Virtual economies & kids

Virtual worlds make their money very differently from social-network sites - mostly from selling virtual objects. Though Disney's Pixie Hollow and Webkinz and Webkinz, Jr. sell real objects such as "friendship bracelets" and plush toys, the economies of most virtual worlds (and multiplayer online games) rely on objects and artifacts such as clothing, furniture, and other property. Social sites, which to date have focused more on display ads, too, are moving into virtual-object retail (see this about Hi5 selling virtual gifts). A figure cited by The Economist indicates everybody may be moving in this direction, though there's much to be learned about this business model. The article mentions that users at a popular VW aimed at teens, Gaia Online, "spend more than $1 million per month on virtual items." Gaia recently hired a full-time economist, The Economist says, "to grapple with problems that are well known in the real world, such as inflation and an unequal distribution of wealth" (maybe child psychologists will need to employed too!). The British news magazine otherwise paints a more measured picture of virtual-world popularity than do other news outlets, but the figure it cites is "regular visitors," not overall registered users. "In America, nearly 10 million children and teenagers visit virtual worlds regularly," it refers to eMarketer as finding. Virtual Worlds News earlier cited data from Strategy Analytics projecting an overall global population of 186 million now, growing to 640m by 2015 (users of all ages - I blogged about that here). My most recent post on VW population is here.

Webkinz for little kids

Now there's a Webkinz virtual world for preschoolers, the New York Times reports in its "Kid Tech" blog. The price of admission to Webkinz, Jr. "is a plush animal about a third larger than a traditional Beanie Baby, with a proportionally higher price of about $18." The games are good, as good as pricier sites for this age group, and parents have a good deal of control over their children's experience in the VW, writes blogger Warren Buckleitner, but "children also can figure out that they can add more $18 pets to their account, and then switch between their animals." Shopping is part of the experience too, with play money, of course. But, hmm, is the site also teaching preschoolers how to shop?

Kids' virtual worlds hot

There's a mini boom of kids' virtual world afoot, CNET reports, probably fueled the success of Webkinz and Neopets and Disney's acquisition of ClubPenguin. One reason: "more kids are flocking to imaginative, character-driven environments. An expected 53% of children on the Web will belong to a virtual world within four years, more than doubling the current population of 8.2 million members," reports CNET citing eMarketer figures. Other worlds and services CNET mentions are WebbliWorld.com from the creators of Wallace & Gromit, GaiaOnline.com, Stardoll.com, and Nickelodeon's Nicktropolis. I would add Whyville.net as another prominent one, and possible Finland-based Habbo.com, though it probably skews slightly older. A related CNET article asks, "Are kids ready for ads in such spaces?". Since this interactive advertising goes well beyond cereal boxes and TV spots to immersive games and other forms of direct involvement for children, it's a good question to ask.