Disney Buys Playdom For Up To $763.2 Million

Disney is making a major foray into social gaming with the purchase of Playdom for up to $763.2 million. The games company, which has titles such as Mobsters, Social City, Sorority Life, Market Street and Bola on Facebook and other social networking sites, claims 42 million active players a month.

The deal is worth $563.2 million in “total consideration” and a possible further $200 million in earn-outs. It marks a considerable jump in the valuations of social gaming companies since last year when games publisher Electronic Arts bought Playfish for $275 million in cash and up to $100 million in earn-outs. Playfish had 60 million monthly active users at the time. The Disney-Playdom numbers imply that Zynga, the biggest social game company on Facebook, would be worth over $3.5 billion based purely on user numbers. AllFacebook.com’s internal numbers show Playdom has 39 million active players a month on Facebook compared with 207 million for Zynga.
Disney has hinted it would lend its brands and characters to future Playdom releases. Robert A. Iger, president and chief executive of the Walt Disney Company, said there was opportunity in bringing together Playdom’s team and capabilities with Disney’s “great creative properties”. “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,” he said.
Disney, through its investment fund Steamboat Ventures, was one of a number of investors in Playdom’s last round of venture capital financing, which raised $33 million in June. Other new backers included Bessemer Venture Partners and New World Ventures. The company has raised a total of $76 million. Disney told PaidContent it had not planned to buy the company when it took part in the June capital raising but the deal brought the two companies a lot closer.
Playdom is to remain in Mountain View in California and has committed to keep working on the 12 titles it currently has in production, as well as any new ones as a result of the Disney deal. The acquisition is subject to regulatory approval but should be complete by the end of Disney’s financial year.