Disney's Chilling in Cyberspace

In a Disney Store earlier this week, I bumped into a merchandising surprise. Tucked away from the garb and gear of Disney's (NYSE:DIS) more popular animated characters was a shelf devoted to Club Penguin products.

There were colorful shirts featuring the site's playful penguins, and a character playset that promised to unlock ClubPenguin.com virtual goodies when purchased.

Disney offered to pay as much as $700 million for Club Penguin two summers ago. It seemed like a stiff price at the time, with the kid-friendly virtual community commanding $5.95 a month from its 700,000 premium subscribers and their waddling penguin avatars.

"$1,000 per fickle kid," I noted at the time. "That's a pretty steep ransom."

However, the site also attracted 12 million freeloading penguins at the time. Paying members are great, but access to countless more casual visitors can be just as valuable.

The social site is ad-free, but hardly influence-free. You don't have to be a paying member to be drawn to the recently released Club Penguin: Elite Penguin Force game for Nintendo's (OTC BB: NTDOY.PK) handheld DS system. The site purchase may have seemed expensive at the time, but it sure seems cheap when you consider Disney's merchandising prowess since.

The plaything that unlocks new areas and accessories? That's been done before. Mattel (NYSE:MAT) offered Barbie-shaped MP3 players that enhanced the BarbieGirls.com social experience. Judging by the drastically marked-down Barbie MP3 dolls I ran across over the holidays, I'm guessing that didn't pan out for Mattel. However, in Disney's case, Club Penguin is already an established online franchise. Parents also have a strange knack for trusting Disney things.

Disney acquired Club Penguin in the summer of 2007, despite having online communities already in place, with plans to launch ambitious realms themed to pirates and fairies. I bring this up only because my Disney in 2012 column -- where I suggest that the family entertainment giant may acquire kid-centric travel companies like Great Wolf Resorts (NASDAQ:WOLF) and Royal Caribbean (NYSE:RCL) -- drew one reader to dismiss the possibilities because CEO Bob Iger is against anything that isn't Disney-branded.

I stand by my prognostications. Club Penguin proves that Iger can snap up a popular non-Disney property and Disney-fy it.

The virtual environment niche is too potentially promising to trust to organic properties. Why do you think Viacom (NYSE:VIA) acquired Neopets several years ago? Why do you think Google (NASDAQ:GOOG) failed last year with its homegrown Lively?

Disney's blend of self-developed sites and the Club Penguin purchase will keep it on the cutting edge among young audiences. When you're the family entertainment giant, you certainly don't want to squander that opportunity.

Other articles to M-I-See:

• Why is Everybody Picking on Disney?
• Disney in 2012
• It's So Much Worse Than You Think