Burgeoning Virtual Worlds Build Engagement and Strengthen Brand Recognition

Engagement and Its Influence on Toys; Third in a Series Exploring the 4E’s of 2009 Toy Trends

For many toy brands, virtual worlds are becoming the go-to strategy for reaching kids online and extending brand recognition. Propelled by the phenomenal success of Ganz’ Webkinz.com and Disney’s Club Penguin, toy companies continue to invest heavily in virtual worlds: game-like web environments where users can create avatars – a computer user’s representation of his or her alter ego – in a fantasy landscape and interact with other users.

To prove the pull of online worlds, sales of web-connected toys (i.e., those with a physical and virtual component) for the 12-month period ending April 2009 were $446.3 million, down from $465.4 million the year prior (Source: The NPD Group).

“For several years now we've monitored kids’ interaction with computers and the Internet, and the various ways in which they're using them for the free-time activities,” said Anita Frazier, industry analyst for toys and video games at The NPD Group. “In just the last year, ‘visiting virtual gaming sites’ realized a 3 point increase among kids ages 4-14, and now 30% of kids in this age group engage in this type of activity on computers.  The lure of hanging out in these virtual worlds is very powerful with kids, and toymakers are harnessing that power and creatively integrating it into their product offerings.”

According to TIA toy trend specialist Reyne Rice, toy makers and entertainment companies continue to invest heavily in digital worlds for their core brands. “The more they capture consumer loyalty, the more likely fans will click through to play for virtual prizes driving purchases of both online and offline products,” she explained.

Mattel, Hasbro and Disney have recently added executive divisions with dedicated professionals who oversee the strategic development of virtual worlds and web-connected products. 

Virtual worlds also offer a unique opportunity to test new business models:

• An offline product purchase that provides free entry for a limited time period using a secret code has been the premise for sites such as www.Webkinz.com and www.Tracksters.com.
• A fee-paid subscription (by month or annually) that includes a shopping opportunity for exclusive products has been a key to success on www.ClubPenguin.com. 
• A new, premier membership model is being explored by a number of companies, according to Warren Buckleitner, Children’s Technology Review “As the virtual world business model matures, more creative applications which provide exclusive access to unique customers are being explored.”  He cites Webkinz Select, as an example of an upscale toy (priced at $30 vs. $8-15 for base line Webkinz) which contains a special code which unlocks access to portions of Webkinz.com not open to its base line customers.
• Many other sites have been developed with a “no-fee” entry but limited site access to non-subscribers. These sites often contain a shopping cart where kids can “buy” virtual add-ons, sometimes for a nominal fee or earned points/credit. In this model, there are “members-only” areas of the site that provide exclusive status. One of the most popular destinations is Mattel’s Barbiegirls.com, which currently has millions of worldwide subscribers; another example is www.PixieHollow.com, where girls can play in the magical world of Disney Fairies for free.  By buying the TechnoSource Clickables product, and uploading a secret code, girls can amass extra fairies’ fashions and accessories to wear online. One of the most anticipated introductions is Dora Links Fashion Doll from Nickelodeon and Mattel coming this fall. Dora the Explorer fans will be able to interact with the "new" tween-age Dora and her school friends, play games and earn virtual currency. By purchasing offline products (dolls, accessories and fashions), girls will be able to enhance their online play with extras in expanded play areas, via secret codes.
• In an open-entry model, players can earn virtual currency and trade for virtual prizes on Hasbro’s Littlest Pet Shop VIPs as well as Chaoticgame.com by 4 Kids Entertainment.

The ability to reach young consumers on and offline is also being explored by video and online gaming companies. Many of these enterprises already have virtual worlds but are inking licensing deals for toys among other products, thus competing with toy manufacturers for share of day, screen time, and share of wallet. 

The play patterns designed for virtual world sites are heavily focused on community, creating avatars, playing games, collecting and challenges. New models that involve trading cards, strategy, racing, rich storytelling and other experiences are evolving.

Gaming companies are increasingly introducing massively multiplayer online games (MMOG’s) – Internet-based video games that are capable of supporting hundreds or thousands of players simultaneously, with the ability to build legions of fans. MMOGs can uniquely enable players to cooperate and compete with each other on a large scale, and sometimes interact meaningfully with people around the world.

“Clearly, technology has changed play patterns forever,” says Jim Llewellyn, Partner, 10Vox Entertainment, a videogame company and TIA member which recently entered the toy space with Tracksters. “The ability to play and interact with players from around the world in an MMOG format is an amazing experience for kids of all ages. But, we also believe in traditional play patterns and quality product that you can hold in your hand. That intersection is what drives our Tracksters product.” 

Hasbro, USAOPOLY and Microsoft (maker of the popular Halo videogame, which has sold over 20 million copies worldwide) have, through a new licensing agreement, formed a powerful threesome to bring RISK: Halo Wars Collector's Edition to market. The new game melds classic RISK game play with the Halo Wars storyline.

“RISK and its contemporary counterpart, the Halo video game series, are the ultimate action games on the market,” says Adam Sblendorio, Game Developer, USAOPOLY.

By combining the two popular strategy games, these marketers hope to engage Halo fans in an entirely new, yet classic, strategy challenge.

Other notable sites showcasing innovative play patterns include Jacobee Code, a newer site that morphs historical artifacts, mystery and detective work to create unique stories and an actual physical printed book with all of your favorite clues and selections; and Kiz Kids, a new site that encourages kids to explore different worlds and take on tasks where they learn about different environments, such as jungle, desert, ocean.  Physical products have USB keys that connect kids to these worlds, and allow them to interact.

As sure as kids’ tastes continue to evolve, the companies that create products to appeal to these digitally native kids must also increase their offerings.  Success will require tapping into kids’ desires and natural play patterns, while creating new digital challenges that meld fantasy with core brand identity.