Second Life for Kids (continued)

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.