Archive for October, 2008

Tuesday, October 28th, 2008

Club Penguin celebrates its third anniversary! To mark the event, Disney and Club Penguin held a big anniversary party this past Friday in the heart of New York City. Excited fans and their parents could be found waddling around the festivities inside the midtown Manhattan Toys R Us and also across the street in the middle of Times Square.

Panorama photo of Club Penguin celebrating their 3rd anniversary in the middle of Times Square
Montage photo of Times Square event. (Click image to see larger photo.)

There were many things to do and see, as well as announcements to hear. The outdoor celebrations included personalities from Radio Disney and the Disney Channel. Entertainment included guest star appearances, many dance numbers on stage, and even a visit from Club Penguin co-founder, Lane Merrifield who thanked everyone for making Club Penguin such a huge success. The event was simulcast online through the Club Penguin website and also projected on the ABC Jumbotron! Nearby, a custom decorated tent, doubling as an igloo, looked like it jumped right off the webpages of the Club Penguin website. Tasty treats were on hand for all

Inside the decorated Club Penguin igloo during the 3rd anniversary celebration in Times Square
A look inside the igloo. (Click image to see larger photo.)

the little ones and an amazing 3rd anniversary cake was made in honor of the celebration!

Across the street, inside the Toys R Us store, many additional surprises awaited which includeda number of new Club Penguin books (I think I saw four different books), plush penguins (I’m going to guess about 12

Club Penguin anniversary cake,  celebrating their 3rd anniversary - online and offline cake comparison
Online and offline anniversary cake. (Click image to see larger photo.)

different characters), and many new Club Penguin toys. Computers were set up for kids to try their hand at Club Penguin for the first time and additional tables were nearby so visitors could play the latest games now available including a Club Penguin branded Mancala and a card game called Fast Flippers. Users could even test out the soon to be released Club Penguin Nintendo DS title called Elite Penguin Force. The official Club Penguin blog also announced a series of Club Penguin trading cards that will be available sometime this coming November.

So, what’s noteworthy here? Well, aside from the party, a number of things. After watching the Club Penguin business for more than a couple of years, I am impressed with how Disney has proceeded after the acquisition of Club Penguin. I had a fear that the sweetness and innocence of the Club Penguin site would be lost through this acquisition and would soon become a site cluttered with advertisements. I am thrilled to report that the Club Penguin site is even better today than it was before the Disney acquisition. The only visible change is a separate webpage with information on where Club Penguin toys can be purchased. This is, however, located outside the Club Penguin world.

Also, the folks at Disney and Club Penguin have spent a lot of time trying to determine how best to grow this virtual world beyond the sizable user base they already have. First, you can see the Club Penguin website has just become international, with the inclusion of Portuguese as a language option in addition to English. Not an easy undertaking considering the live monitors needed to watch the site’s activity very closely. I’m betting you’re going to see more languages added here soon. Second, instead of the typical revenue approach offered through monthly subscriptions often used with other virtual worlds for kids, Club Penguin is extending revenue support through physical product that include numerous ties back to the website. The new products announced at the anniversary celebration include special physical “coins” attached to the plush penguin dolls and codes woven into games and books that unlock unique Club Penguin rewards. For example, within the Club Penguin world, an activity can ask for the special word found on page 46 paragraph 2 word 14 of one of the new books, and once this word is entered into the activity, prizes await. Also, it’s been stated that coins collected in the new Nintendo DS game can be transferred into a child’s online account too. Pretty cool! Now the cynic in me might say this is too much consumerism, but I have to acknowledge the amazing commitment to quality and careful thought put into these new products. A child does not have to be a paid subscriber of the site in order to take advantage of these rewards.

The solitary subscription model and in-world advertising approach to grow a children’s virtual world is looking like an outdated thing of the past. Club Penguin and Disney are positioned to capitalize on it’s consumer product strength to grow Club Penguin numbers like no other virtual world offering for kids can. Waddle on Club Penguin! Waddle on!

