Virtual worlds for kids take off

When dancing penguins are sold to Disney in a deal worth up to $700m (£345m), you know that websites aimed at kids are a serious internet phenomenon.

The corporate giant last week acquired Club Penguin, a virtual world aimed at children aged between six and 14. With a claimed 700,000-plus young subscribers paying $57.95 (£28) for a 12-month subscription, it's clear that social networking for the young is likely to be just as big - and as lucrative - as websites such as Facebook and MySpace.

Club Penguin is by no means the only place for children to interact online. Among the latest crazes is Webkinz, a website that lets young children bring their real-world fluffy toys to life online within a virtual world.

Webkinz, developed by privately owned Canadian toy and gift company Ganz, is a range of soft toys aimed at children between the ages of six and 13. Each toy comes with a code that can be entered into the website to create an animated virtual version of it.

Marketing message

Ganz has sold more than 2m of the toys since 2005 and the website has seen an elevenfold growth in market share of visits for the year to April, according to Hitwise, the internet metrics company - more than double that of Club Penguin. According to Nielsen/NetRatings, the Webkinz site attracted 4.1 million unique users in May, outstripping long-established brands such as Barbie, ToysRUs and Hasbro.

While much media and analyst attention has been paid to the growth in social networking sites, such as MySpace, Facebook and Bebo, the rapid growth in games sites and virtual worlds targeted at younger children has largely slipped beneath the radar.

Yet sites like Webkinz and interactive dressing-up sites aimed primarily at young girls are proving very popular. Cartoon Doll Emporium, for example, aimed at children between six and 16, now has around 3 million visitors a month, while Stardoll, aimed at children aged between seven and 17, claims 8.8 million members.


And Disney is just the latest of the big media groups to get into the pre-teen market. In 2005, Viacom - owner of MTV and Nickelodeon - bought Neopets, an interactive cartoon gaming site that claims to have 143 million Neopet "owners",for $150m.

Disney was in this space two years ago; its website - Disney Online, which attracts more than 17 million unique users a month - launched Virtual Magic Kingdom, a multiplayer gaming world aimed at children between 8 and 14, in 2005. Nick Gibson, an analyst with Games Investor Consulting, says: "Game-playing among pre-teen children is pretty much 100% so this is a market that has emerged strongly over the past few years. We're likely to see a gradual infusion of non-games companies into this virtual world environment as brands attempt to control the marketing message."

But concern is growing about the way some of these sites are marketing themselves to young children. Webkinz may be advertising-free, but it is nonetheless relentlessly commercial in its approach.

Once you've registered, you get 2,000 "KinzCash", the virtual currency which kids can use to buy food, furniture, clothes and other accessories for their pets. Playing with, feeding and exercising the virtual pet daily keep it healthy, happy and fed. Neglect it and you have to take it to the virtual clinic to buy medicine. In other words, children are given a strong incentive to return to the site regularly. Buying more real-world toys, playing games and entering quizzes earns the children more KinzCash to lavish upon their virtual pets, providing yet more incentive.

But the real genius lies in the fact that the account lapses after a year. If kids want to keep up the relationship with their virtual pets they have to buy another real toy (at around $12 each) - and there are 51 Webkinz and 29 Lil'Kinz toys to collect.

Piers Harding-Rolls of media analyst Screen Digest, says: "There is a lot of interest in the Webkinz business model as it is one of the first to combine the real and virtual worlds so effectively. Offering real toys reinforced by a virtual world of games is a brilliant way to enhance a brand and build up a continual relationship with it. That they can do this without resorting to advertising, as many free-to-play games sites have to do, is impressive."

Using a virtual currency or points system as a reward for repeat website visits and engagement with the games is common among such sites, with Disney's Virtual Magic Kingdom, Stardoll and Neopets all adopting similar practices.

While Club Penguin relies on a subscription-only revenue model and makes great play of the fact that it does not take advertising, other child-orientated games sites such as Stardoll and Cartoon Doll Emporium have no qualms about making money from monthly subscriptions supplemented by advertising.

Professor Sonia Livingstone at the Department of Media and Communications at the London School of Economics says: "There is lots of concern in academia and beyond that sites like these encourage children to become ever younger consumers without alerting them or encouraging them to be critical of the commercial relationship they are entering. The message learned is that education is equated with money or points and that buying things for your pet is fun."

'Crack for kids'

There is little evidence that online games and virtual worlds can cause addiction among young children, but nevertheless pestered parents and exasperated teachers in the US are beginning to protest. One blogger has described Webkinz as "crack for kids".

And Professor Livingstone warns that an over-reliance on such virtual entertainment could also be detrimental to a child's imaginative development. She says: "Educational theory is clear that play which demands imaginative input from the child is far more beneficial than play in which all the pieces are provided and the scope for imaginative responses is extremely limited."

At least parents worried about the potential for Webkinz fever to take hold in this country can rest easy - for the time being at least. Ganz says: "At this time, we have no plans to expand into the UK."