The kids space is hot. Techcrunch just reported on rumors that Montgomery and Co or Monty was working with Club Penguin on a sale to Sony for $500 million. Montgomery is the same investment bank responsible for selling Intermix (MySpace) to NewsCorp and Grouper to Sony so they have been building a nice practice in the Internet and digital media sectors. As for the price tag, $500mm is pretty big money (I have heard ranges of $250-500) but according to Techcrunch the company projects around $65mm in revenue with $35mm in profit. No wonder why the company didn’t need my angel or VC money :-). If most of this revenue comes from subscriptions at $6 per month or $60 per year for upfront commitments, using a blended rate of $65 annually, you get around 1mm paying subscribers (this is simple math and does not take into account growth and ramp). Not bad for a company that was started by 3 dads. As I mention in an earlier post, virtual worlds are hear to stay and there will be a number of acquisitions in the space over the next couple of years. In my household, Webkinz has taken the top spot. It will be interesting to see what Ganz, a privately held company in Toronto, does with this fast growing property. I can think of lots of ways it can further build out Webkinz and also monetize the community without losing its appeal and innocence.
Published by Ed Sim
founder boldstart ventures, over 20 years experience seeding and leading first rounds in enterprise startups, @boldstartvc, googlization of IT, SaaS 3.0, security, smart data; cherish family time + enjoy lacrosse + hockeyView all posts by Ed Sim →