Disney Turns to Its Top Franchises, Like ‘Star Wars,’ to Lift Club Penguin

For the past six years, social network Club Penguin has been top virtual world for kids

Club Penguin Starwars

For the past six years, Club Penguin has been the top virtual world for kids. But as its members have grown up, or turned their short attention spans elsewhere, the social network has risked becoming another MySpace.

But Disney, which bought the company in 2007, has found a way to make Club Penguin cool again: inject a little Pixar, Marvel and “Star Wars.”

In Club Penguin, members pay a monthly fee to outfit their animated penguin characters with costumes, decorate their igloos, play games and interact with other kids age 6-14.

To keep kids coming back to the Antarctic setting, the virtual world has hosted themed parties once a month that offer new costumes or other character upgrades, new settings and games. Those typically have been based on holidays, in-game pets called “puffles,” or notable characters in the Club Penguin universe.

But Club Penguin tried something new last year. First, Marvel was leveraged in a two-week “takeover,” in which the company’s library of superheroes and villains were infused throughout the site. The stunt proved so popular that Club Penguin brought them back for the release of “Iron Man 3” this summer, adding superpowers to its penguins and using Iron Man’s Stark Tower as a meeting place. More recently the social network hosted a “Monsters University” themed event timed to the film’s release.

But Club Penguin will pull off its biggest tie-in yet on July 25, integrating the “Star Wars” characters for a three-week takeover that will involve more costumes, games and locations than any event so far.

Chris Heatherly, who oversees Club Penguin as VP and GM of Disney Interactive Worlds, said the virtual world had been “bombarded” by requests from kids to include “Star Wars” as a theme since Disney’s $4 billion acquisition of Lucasfilm was announced last year. Though Disney isn’t scheduled to release the next film from the franchise until 2015, Heatherly said the company is offering “Star Wars” now “because we can.”

Themed parties have increased usage by 20% to 50% over the previous week. But Marvel and Pixar events have upped traffic by around 40% to 60%. Because of that, expect more synergistic crossovers with other Disney properties, as well as its theme park attractions.

“The partner events have been successful in bringing new players into Club Penguin who would normally not play Club Penguin,” Heatherly says.

Getting the various Disney brands onboard wasn’t easy, though. Convincing Marvel or Pixar what a penguinized version of their characters would look like came with a little bit of skepticism, Heatherly said. “But once they see how we respect their property, that makes them comfortable,” he added.

Making sure Club Penguin remains popular is key to making Disney Interactive profitable again. After years of losses, the division that oversees Disney’s games and online efforts has cut overhead through layoffs, and eliminated costly projects. It’s now focused its resources on mobile games like “Where’s My Water” and high-profile mashups like “Disney Infinity.”

Over the years, Club Penguin has been a consistent cash cow for Disney, generating revenue from subscriptions that start at $8 a month — or $60 for a full year. The ad-free site also generates coin from micro-transactions in the form of props and costumes, gift cards and merchandise like plush figures that come with downloadable codes. Disney bought Club Penguin in 2007 for around $700 million (agreeing to pay $350 million in cash and another $350 million should the site meet performance targets through 2009).

“We have Club Penguin back on a growth trajectory and it’s a nice place to be,” Heatherly says. “The parties are a key part of our strategy moving forward.”