Toys and the online revolution

Social Media, virtual worlds and online games don?t have to be seen as the toy market?s enemy, argues Matthew Warneford. He explains how toys can profit from the online world.
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Digital toys, interactive cartoons, social games and virtual worlds – whatever you call them, they are no fad.
We’re all human, we need friends, and we all want to have fun. Virtual worlds offer exactly that, a place to have fun with friends. Their appeal is clear, and they’re here to stay.

Since gaining wider notoriety three years ago when Disney bought leading virtual world, Club Penguin for $700m, it’s been this basic desire for fun with friends which has driven the number of registered virtual world players to over one billion – double the number from 18 months ago. Virtual world strategists, KZero, see no signs of this growth slowing.

This isn’t a case of all talk and no trousers. Virtual worlds are producing real revenues from the sale of virtual goods – virtual clothes for an avatar, virtual furniture for a virtual house, or even stranger, virtual food for a virtual pet living in a virtual cage.

In the US alone, $1.6bn was spent on virtual goods this year. Keep in mind, these virtual goods require no warehousing, no distribution, and have no raw material cost. They are 1s and 0s on a server.

 Exactly how these worlds are impacting toy sales is hard to say, but it’s fair to say they’re also targeting the parent’s purse. Despite that, I don’t believe the toy industry should see social games as a threat. They’re not competing, they’re complementary – a new revenue stream, a marketing channel, and an IP test bed.

 Webkinz can be used as a model of how to merge online and offline play. The dolls come with a code which allows the owner to play with a virtual version of their new toy. The core toys are complemented by a Pet of the Month that unlocks exclusive items. There is also a trading card game and the option to buy virtual goods in the Webkinz eStore.

 Mattel’s Barbie Girl virtual world has been a storming success, signing up three million members in its first two months, while World of Warcraft took twice as long to reach half that figure. Online, kids can customise and play with a virtual Barbie and buy virtual goods using ‘B-bucks’, earned by playing games, and watching promotional videos. Mattel even uses the physical product as a form of security. While all players can chat using a range of approved phrases, players can chat freely to ‘best friends’ – players whose USB-enabled Barbie doll has been docked in their PC, meaning they know them personally.

 On the other hand, Gaia Online has taken the opposite approach, tapping in to an older market, by offering products such as t-shirts, plush dolls and accessories based on the virtual goods.

 However, what really makes a kid happy is not the toy or the technology – it’s the story they are able to tell with it. This is where virtual worlds shine. They’re not about the avatars or the flashy games; they’re about role-play, narrative and adventure. This is where I see toys and social games working together.

A Barbie, R/C car, or even a Nerf gun, are all vehicles for imagination, a catalyst for adventures and stories. Virtual worlds are places where these stories can come alive – where players can go shopping with Barbie, race their R/C car across the Mojavi desert, or save the world from aliens using only their virtual Nerf gun.

All these stories and many more are acted out by kids every day. Now, through virtual worlds, they can be part of those adventures online.

As the toy industry feels the squeeze, now is the time to embrace online. I don’t mean just as a medium for marketing, but as a new way for kids to engage and to benefit from the growing virtual goods market. Online games aren’t a threat, they are an opportunity.



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