Real returns from virtual worlds
By Paul McIntyre | | 16 October
Media groups and aspiring digital entrepreneurs are hoping to lure more youngsters online and to create new worlds that will capture adult imaginations.
It is estimated more than 200 virtual world projects are in development globally.
One of the early virtual worlds, Second Life, garnered much corporate attention and investment but failed to ignite the interest of older internet users.
But children and teenagers love the idea of virtual playgrounds, places where they can create their own identities, or avatars, and interact with thousands of others in new digital environments.
In Australia, the most successful projects include the Finnish teenage virtual world Habbo and Canada's Club Penguin, for five-to-12-year-olds, which was bought out last year by Disney for $US700 million .
Habbo, which started an Australian arm nearly four years ago, attracts about a quarter of the 800,000 Australians aged 13 to 17 every month. They spend an average of one hour per session in Habbo - more than double that of MySpace in Australia.
Big-name advertisers such as Nike, Adidas, Nintendo, Kraft, Sony, Wrigley and Johnson & Johnson have been spending up to reach the Habbo crowd with marketing efforts which are about as far from traditional advertising as you can get.
Habbo, owned by the Finnish company Sulake, generated about $100 million in revenue in 2008, 75 per cent of it from teenage users buying virtual furniture to deck out their private rooms in the Habbo Hotel. The remainder comes from advertisers.
In contrast, Club Penguin has a blanket ban on advertising, generating its revenue from subscriptions. This environment without commercial influence has proved attractive to Australian parents: before it established a local site this year, Australia was one of Club Penguin's biggest markets outside North America.
These success stories, from projects based on narrowly defined audience demographics, have triggered widespread investment interest in new virtual worlds.
Media companies and the digerati have realised that the online world might just mimic what happens in offline media.
In magazines, Australian teenage girls start out with titles such as Dolly and Girlfriend, move on to Cleo and Cosmopolitan and end up as readers of The Australian Women's Weekly.
Online, Disney's Club Penguin, Viacom's Neopets, Nickelodeon's Nicktropolis and yes, Mattel's BarbieGirls, have huge interest among children aged up to 12. Then comes Habbo - and in the US, Gaia Online - for teenagers before the virtual world action stops and older teens move into social networking sites such as MySpace and "immersive gaming" sites such as World of Warcraft.
Habbo is looking to expand its global teen reach - it has about 9 million users - to older audiences although it is acutely aware of start-ups looking to poach its users.
"It's the brightest star in the online sector in terms of development and where people see the future," Sulake's Asia-Pacific regional director, Jeff Brookes, says. "For Habbo, once our users hit 17 they pretty much drop off. It's why there are 200 virtual worlds in development .. everyone is trying to get another one going that will catch them at 17 and catch them again after that."
More competition is certain. Disney is working virtual worlds for its franchises such as Pirates Of The Caribbean and Fairies. Lego Universe is in development and is predicted by some to be the biggest virtual world yet for under-10s, allowing children to construct virtual buildings and vehicles.
But the real trick is finding a lure for the grown-ups.
