Following several days of rumors, The Walt Disney Company has confirmed that it has bought social game developer Playdom, a move that dramatically expands the company’s footprint in one of the fastest growing segments of the video game world.
Disney is paying $563.2 million for the company – as well as a performance-linked earn out for investors of up to $200 million. That’s a substantial premium over the $400 million Electronic Arts paid for Playfish, a larger company in the space, last November.
And it’s sure to be music to the ears of investors in Zynga, which is far and away the leader in the social gaming space and already has an estimated market value of over $1 billion.
Disney and Playdom were hardly strangers. Disney’s Steamboat Ventures recently was part of a $33 million financing round for the company – and in May Playdom reached a deal with ESPN to create sports games for social media platforms. The first of those is scheduled to launch this fall.
Playdom is the industry’s third largest developer of social games, behind Zynga and Playfish, with 42 million active users. Its titles include Facebook and MySpace standards including “Social City,” “Sorority Life,” “Market Street” and “Bola”.
“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,” said Disney president and CEO Robert Iger in a statement.
Earlier this month, Disney broadened its footprint in the mobile space, acquiring music rhythm game maker Tapulous, makers of “Tap Tap Revolution” for an undisclosed sum. While it was a much smaller deal – and in a different segment of the market - the Tapulous acquisition had some characteristics in common with a potential Playdom buyout. Specifically, each deal gave the company instant credibility in the space.
It also gives the company an executive who knows a growing market that Disney doesn’t. With Playdom, that’s CEO John Pleasants, who will become an EVP in Disney's Interactive Media Group.