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Big companies have led the latest surges in virtual worlds October 11, 2007

Posted by jeremyliew in gaming, media, virtual worlds.

Virtual worlds are big and will continue to grow – over $1bn has been invested in 35 virtual worlds in the last year. A recent eMartketer report on virtual worlds notes that:

eMarketer estimates that 24% of the 34.3 million child and teen Internet users in the US will use virtual worlds on at least a monthly basis in 2007. By 2011, 53% of them will be going virtual.

Argueably, virtual worlds will become one of the dominant forms of online communication, supplanting email for this demographic, just as social networks have done.

Virtual World News notes in an interview with eMarketer Senior Analyst Debra Aho Williamson:

“I think we may well see a growth trajectory similar to what we’ve seen for social networking,” continued Williamson. “Virtual worlds can be an addictive, immersive, compelling environment. They offer a lot of things for kids and teens to do. Just over half of kids and teens will visit virtual worlds at least on a monthly basis by 2011. Already you’re seeing session times of a half hour, an hour, and ten hours a month. 2008 and 2009 are where the growth is slightly bigger than ’10 and ’11. You’ve got other media companies jumping in the game. Disney is getting aggressive. MTV and Nick are getting very aggressive. Right now what we’re seeing is a lot more development activity and figuring out how a virtual world fits into media assets. I think as we get into ’08 and ’09 is when you see a lot of traction.”

The Alexa graph below shows that Williamson’s observation about big companies jumping into the game is spot on:

traffic growth of virtual worlds

Barbiegirls signed up 3 million members in the first 60 days – it took Second Life 3 years to hit the same metric. Some say that Webkinz is pulling users from Club Penguin. And IAC is driving massive growth for Zwinktopia, as they noted in their Q2 2007 earnings call:

Zwinky.com now has over eight million registered users, spending on average 64 minutes on the site each session. The recent April launch of the Zwinky Virtual World, Zwinktopia, has led to over 15 million transactions using the Zwinky virtual currency called Z-Bucks. In addition to monetizing through search, there are clearly e-commerce opportunities with Zwinky, as well.

Two of these companies are using offline channels to drive online growth, and many other companies (including MTV, Disney etc) will be taking the same approach. While the incumbent virtual worlds like Habbo and Gaia are unlikely to be threatened, I wonder if bigger companies, using their distribution muscle to get out of the gate quickly, will make it harder for new virtual world startups. What do you think?


1. NY Time’s notes that many media companies are launching vitual worlds for kids « Lightspeed Venture Partners Blog - January 1, 2008

[…] 1, 2008 Posted by jeremyliew in mmorpg, virtual worlds. trackback I noted earlier this year that big companies have led the latest surges in virtual worlds, with many of these virtual worlds targeting kids and teens. Today’s New York Times concurs […]

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