swisher

Recent Posts by Kara Swisher

Disney Tries to Waddle Its Way to Digital Success

penguin

After having just visited WeeWorld in London, an avatar-based site that allows mostly young people to create online personas for social networking and other activities around the Web, it was interesting to see Walt Disney last week forking over up to $700 million to own another popular social-networking site for “tweens” called Club Penguin.

As much as I despise that icky marketing term to signify kids on the cusp of becoming teenagers, to spend that much money to get its hands on that market is an interesting indicator of the desperation of older media companies to latch onto a big trend and also the perplexing development of the social-networking business, where the cart is so far in front of the horse that it’s almost laughable.

I have to give Canadian-based Club Penguin props for building a site in only two years that has attracted 12 million registered users and about 5 million monthly unique visitors–700,000 of whom pay a monthly fee of almost $6 to play in the virtual online space.

But its purchase price is still way high compared to its revenues (especially since no advertising is one of the attractions of this site to parents) and now sticks a large no-discount sticker all over the Web for such sites.

True, Club Penguin has been a raging success, especially compared to Disney’s own recent efforts at sites like Toontown. Perhaps that is due in part to that site’s not-so-punny catchphrase on top of its newspaper-like homepage: “The Best Game in the Tooniverse” with a price of “Five Jellybeans,” which just screams to kids: lame.

So Disney is paying the price for an inability to innovate online in the space–as it did before in an odd deja vu to a lot of Disney online efforts, including a premium site called Blast and when it bought Infoseek and turned it into the clunky Go portal.

Ponying up $350 million in cash with promises of $350 million more if certain performance criteria are met speaks volumes to me about this key problem Disney has long had on the Web–how to grow its original online media organically, beyond the basics of theme-park ticketing and other obvious stuff around its established products.

This time, Disney is not fooling around, it seems. “We plan to rename it Disney’s Club Penguin and to immediately use our Disney-branded properties such as Disney.com, Disney Channel, Radio Disney and our parks and resorts to raise its profiles,” said Disney CEO Robert Iger on a recent quarterly call. “We believe virtual worlds can extend and expand on the life of a franchise, expand our global reach for our entertainment content and allow us direct contact with our consumers in a more personalized and engaging way.”

Now, I have been a big admirer of the recent digital efforts of Iger, whom we interviewed at D4, such as his aggressive move into streaming and selling television content on the Web (how much do I love its ABC.com player, for example?).

Perhaps this is part of that drive, but it is unclear if paying these kind of prices will get Disney there, even without all the marketing muscle it brings to bear.

Even if Club Penguin is trumpeted all over the massive Disney universe from theme park to cable channel (that started immediately), the purchase is risky on a very basic level, given the cost and the nature of kids’ fast-changing preferences. Neopets? Webkins? And for us older demographic: Furby, Beanie Babies and Cabbage Patch Kids.

And, of course–and here I am really dating myself–the Pet Rock.


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There was a worry before I started this that I was going to burn every bridge I had. But I realize now that there are some bridges that are worth burning.

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