Club Penguin is a massively multiplayer online role-playing game (MMORPG) involving a virtual world containing a range of online games and activities, by Club Penguin Entertainment (formerly New Horizon Interactive). Players use cartoon penguin-avatars and play in a winter-set virtual world. After beta-testing, Club Penguin was made available to the general public on October 24, 2005, and has since expanded into a large online community —growing to the extent that by late 2007, it was claimed that Club Penguin had over 12 million user accounts. While free memberships are available, revenue is predominantly raised through paid memberships which allow players to access a range of additional features, (such as the ability to purchase virtual clothing, furniture, and in-game pets called “puffles” for their penguins through the use of in-game currency).
The success of Club Penguin led to New Horizon being purchased by The Walt Disney Company in August 2007 for the sum of 350 million dollars, with an additional 350 million dollars in bonuses should specific targets be met by 2009.
Club Penguin started with 15,000 users, and by March that number had reached 1.4 million—a figure which almost doubled by September, when it hit 2.6 million. By the time Club Penguin was two years old, it had reached 3.9 million users. At the point when they were purchased by Disney, Club Penguin had 12 million accounts, of which 700,000 were paid subscribers, and were generating $40 million in annual revenue.
Although the owners had turned down lucrative advertising offers and venture capital investments in the past, in August 2007 they agreed to sell the company (both Club Penguin and the parent company) for the sum of $350.93 million. In addition, the owners were promised bonuses of up to $350 million if they were able to meet growth targets by 2009. In making the sale, Merrifield has stated that their main focus during negotiations was philosophical, and that the intent was to provide themselves with the needed infrastructure in order to continue to grow.