Does Disney “Get” Virtual Worlds?

Second Life is looking for it’s Second Wind. There.com isn’t quite there yet. The media hype that surrounded virtual worlds just a year ago has ratcheted way back. Real world companies who came in not understanding what they were getting into quickly faded away after they didn’t get what they were expecting.

But one demographic seems to be doing quite well in the virtual space: Kids. If you have one of these living under your roof, you probably know that they are actively participating in online virtual/social networking spaces. They are joining online social networks at increasingly early ages (pre-school in the case of Club Penguin) and in those spaces, they are forming relationships that are very real.

This high level of participation has made kid-oriented worlds like Habbo, Gaia Online, Neopets, Webkinz and Nicktropolis more successful that adult oriented virtual worlds. Disney’s launched Virtual Magic Kingdom in 2005 with a target audience of 8 – 14 year-olds. Seeing business opportunity in the virtual space, they paid $350 Million to acquire Club Penguin last year. This year, Disney launched Pirates of the Caribbean Online to attract a somewhat older, but still teen aged audience (mostly boys) and Pixie Hollow (targeted at girls) is set to be launched later this year. The longer range plan, according to Mike Goslin, VP of Disney’s Virtual reality Studio, is to “have a large number of virtual world for a range of different audiences… sort of like a theme park.” The strategy also includes making the different worlds “feel like a common experience” including the ability to move your social contacts between virtual experiences.

Last Week, Shel Israel posted an fascinating video interview with Goslin and other senior team members from Disney’s Interactive Studios.

In the interview, the Disney team talks about the differentiators that they bring to the game. The most interesting one for me was the idea of Context. Like physical playgrounds, Disney sees their virtual worlds as socializing environments. In them, kids are learning collaboration skills, communication skills and social skills, but as with most everything Disney does, these interactions and communications are done in the context of a story. Disney believes creating social environments and communities around a context adds value to both consumers and business. On the customer side, building environments around a theme drives engagement by communities of interest who are passionate about that theme (think “ESPN Fantasy Football”). This leads to large communities that are defined by their common interest as opposed to the relatively small number of people that may be in your friend list. Those large communities with common interests provides a context for a business model like advertising. Because the community is all there for the same reason, they will likely engage in predictable ways (i.e. minimize random and inappropriate behavior).

Conspicuously absent from the interview was any mention of Disney’s Virtual Magic Kingdom (“VMK”). VMK was launched in 2005 as part of the Disneyland 50th year celebration. In it, participants create rooms themed after Magic Kingdom attractions, play mini-games, collect inventory and make friends. Just seven months after launch, Disney announced the game surpassed one million players and over 1.3 million personalized in-game rooms. Last month, with no advance notice, Disney announced that they would be shutting the doors on this virtual theme park on May 21. Predictably, the outcry from the “community” has been loud and is growing as the date approaches. A number of petitions have collected thousands of signatures, boycotts are being threatened and one group, VMK Kids Unite, is organizing a protest at the gates of Disneyland on May 10 which may be covered by CNN and CBS. Obviously, adults are helping to organize these efforts, but the kids are the driving force. Kids who are already comfortable with the participatory web and who want to have their voices heard.

So here’s my takeaway. From the interview, its clear that Disney understands the business opportunity in Virtual Worlds & Social Networks. The also have a pretty good idea how to build communities through contextually engaging virtual experiences. On the other hand, Disney’s decision to shut down VMK demonstrates that perhaps they don’t really get the “social” component. In these social environments, Disney’s role is to provide the frameworks (architectural, security and creative) and the context, but the real content is created by the participants. In shutting down VMK, they aren’t just closing an amusement park attraction. They are throwing away the work of the thousands of dedicated, passionate kids who have spent countless hours building and sharing wonderfully imaginative experiences, and in the process, will be alienating many of their most dedicated and influential advocates.

What do you think? Is closing VMK “just business”? Will the kids get over it? Is this consistent with Disney’s brand?

Update: Per my daughter’s advice, here are links to http://www.savevmk.com and http://www.savevmktoday.com

Update #2:  My daughter wrote a song and created a video about saving VMK.  Check it out here.

Marketing to Youth in Social/Virtual Worlds

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As I sit here in my kitchen looking for a job, my daughter Tyler and her friend have the big HP notebook fired up and pointed at Disney’s Virtual Magic Kingdom. Tyler, who just entered her teen years, has been playing around in virtual worlds for a few years now. She has as many friends in these communities as she does in real life and she is not alone. Millions of younger kids are spending significant time in virtual worlds like Disney’s Toontown, VMK, Club Penguin, Webkinz and Whyville. The market for “safe” teen social sites and virtual worlds continues to grow as well with MTVs virtual worlds, There.com, Doppelganger and others.

According to a recent study, 71 percent of tweens and teens between the ages of 9 and 17 visit social/virtual world sites weekly. There isn’t a clear tally of the virtual world population, but the number of registered users for kids and teen worlds is growing. From the study:

Urban teen environment Doppelganger has nearly 150,000 registered members, while PG-13 site There.com has 1 million members, 70 percent of whom are between the ages of 13 and 26. Self-described “edutainment” site for tweens, Whyville, has 2.3 million users.

