Magazine article Marketing

Andrew Walmsley on Digital: Kids' Virtual Worlds Are Maturing Nicely

Magazine article Marketing

Andrew Walmsley on Digital: Kids' Virtual Worlds Are Maturing Nicely

Article excerpt

The 3-D environments of online communities such as Second Life and World of Warcraft have made positive headlines in the past year, and marketers have wrestled with the implications for brands and their opportunities in untapped markets.

However, more recent coverage has been sceptical, focusing on the fact that despite the oft-quoted millions of registered users, relatively few are engaged with these communities at any one time. As I write this, Second Life, for instance, has only 40,000 users online.

Advertisers and retailers who had initially rushed in are having second thoughts, and scaling back their operations and closing stores. So, are virtual worlds just a bubble, or are we going to see long-term growth?

To answer that question, we need to look at tomorrow's users. While virtual worlds for adults are still in their infancy, those targeting kids and teens are experiencing phenomenal growth, and fuelling multimillion-dollar acquisitions.

Launched in 2005, Club Penguin was acquired by Disney for pounds 350m in August. Positioned as a gaming and chat forum for 6- to 14-year-olds, the website has more than 12m active users. Plenty of functionality for non-subscribers ensures there are always plenty of kids online, and provides a place for future subscribers to become addicted to the site.

The business model works: there are 700,000 paid subscribers who get to decorate their igloos, dress their penguins and adopt more 'puffles' (the site's digital pets). At dollars 58 for a year's subscription, the site is already generating about dollars 40m from paid-up members - hence Disney's interest.

This is not a trend restricted to the US. One of the biggest kids' sites is Stardoll, founded by a Scandinavian mother who had a lifelong interest in paper dolls. From its homely roots, Stardoll has grown to attract more than 6m users a month, and is backed by Index Ventures, the venture capitalist that invested in Skype, Joost and Betfair.

There is no subscription fee for Stardoll, but its young members buy - and their parents are encouraged to give - 'stardollars', a currency that can be spent on virtual clothes for the dolls and personalising your profile.

This is a business model based on South Korean community Cyworld - the forerunner of MySpace - which since 1999 has been charging users to decorate their 'minihomes' and obtain accessories for their 'minime' avatars.

At first glance, all this activity takes place online, but some sites are starting to move into the offline space, creating multifaceted businesses in entertainment and merchandising. …

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