Money Matters, Simplified.
Disney to acquire Playdom to strengthen foothold in social gaming industry
by Sophie Anderson - July 25, 2010 - comments
The Hollywood entertainment giant Walt Disney Co. is in discussions to buy game developer Playdom Inc.
Walt Disney Co. is reportedly buying Playdom Inc., the maker of video games played on the social-networking website Facebook.
Disney, the largest media and entertainment conglomerate in the world, will pay $500 million for the Mountain View, California based Playdom.
Booming social gaming industry
Burbank, California, based Disney will use the acquisition of Playdom as a means to make further inroads in the social gaming industry whose popularity has skyrocketed in recent times.
The deal with Playdom also underscores the keenness of entertainment companies to capitalize on the growth of social games.
"Playdom is the biggest guy left that’s independent that’s not crazy expensive," said Michael Pachter, a Los Angeles-based analyst with Wedbush Morgan Securities.
As a strategy, Disney has gradually increased its stakes in the games market. The company recently acquired Tapulous Inc., a maker of music games for the iPhone and other Apple devices.
The deal with Playdom also underscores the keenness of entertainment companies to capitalize on the growth of social games.
Game publisher Electronic Arts Inc. paid $408 million to purchase a social-games start-up, Playfish Ltd. last year.
Zynga, maker of Farmville and a clear market leader, whose market value runs in billions of dollars, is contemplating an initial public offering (IPO).
Playdom growing at a fast clip
Playdom may not have as many as 200 million users that Zynga has but the former claims that it "may be the fastest growing social gaming company on the planet."
Zynga, with it’s with 1,000 employees, has displayed an incredible ability to generate profits. Playdom, with 600 employees, has also had two good consecutive years.
Playdom, maker of the Mobsters, the No. 1 game on MySpace boasts of more than 38 million monthly active users.
Playdom's other most popular games include Social City, which allows players to build and run their own virtual cities.
Disney and Playdom already have a business alliance. The latter develops social games for Disney’s ESPN sports cable channel.
It is pertinent to note that the fast-growing social game company Playdom is itself on a shopping spree.
The company had raised $33 million in a third round of funding from Bessemer Venture Partners, Steamboat Ventures, and New World Ventures to fund its seven acquisitions in the last six months.
Playdom has more than 130 million games installed on Facebook, MySpace, iPhone and Hi5.