As has been pointed out in numerous studies, many kids are watching less television, preferring instead to spend time on the internet. In the last week alone, my daugher has watched maybe 6 hours of TV, but has spent three times that much time on YouTube, VMK and other social sites. I’m beginning to think the computer is somehow physically attached to her as she takes it everwhere.

Enter the Marketers

Over at ClickZ, Matthew Nelson published a good article last month which discusses the the marketing landscape in youth oriented virtual worlds. He points out that in the PG-13 worlds, marketers are quite active in promoting specific items that appeal to todays teens (clothing, music, electronics). The challenge here is to find ways to engage them. As Nelson points out, this audience has been the target of sophisticated campaigns since they were babies. They recognize when they are being marketed to and will simply ingnore the message if it doesn’t add value to them.

To appeal to teens, advertisers and virtual worlds often team-up around themes that are clear fits, such as music, entertainment, clothing and electronics, but marketers need to engage their audience to keep them coming back. Recently, There.com signed an agreement with Capitol Music Group to bring music artists into its world, and created a series of virtual nightclubs for them to play in. More than that, users will be able to watch videos and interact with band members.

“The artists are realizing they need to be more involved with their market,” said Michael Wilson, CEO of There. “And this is a more efficient way to meet a fan, to change the engagement with them from a few moments to minutes.”

Nelson points out that there has been conscious decision among the young kid oriented sites to disallow all in-world advertising, but that’s not to say that the sites themselves aren’t powerful marketing vehicles for the brands that own them. The point of sites like Nicktropolis, Toontown & VMK is to get kids to interact and engage with the brand. Spend any time in VMK and you will see all kinds of in-world ad for Disney properties.

Youth Are Receptive to Marketers IF….

A recent study conducted by Grunwald Associates found that kids (9 to 17-year olds) are not only spending significant time in social sites, but are willing to engage with advertisers in those spaces is they are approached in the right way (i.e. must be relevant and perceived as adding value).

Disney obviously understands the attraction of social/virtual worlds to their target consumer (kids) and are aggressively moving to expand their presence. They are planning new virtual worlds around specific properties like Pirates of the Carribean and just this week bought Club Penguin. By simply renaming it “Disney’s Club Penguin” club penguin fans become Disney fans. Others brands, such as Capital Music Group, are partnering with virtual worlds to build persistent experiences for their consumers to interact with. If you market products to youth, social/virtual worlds are clearly channels that you need be exploring. These are two examples of what I think are successful approaches to marketing in social/virtual worlds.

Do you have some examples to share (good or bad)? What are the big pitfalls of marketing to youth through these channels.

Discuss……

Thursday Night at the Airport

This should be a twitter, but the WordPress guys haven’t jomped on that bandwagon.  Anyway, long day at the Virtual Worlds ’07 conference, but well worth the trip.  Too tired to write about it now, but will provide an update tomorrow.

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In the meantime, if you want to see a pretty cool and unexpected corporate build in SecondLife, check out Pontiac’s Motorati Island

Virtual Worlds ’07 – Day One

courtesy of Greg Verdino

If you were not able to get a pass to the sold-out Virtual Worlds ’07 conference in NYC, you are missing out on a great experience.  Compared to other conferences I have attended, this small and intimate gathering is great opportunity to network and to have conversations with some to the early movers and shakers in the virtual world space.

Just about everyone you would want to speak with is here and most of them are participating in panel discussions.  Highlights from today’s session (with links to blogs from other attendees who took better notes than I did):

Phillip Rosedale confessed that his thinking about virtual worlds has changed from being focused on the physics of it, to the realization that it’s the social interaction that’s so powerful. (GregVerdino2.0)

Second Life Technology VP Joe Miller disclosed:

  • We’ll be open-sourcing the back end so sims can run anywhere on any machine whether trusted by us or not.
  • We’ll be delivering assets in a totally different method that won’t be such a burden on the simulators.
  • Very soon we’ll be updating simulators to support multiple versions so that we don’t have to update the entire Grid at once.
  • We’ll be using open protocols.
  • SL cannot truly succeed as long as one company controls the Grid.

 MTV Networks announced a number of new expansions, building on their successful Virtual Laguna Beach and Virtual Hills.  First up, Virtual Pimp My Ride set in the home of the fast and furious crowd, Van Nuys, CA.

In the afternoon, there was a great discussion on virtual world consumer behaviors and the evolution of social networking.

More to come after tomorrow’s session.

eBay bans auctions of virtual goods

On January 1, the massively multiplayer online role-playing game (MMORPG) “World of Warcraft” released a major new upgrade.  The 3D Virtual World game has over 7 Million subscribers worldwide who shell out a monthly fee to play the game.  In addition, the community of WoW players has created a thriving marketplace for virtual goods on eBay, where virtual weapons, attire and characters have been selling for real cash.  While there is no universally agreed-upon value for “Real-Money Trades” (RMTs) market, it is assumed to be worth somewhere between $250 million and $880 million a year, according to experts. 

eBay, which has dominated the market for these transactions has confirmed that they are now going to ban auctions for the characters, currency, weapons, attire and accounts of online games such as World of Warcraft, City of Heroes and others.

