Playdom, is the fourth largest game developer on Facebook with 38 Million active users, but the social gaming startup is the largest one when it comes to MySpace. To strengthen its digital portfolio, Disney has bought Playdom for up to $763 Million, including $563 Million in up front payment and $200 million contingent on performance. Playdom CEO John Pleasants, who had joined the startup last year after leaving Electronic Arts, will still manage Playdom but as a Disney employee.
With less than $75 Million in total funding, this transaction represents a huge premium for Playdom’s investors and indicates how hot the social gaming market is. A few months, another social gaming startup Playfish was acquired by Electronic Arts for close to $375 million. Disney will now use the platform to integrate its proprietary characters and stories into social games and leverage the interactive features to provide better opportunities for users to connect to the characters they have come to love. Using Playdom’s games, Disney would jump right into the Facebook and MySpace market for its well known characters and brands.
The transaction still has to pass through the anti-trust laws and is expected to close by the end of Disney’s current fiscal year.