Mattel boosts Net stake with Purple Moon

Toy giant Mattel said today it plans to acquire Purple Moon, whose CD-ROM games and online community target girls aged 8 through 14. Neither company would reveal the sale price.

Purple Moon, which had $5 million in revenues last year, announced last month that it had ceased operations and laid off its staff.

The buyout is Mattel's latest move to harness bigger profits from products aimed at computer-savvy girls.

In December, Mattel bid $3.8 billion in stock for educational-software maker The Learning Company, which is considered the world's second-largest consumer software company after Microsoft and produces such titles as Reader Rabbit, Myst, and Carmen Sandiego. Shareholders will vote on the merger in May.

Barbie's maker also recently launched a customizable version of the blonde bombshell, called "Friend of Barbie," which is available via a new Web site, and has teamed up with Intel to jointly develop PC-enhanced toys.

"We are really trying to move from being just a toy company to being more of a children's products company--obviously that includes the Net and CD-ROM products," said Mattel spokeswoman Lisa McKendall.

Although Mattel crept into the digital entertainment business, Barbie's image helped harness 90 percent of its $70 million in PC-related product profits last year, according to toy industry analyst John Taylor, president of Arcadia Investment Research.

Purple Moon will be an asset, he added.

"[Mattel has] come on a bit like a storm in the last two years, and they've got surprisingly high market share," Taylor said. "Mattel's mission in life is to make toys, provide entertainment, and enable girls to have fun. Purple Moon fits real well into Mattel's global strategy because it's built a franchise on the Net that a lot of girls recognize."

Mattel hopes that Purple Moon's smart, nonviolent games will rope in brand loyalty from preteens, who may have outgrown Barbie but are drawn to Purple Moon's Rockett, Secret Paths, and Starfire Soccer game series and online community. About 75 percent of Purple Moon's customers are girls aged 11 through 14, according to the company.

Purple Moon, which has about 40 employees whose jobs are still in flux, will be incorporated into the Mattel Media unit's expanding stable of interactive products for girls, including Barbie and American Girl.

Mattel also said it plans to support Purple Moon's brand expansion with the launch of the Rockett's World Book series by children's book publisher Scholastic, due later this year.

"The radical idea that girls are intelligent and inquisitive and get off on complexity hasn't occurred to people in the video game industry very often," Brenda Laurel, former vice president of design for Purple Moon, told CNET News.com in a past interview.

Laurel led the four-year gender and technology research project at Paul Allen's industry think tank, Interval Research Corporation, which led to Purple Moon's creation. (Allen is an investor in CNET).

When Purple Moon was launched just over two years ago, there were few such games aimed at its target audience, but that changed with the entry of big brand names like Mattel.

In fact, it was Mattel's success with its Barbie CD-ROM that lit a fire under Purple Moon in 1997 to get its products out on the market after two years of research.

Now Purple Moon is banking on Mattel to revive its flailing business.

Nancy Deo, Purple Moon's CEO, said she isn't worried about a culture clash between her firm's organic characters, who focus on relationships and growing up, and the super-model glamour of Barbie and friends.

"Our goal is for the broadest product to be available to girls across all ages," Deo said. "The acquisition helps us grow our brand, and Matell getting behind us will take the brand to the next level."

Reuters contributed to this report.