In most cases, publishers of online games include in their terms of service a prohibition on RMTs.  Players who violate such rules can be banned.   eBay’s move is a boon for companies like Internet Gaming Entertainment who now own the third party market.   Julian Dibbell, author of Play Money: Or How I Quit My Day Job and Struck it Rich in Virtual Loot Farming commented that this development is “sad” because it restricts individuals from being direct participants in the markets themselves.  I should note that SecondLife is not affected by this move since virtual goods in that realm are freely traded.

If I had to bet, I would expect that the community is not going to accept this change quitely.  It’s in their nature to be active participants, to control the content, terms of service be damned.  When it comes to digital content, be it a virtual tool, or a song from Tool, the community always finds a way to get what they want on their terms.

 The article on CNET goes into more detail regarding the motivations behind eBay’s decision. 

CBS, Sling & SecondLife???

In case you haven’t see this, CBS will be joined by Sling Media and SecondLife in a presentation at CES today.  I’ll update the post after the details are out.

UPDATE:  So the keynote is over and here’s the skinny.  For the past year of so, we’ve all been talking about “The New Media”,  “Generation C(ontent)”,  “Web twodotwhatever” and so on.  We’ve also been saying that traditional media “doesn’t get it” or is no longer relevant. 

Apparently good old CBS isn’t going to go away quitely.  Instead, they have spent the last year developing lots of new partnerships with everyone from social networking sites for lesbians to SecondLife where a virtual replica of the Starship Enterprise (CBS property) will be made available to residents.  Perhaps that’s a bit over the top, but this is afterall the age of “Individual and Interactive”.  There is no niche too small (right longtailers?) and we all want to play a starring role.

In his keynote address, CBS President and CEO Leslie Moonves showed off quite a few of his new friends to demonstrate that CBS “gets it”.

“The symbiotic relationship (between online and television content) will only tighten,” Moonves said. “What’s a big media company like us to do? We’re embracing it big time. We’re doing just about everything we can to see what’s going to work now and in the future.” That often means bringing in people outside CBS to do so, he said.

The partnership with Sling media involves Sling’s latest technology called Clip + Sling. It allows users to clip content from live or recorded TV and share it with anyone, including non-Slingbox owners. The clip can be sent in an e-mail that plays the video from a hosted portal.   It’s not exactly YouTube, so to cover all the bases, CBS also has a joint venture with Google’s latest toy in the form of a contest in which users submit 15-second videos to YouTube about anything they’d like.  The highest-rated video will be broadcast on CBS during this year’s Superbowl.

The message from Moonves is that “there is no such thing as old media and new media.  There’s just media.” Is this kind of media mash-up going to save the traditional guys from extinction?   What do you think?  While you ponder that, I think I’ll head over the the StarTrek sim in SecondLife.  I hear there’s a helluva dance party going on in the shuttle craft bay 🙂

SecondLife Goes OpenSource

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Chief Linden, Philip Rosedale said today that Linden Labs is going to make the core codebase for SecondLife available to developers.  Considering that the contents of SecondLife has been developed entirely by user “residents”  and the number of registered avatars has grown exponentially over the past year, the move to open source is a natural progression.  After all, Linden has a limited number of developers and there is much work to be done to meet the needs of its growing population and to make the software more palatable for less powerful computers (like most of us have).

Given the growth of SecondLife, the vision my many in the software development community that a 3D web is the shape of things to come, and the success that other projects like Firefox and Linux have had using the community to build the code; this move is smart and should help keep things moving.  It can also lead to some interesting new capabilities:

“There are lots of handicapped people using ‘Second Life,’ It’s one of the really inspiring things about it,” Rosedale said. “There are a lot of ways of connecting people to their computers, not just mice and keyboards but gaze detection and neuromuscular stuff” that Linden Lab doesn’t have the manpower to address, but he hopes outside programmers will.

Someone also could “hook up an exercise bike and fly around ‘Second Life’ while exercising,” he said, or write a program for accessing the world from a smart phone.

“All that becomes extremely easy to do,” said Rosedale, who will speak tomorrow at the International Consumer Electronics Show in Las Vegas.

The details for the more technical readers out there, according to an AP report are as follows:

The code will be available under the GNU Public License, a widely used agreement among open-source developers that allows them to legally modify and share software. Linden Lab will review and test some add-ons, modifications and bug fixes, and incorporate them into the official version of the viewer, which can be downloaded for free.

Monday’s announcement doesn’t cover all the software behind “Second Life.” The program that controls the underlying infrastructure will remain proprietary, though Rosedale said open-source “is absolutely our direction.”

Fortune has an exclusive interview with Rosedale as well as comments from Electric Sheep, one of the largest in-world construction companies, and IBM who worked with my company, Circuit City, to open a virtual store in SecondLife.  It’s worth the read.