I was sitting with my boss yesterday and she told me yet another fascinating story about her son (the 7 year old). Her son had received an awesome iPod docking station from his grandparents, a gift valued at around $150. Just this weekend, her son had a total meltdown (tears and all), begging mom and dad to return the gift from his grandparents and instead use the money to buy an assortment of $6.99 Club Penguin “puffle” plastic figurines.
While online may be the thriving and emerging mode of play for kids, I don’t think anything will ever replace individual or group play in the real world. Despite having an entire virtual world to play with, the kid was crying for plastic figurines!
Which brings me to my next point – I was floored to hear that Club Penguin had crossed the divide into physical in-store merchandise. I suppose lots of online children’s brands move from online to real world, but Club Penguin seemed different to me. I didn’t expect toysrus.com to have an entire “Character/Theme” page to Club Penguin.
But then again, kids want and can consume their favorites on all screens and apparently all stores – virtual goods from virtual stores and real life Puffles at brick and mortars. Forget content is king… kid is king.
An Adweek article this week discusses the changes in store for kids virtual worlds. Another effect of the gloomy economic recession, Barry Gilbert from Strategy Analytics, predicted an ebb of virtual worlds targeting kids. To give you some perspective on the virtual world market, in 2008, social worlds amassed $1.2 billion in revenue globally(!).
Besides (declining) advertising, some of kids’ favorite sites like Habbo and Club Penguin, generate revenue from subscriptions, usage cards and virtual goods. FYI – virtual goods and avatar accessories account for 68% of spending. However, lack of loyalty makes a revenue generating business model tricky. Just like the breadth of television channels, websites and licensed product, kids can visit four virtual worlds without committing to any single one. Only 23 million of the 180 million estimated virtual world global registered users are considered active.
Conducting an informal experiment, my boss told me her older son was insistent on joining Club Penguin. There is only so much you can do on the site without paying, so she gave in and paid for a month. She didn’t tell her son when the month expired and his “virtual goods” privileges ran out. Good thing she kept her mouth and wallet shut, because he never noticed!
Again, with so many options out there, I think these virtual worlds are lucky to capture kids attention (and their parents’ wallet share) for an entire month. Though today they love Webkinz, tomorrow they and all their friends may think Webkinz is babyish and they want to play on StarDoll.
But, like ants, as one goes, I’m confident 10 more will come. Fear not virtual worlds, I think you just need to ride out the economy like everyone else.