So-called "virtual worlds" have gotten lots of buzz lately. These are communities where people can hangout, build things, trade and so on.Even companies like IBM (NYSE: IBM) use virtual worlds to do things like management training.
Well, this week, Disney (NYSE: DIS) shelled out $350 million for Club Penguin, which is a virtual world that's focused on kids between the ages of 6 to 14. Basically, a kid can do things like furnish their igloo home.
The business model involves a combination of premium subscriptions ($5.95 per month) as well as merchandising (gift cards, t-shirts).
I had a chance to interview Robert Botch, who is a veteran of the gaming world and operates TidePool Partners. He is also a director of a virtual world, FakeTown.
Q: What's the background on FakeTown?
"FakeTown was one of the first online virtual worlds and got its start about six years ago. At first, it was a hobby of the two founders -- a way to let friends interact in a virtual online environment, originally intended to be a parody of L.A. Over the years, with the help of a talented development team, capital from friends, family and angel investors, it has evolved into what it is today. The beauty of FakeTown is that over time it will continue to evolve with the help of its users."
Q: What makes you different?
"FakeTown is aimed at an older demographic than Club Penguin. Our target is for users ranging from 14 to 35 years old. As a result, our emphasis is on giving users more ability to create their own content and control their individual user experience. Our world is very open ended and can be as interactive or passive as the user wants it to be. The same applies to the graphics. FakeTown allows users to upload graphic items such as photos or drawings and customize them for their world using our built-in editing tools.
"Although, the biggest difference is that FakeTown is based on things people do in the real world but with a heavy, heavy dose of tongue in cheek. We like to think of FakeTown as an open-ended digital amusement park for teens and adults. It is rendered in cartoon style 2.5D not 3D, which allows users to enter it through their browser without having to download a large application that eats up memory and processing power."
Q: Thoughts on the Disney deal?
"We think the Disney deal is a strong endorsement of our model and shows that large entertainment companies share our conviction that online digital entertainment is the wave of the future. Disney has been in the theme park business for many years and their recognition that this style of entertainment can be carried over into the digital world is a vote of confidence in the space."
Q: Think there will be more dealmaking? If so, why?
"This category is just getting started and there is a lot of room to grow. Based on the number of companies we have been talking to, you can expect to see more action in the future. We expect to see new start up companies, plenty of new concepts and a lot of action from entertainment publishers and the traditional game publishers. Look for a flurry of activity over the next 12 to 24 months and some interesting strategic partnerships. I was lucky enough to play an integral part in the growth of the video game industry back in the 80's and this has the same feel."
To check out more recent M&A deals, click here.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
"FakeTown was one of the first online virtual worlds and got its start about six years ago. At first, it was a hobby of the two founders -- a way to let friends interact in a virtual online environment, originally intended to be a parody of L.A. Over the years, with the help of a talented development team, capital from friends, family and angel investors, it has evolved into what it is today. The beauty of FakeTown is that over time it will continue to evolve with the help of its users."
Q: What makes you different?
"FakeTown is aimed at an older demographic than Club Penguin. Our target is for users ranging from 14 to 35 years old. As a result, our emphasis is on giving users more ability to create their own content and control their individual user experience. Our world is very open ended and can be as interactive or passive as the user wants it to be. The same applies to the graphics. FakeTown allows users to upload graphic items such as photos or drawings and customize them for their world using our built-in editing tools.
"Although, the biggest difference is that FakeTown is based on things people do in the real world but with a heavy, heavy dose of tongue in cheek. We like to think of FakeTown as an open-ended digital amusement park for teens and adults. It is rendered in cartoon style 2.5D not 3D, which allows users to enter it through their browser without having to download a large application that eats up memory and processing power."
Q: Thoughts on the Disney deal?
"We think the Disney deal is a strong endorsement of our model and shows that large entertainment companies share our conviction that online digital entertainment is the wave of the future. Disney has been in the theme park business for many years and their recognition that this style of entertainment can be carried over into the digital world is a vote of confidence in the space."
Q: Think there will be more dealmaking? If so, why?
"This category is just getting started and there is a lot of room to grow. Based on the number of companies we have been talking to, you can expect to see more action in the future. We expect to see new start up companies, plenty of new concepts and a lot of action from entertainment publishers and the traditional game publishers. Look for a flurry of activity over the next 12 to 24 months and some interesting strategic partnerships. I was lucky enough to play an integral part in the growth of the video game industry back in the 80's and this has the same feel."
To check out more recent M&A deals, click here.
Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.
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