VW analysts sees boom in kids and branded worlds

By Eric Reuters

The casual gaming market, which includes virtual worlds, grew by 29% last year to total over US$1 billion, according to a new report. Michael Cai of Parks Associates drew on surveys of adult computer users who spend more than hour a month playing games, a threshold he said was purposefully broad. Three of four websurfers meet his criteria as a gamer.

While his research focused on all computer games, he also looked specifically at the rising virtual worlds industry.

“Our research confirms the popularity of the kids worlds,” he said in a telephone interview. Of the top five virtual worlds, only one — Second Life — targeted an adult audience.

He pointed to two strengths in kids-oriented worlds. “Kids are further along the technology adoption curve than adults are,” Cai said. Businesses have also found making money easier in more tightly controlled environments. “The kids worlds have a mature business model, with real-world product tie-ins and premium accounts.”

A similar report by Virtual Worlds Management shows over 100 kids-themed worlds are live or under development.

It remains unclear to Cai whether marketers will ultimately prefer being one player of many in generic communities such as Second Life or There.com, or whether the trend towards entire virtual worlds built around a pre-existing brand will accelerate. But in the short-term, most new development will take place in branded worlds such as Nickelodeon or Barbie.

“For a Habbo, they’re already built and can do tie-ins,” Cai said. “But without a Mattel behind you, it will hard to enter the market as a new player.”

Cai isn’t the only analyst bullish on virtual worlds. A new report by Erica Driver of Forrester Research urges executives to focus on the industry’s potential.

“It’s easy to poke fun at Second Life and pooh-pooh the whole idea,” Driver wrote. “But ignore it at your peril. Web3D has major implications for innovation.”