Don't miss
  • 12
  • 6468
  • 6097
  • 20

Disney buys Playdom, but will its IPs work in social games?

By on July 28, 2010
Print Friendly

The acquisition of Playdom by Disney is all about exploiting Disney’s IP on social plafforms. But will it work?

Playdom logo

Disney has paid $563.2 million, mainly in cash, plus a $200 million earnout for Playdom. that’s a total value of $763.2 million if the targets are met. I don’t have insight into the financials of Playdom, but it’s a big number. Playdom had better deliver for Disney (Disney’s other big online acquisition has only partially worked out. Club Penguin failed to meet its earnout target, halving the acquisition price).

What are Disney buying?

Disney can see that social games are a large part of the media future. In Playdom, they are acquiring:

  • Users: According to AppData, Playdom has 38.8m MAUs (not d-duped), making it the #4 Facebook app developer behind Zynga, EA/Playfish and Pencake.
  • Revenues: Playdom expected to make “upwards of $50 million” in revenue in 2009, says Inside Social Games.Given the trajectory of virtual goods across the market, that seems like a conservative estimate. it wouldn’t surprise me if it were going to make 2-3x that figure in 2010 (although I have no insight into this at all).
  • Management: John Pleasants, CEO of Playdom and ex-COO of EA has played his hand well, and particularly has managed the company’s transition back from its nearly-disastrous decision to back MySpace over Facebook as the platform for social gaming.
  • Expertise: This is the biggie. In this market, there are few companies who really get social games, and finding employees who can make them is really tough (and very expensive). Disney is buying a head start.

What about IP?

Bob Iger, Disney CEO, had this to say:

“We see strong growth potential in bringing together Playdom’s talented team and capabilities with our great creative properties, people and world-renowned brands like Disney, ABC, ESPN and Marvel.

This acquisition furthers our strategy of allocating capital to high-growth businesses that can benefit from our many characters, stories and brands, delivering them in a creatively compelling way to a new generation of fans on the platforms they prefer.”

So there is little rationale in buying the IP of Playdom (fair enough, there isn’t much yet) and more in bringing Playdom’s social gaming expertise to the Disney family, particularly Disney and the $4 billion acquisition of the Marvel mine.

Will it work?

For me, the jury is out. Playfish and now Playdom are now touting branded content as the next big thing on social games.

Well they would, wouldn’t they, being owned by massive brand owners who want them to exploit those brands in the social space.

The problem is that brands and “iterative development” don’t go together very well. It’s all very well putting out a low-budget test title with an unknown IP. It’s another thing to make a social game with Mickey, Thor or John Madden that dies on its arse.The proven model of social games has been to try – learn – iterate, which is not something that businesses steeped in old media thinking are naturally well-positioned to do.

So big publishers will try to make social game development like traditional development: risk-averse, driven by committee, full of focus-groups and arse-covering.

I don’t say that it won’t work, but I do say that these acquisitions are fraught with risk. i was much more comfortable with the EA/Playfish deal because I believe that John Riccitiello is totally committed to adapting EA to the new games market.

The jury is still out on Disney.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com
  • Hello!

    Very good Site i like this!
    5 Stars!
    Thx

    Jurica S.

  • I agree. It's not impossible, but it will be tough. It really is two totally different ways of doing things.

  • killing butterflies

    Disney have many, many levels of stakeholder that *have* to be involved in the sign-off process, so getting something out in a few months will require a massive change in process from their side. Also, their last attempt to get into a social space didn't work out too well, did it Club Penguin?