Why did Club Penguin shut down?

  • Club Penguin was a massively multiplayer online game (MMO) created by Lane Merrifield, Dave Krysko, and Lance Priebe in 2005. From a peak of 200 million accounts in 2013, the game was shut down four years later.
  • Disney’s acquisition of Club Penguin set in motion a series of events that would prove to be the game’s demise. The acquisition resulted in multiple copycat versions which eroded the game’s user base. Disney’s attempt to capitalize on the emergence of mobile-based gaming also contradicted the essence of the game and alienated users.
  • After Club Penguin failed to meet performance targets, the game’s original creators resigned from Disney to pursue other opportunities. With over 200 moderators and developers to pay in the face of declining revenue, the game no longer made financial sense for Disney. It was shut down on March 30, 2017.

Origin Story

Club Penguin was a massively multiplayer online game (MMO) created by New Horizon Interactive in 2005. The game was created by Lane Merrifield, Dave Krysko, and Lance Priebe.

The original game featured a virtual world set in winter where players used cartoon penguin avatars to interact with others. The game was particularly popular among young children who used the game as a safe space to play with others, free from advertisements and malicious users.

By July 2013, more than 200 million penguin avatars had been created as the game became increasingly affiliated with a video game, book, and television franchises. Indeed, special-themed events and parties were regularly held to celebrate the release of new movies such as Frozen, Zootopia, and Star Wars. 

Over the next four years, the game suffered a decline in popularity and was officially shut down on March 30, 2017.

Why did Club Penguin shut down?

Disney purchase

Disney acquired Club Penguin in 2007 for $350 million, with a further $350 million to be paid if performance targets were met until 2009. The acquisition led to a raft of copycat platforms which took valuable users away from the Club Penguin platform.

Some argue that the Disney purchase was the beginning of the end for Club Penguin. Although Disney changed little of the game itself, Club Penguin was just one of four MMOs the company was trying to manage simultaneously.

The significance of the Disney acquisition and its future strategic decisions will become apparent in the rest of Club Penguin’s story.

Smartphone emergence

During the late 2000s, the emergence of smartphones caused many gamers to favor mobile-based games over those played in a web browser. 

Disney took this idea and ran with it, developing a three-dimensional sequel to the original game called Club Penguin Island. Unfortunately, the pets, clothing, and other items users had accumulated over the past decade were non-transferrable. 

Disney’s decision to incorporate in-game purchases and frequent advertising clashed with the original purpose of Club Penguin. The platform hosted fewer meet-up parties and instead became a medium for Disney to promote its other brands. These factors served to alienate the game’s core user base, who were growing older and needed no encouragement to migrate to other social media sites such as Facebook.

Perhaps unsurprisingly, the user base and its associated revenue potential started to diminish The game failed to meet its stated performance targets in 2009, with Dave Krysko and Lance Priebe leaving Disney in 2010 to pursue other opportunities. Merrifield followed suit two years later.

Other priorities

Belated attempts were made to capitalize on the growing popularity of mobile-based games, with a Nintendo DS version and a game more closely resembling Angry Birds for iPhone users released in 2011.

Traffic decreased from a high of 8.5 million monthly visitors to 3.3 million when Disney executive Chris Heatherly took control in October 2012. 

An app-based version of Club Penguin was finally made available in December 2013, but the release was a case of too little too late.

Disney also owned several far more popular and lucrative games, including Call of Duty, RuneScape, and Fortnite. Support for the ailing Club Penguin no longer made sense, with developers and a team of more than 200 moderators becoming a financial burden on the company.

In 2015, the UK office was shut down and 28 employees were laid off in Club Penguin’s Kelowna headquarters. The German and Russian versions of Club Penguin were also shut down later that year. 


With Club Penguin ceasing operations in March 2017, its successor Club Penguin Island was also removed just 15 months later in September 2018.

Several copycat versions of the original game exist today. But without a team of moderators maintaining family-friendly gameplay, Disney has been careful to distance itself from any negative publicity surrounding the game.

Read Other Failure Stories: Lehman BrothersAmerican ApparelToy “R” UsRadioShackForever 21GawkerEnronCompaqKodakAltavistaPalmFriendsterStumbleUponQuibiBlockbusterNapsterNetscapeChachaMapQuestSports AuthorityWeWorkConcordeXeroxCommodoreCircuit City.

Other Failure Stories

What Happened to WeWork

WeWork is a commercial real estate company providing shared workspaces for tech start-ups and other enterprise services. It was founded by Adam Neumann and Miguel McKelvey in 2010. WeWork’s business model was built on complex arrangements between the company and its landlords. There were also several conflicts of interest between Neumann and WeWork, which provided the impetus for the failed IPO and significant devaluation that would follow.

What Happened to Netscape

Netscape – or Netscape Communications Corporation – was a computer services company best known for its web browser. The company was founded in 1994 by Marc Andreessen and James H. Clark as one of the internet’s first and most important start-ups. The Netscape Navigator web browser was released in 1995 and became the browser of choice for the users of the time. By November 1998, it had been acquired by AOL, which tried unsuccessfully to revive the popularity of the web browser. Ten years later, Netscape was shut down entirely.

What Happened to Musical.ly

Musically, or Musical.ly as it is officially known, was a Chinese social media platform headquartered in Shanghai. After passing 200 million users in May 2017, the platform was shut down by tech company ByteDance in November. After its acquisition, ByteDance suggested Musical.ly would continue to operate as a standalone platform. Company representatives noted that it would be able to leverage ByteDance’s AI technology and enormous reach in the Chinese market. Musically was ultimately absorbed into TikTok in June 2018, with the app no longer available in August of the same year. Existing users were offered technical support and several new features as a sweetener.

What Happened to Vine

Vine was an American video social networking platform with a focus on looping video clips of six seconds in length, founded by Dom Hofmann, Rus Yusupov, and Colin Kroll in 2012 to help people capture casual moments in their lives and share them with their friends. Vine went on to become a massively popular platform. Yet by 2016, Twitter discontinued the mobile app, allowing users to view or download content on the Vine website. It then announced a reconfigured app allowing creators to share content to a connected Twitter account only. This marked the end of Vine.

What Happened to CNN Plus

CNN Plus was a video streaming service and offshoot of CNN’s cable TV news network that was launched on March 29, 2022. The service was ultimately shut down just one month after it was launched. Trouble began for the platform when parent company WarnerMedia merged with Discovery. The latter was unimpressed with paltry viewer data and, with $55 billion in debt to clear, was not interested in funding CNN+ moving forward. Other contributing factors to CNN Plus’s demise include a lack of compelling content and streaming service market saturation.

What Happened to Clubhouse

Clubhouse is a social app that allows thousands of people to communicate with each other in audio chat rooms. At one point, the company was worth $4 billion and boasted users such as Mark Zuckerberg and Elon Musk. Clubhouse declined because it rode the wave of pandemic lockdowns and suffered when people resumed their normal routines. The decision to remove the invite-only feature also caused a rapid influx of new members and removed any exclusivity. Clubhouse management also failed to define a business model and was unaware of the components of a successful social media site.

What Happened to Facebook


Main Free Guides:

About The Author

Scroll to Top