George Gutowski

Disney Acquires Penguin: Ridiculous

Mea culpa I got it wrong on the monthly pricing and I take responsibility for that. I still feel that given the very young youth metric there will be a lot of churn as kids grow up and move onto other things and the subscriber revenue will need to be replaced. Also for $350 million (perhaps $700 million) Disney clearly could have developed something on their own. They are acting as a financial investor and not as a content developer. That is why I doubt their own in house ability.

Penguin currently operates on a shoestring. As they develop more scale and attempt to become a platform for other Disney products the overheads will grow. Will they be able to maintain a positive margin with such a low price? Disney will want to protect their overall brand by not disappointing the user. Rapid growth in the petrie dish is very difficult to perpetuate in the real world large scale that Disney will need. I do not see this acquisition as a win.