Disney Drops $560 Million for Silicon Valley Gaming Group

By Scott McGrew and Jessica Greene
|  Wednesday, Jul 28, 2010  |  Updated 7:29 AM PDT
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Wondering about what the best way to make a buck these days? It's all in the game -- online gaming, that is.

The casual Internet game has become a huge growth industry in the Bay Area. Consider the simple flash-based game you see your co-workers playing on the sly or the real-life role-playing type of games your social networks friends ask you to help them win.

Today, that casual habit translates into a big payout for a few programmers in Mountain View. The Walt Disney Company is going to buy the company Playdom for $563.2 million.

No, that's not a typo.

The company has only been around for just over two years now but it's already figured out the formula for success in the emerging online-gaming market and Disney took notice.
 
Playdom has about 42 million monthly active users, who play games such as "Social City" and "Sorority Life" played on Facebook and iPhone. Bringing Playdom on board will strengthen Disney's digital-gaming portfolio and help them bring Disney's characters, stories and brands to customers in new ways through Facebook and MySpace, the company said.

The deal comes less than a month after Disney announced it bought Tapulous, the maker of the popular iPhone music game "Tap Tap Revenge." Disney also bought the popular online kids hangout Club Penguin for $350 million in 2007.

Disney is snapping up Playdom amid a boom for online social games, which are played for free by millions of people and make money through ads and, more importantly, sales of virtual goods for small amounts of money. The deal is supposed to close in September.

The grandfather of all the online gaming startups, Zynga, is probably worth somewhere in the neighborhood of $4.5 billion, according to some analysts. Most well-known for "Mafia Wars" and "Farmville," privately held Silicon Valley-based Zynga didn't even exist three years ago. Today, it boasts more than 235 million monthly users who play its Farmville, Mafia Wars and poker games in Facebook and elsewhere online.

Meanwhile, a brother and sister in San Francisco who invented a gaming website called Kongregate just sold their product to gaming retailer Game Stop. The price hasn't been announced but analysts are figuring the deal is somewhere in the mid-$20 million range.

Late last year, Electronic Arts Inc. snapped up San Francisco-based social game developer Playfish for $275 million.

And those are real dollars.

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