The virtual world for kids 6-14 launched in Canada in 2005 and claims 700,000-plus paying members; subscriptions run about $6 or $58 a year. The site also makes money from virtual goods and other online merchandise sold through the site.

Founders Lane Merrifield, Dave Krysko and Lance Priebe will join Disney and remain the senior execs responsible directly for Club Penguin. Former Disneyland employee Merriefield, now the CEO, will be an EVP of the Walt Disney Internet Group reporting to WDIG president Steve Wadsworth. The founders are the only shareholders; each stands to make $115 million.

The combination of Disney and Club Penguin made sense all along but Disney seemed to be more inclined toward growing its own communities-Toontown (2003), Disney Fairies (launched in 2007 with a game coming in 2008), the upcoming Pirates-in house. Iger said the company is still committed to that strategy and thinks it will be successful but sees in Club Penguin a successful standalone business. With the exception of changing the name to include Disney and supporting the company, Iger promised: "Club Penguin is going to continue to exist as is... The experience will not change at all. It will continue to evolve." Iger added: "We really don't intend to get in the way of that or do anything by virtue of the way we own it."