Disney has acquired social gaming developer Playdom for a whopping $563.2 million, with up to another $200 million in performance-linked incentives.
Playdom is in the thick of the competitive battle for second place in social gaming, along with Electronic Arts, which made a $300 million acquisition in the space last year, and a handful of competitors. (FarmVille developer Zynga is in a league of its own.)
Disney could add a lot of value to Playdom’s operation by contributing its intellectual property. That would let the developer release games with much more recognisable brands than anything happening in the space today.
Here’s the press release:
BURBANK, Calif.—(BUSINESS WIRE)—Advancing on its goal of bringing consumers its well-known stories, characters and brands in ever more engaging ways, The Walt Disney Company (NYSE:DIS) has agreed to acquire Playdom Inc., one of the leading companies in the fast-growing business of online social gaming.
“We are at the start of a once-in-a-generation opportunity to transform the way people of all ages play games with their friends across devices, platforms and geographical boundaries”
Playdom shareholders will receive total consideration of $563.2 million, subject to certain conditions, and a performance-linked earn-out of up to $200 million.
In just two and a half years of operation, Playdom has established itself as a pacesetter in building popular games for social networks enjoyed by consumers around the globe. Through well-known titles like Social City, Sorority Life, Market Street and Bola, Playdom engages an estimated 42 million active players each month.
By acquiring Playdom, Disney will strengthen its already-robust digital gaming portfolio, acquire a first-rate management team and provide consumers new ways to interact with the company on popular social networks like Facebook and MySpace.
“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,” said Robert A. Iger, President and CEO, The Walt Disney Company.
“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,” Iger added.
“We are at the start of a once-in-a-generation opportunity to transform the way people of all ages play games with their friends across devices, platforms and geographical boundaries,” said Playdom Chief Executive Officer John Pleasants. “Disney is an incredibly forward-thinking company that shares our vision and is the ideal partner to further our mission to bring great entertainment to people around the world.”
Playdom, which has 15 game development studios, will remain headquartered in Mountain View, California. Pleasants will become an Executive Vice President of the Disney Interactive Media Group (DIMG) and General Manager of Playdom, reporting to DIMG President Steve Wadsworth.
Disney expects Playdom’s expertise in social gaming software tools, business intelligence and rapid innovation to broadly benefit DIMG, which already has a substantial global presence in online, console and mobile gaming.
The transaction, which is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act and certain non-U.S. merger control regulations, is expected to close by the end of Disney’s 2010 fiscal year.