Video of the Club Penguin anniversary event in NYC’s Time Square.

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Wednesday, October 15th, 2008

[The following is an article I wrote for the October 2008 issue of Playthings Magazine. For those unfamiliar with Playthings, it is the oldest (over 105 years in circulation!) and most widely respected professional toy magazine in all of North America. Playthings reports on the business of play as well as trends that not only impact the toy industry but also children across the globe.]

Social networking, social media, virtual worlds; the Web 2.0 world is on fire, and sites that touch on some part of social media are rapidly growing. Sites that allow individuals to come together, form online communities, and share thoughts and different media types in a virtual way are feeding this ever-changing way to engage with others online.

Plain and simple, people are social creatures. It’s wired into our being. The concept of social networking is not new. It’s been part of our DNA since the dawn of time. Some researchers think that our desire as humans to socialize is an instinct that plays a part in our survival. Only recently has the term “social” been applied to interacting online, allowing individuals to become virtually engaged with others who share common interests across the street or around the globe. And social network destinations are not just for adults and business people, they’re of great interest to kids. Many adults may first have become aware of social networking sites through high profile business acquisitions with noteworthy online companies like MySpace or Club Penguin. Kids, on the other hand, often learn about child-friendly equivalents by word of mouth, from friends at school or the playground.

But just what are the current growth trends? What is the makeup of existing social networking sites today and how—and better yet, why—are kids interested in them? Where are the new opportunities yet to be explored by future businesses? How can a traditional toy business better integrate these new virtual play patterns into existing physical products?

Worlds worth watching

One way to begin chipping away at these questions is to take a look at the wealth of social network products available on the market today. There are literally dozens of sites that people young and old use.

In fact, once a list of social networking sites is identified, a clear demographic split can be seen, and two distinct user groups emerge. One group includes children ages 12 and under; the other includes teens between the ages of 13 and 18.

What is this age group distinction about? In part, the separation has to do with privacy laws that protect young children online. Another factor is that each group comes to these products with a different set of social interests. There are also differences in communication style across the age groups as well as access to and understanding of different technology types.

Before building our list of sites, it’s important to identify the critical social networking features these destinations have in common. The criteria used for this article includes features that allow its user base to communicate with one another in a real time or a delayed manner using open chat, filtered chat, or canned chat —the three main methods of communicating online through such sites. The ability to communicate with other members in these sites is usually, though not always, accomplished through interacting in a virtual world. First, let’s take a look at a list of destinations that appeal to children age 12 and under.

Popular Social Networking Destinations Used by Children Age 12 and Under
BarbieGirls 2007 MinyanLand 2008 SuperClubsPlus 2006
Beanie Babies 2.0 2008 Mokitown 2001 ToonTown 2003
Be-Bratz 2007 Moshi Monsters 2007 TyGirls 2007
Club Penguin 2005 MyEPets 2007 Webkinz 2005
Club Tuki 2007 MyNoggin 2007 Whyville 1999
Dizzywood 2007 Nicktropolis 2007 YoKidsYo 2006
Gold Star Café 2007 Panwapa 2007 Yomod 2007
Horseland Jr. 2006 Postopia 2001 ZooKazoo 2008
Imbee 2006 Shining Stars 2007
Kidscom 2001 Stardoll 2004
NOTE: The year listed next to the social networking site indicates the time that the site launched or the time the site first began offering social networking tools.

Next, a similar list can be created for popular social networking services that appeal to users between the ages of 13 and 18. The method of communication in these sites for older users tends to be more open-ended and less likely to be monitored or filtered when compared to sites for their younger counterparts.

Popular Social Networking Destinations Used by Children Age 13 – 18
Bebo 2005 Horseland 1998 Postopia 2001
CityPixel 2006 Millsberry 2004 PuzzlePirates 2002
Facebook 2004 MySpace 1999 Runescape 2001
Friendster 2002 MyYearbook 2005 Teen Second Life 2005
Gaia Online 2003 Neopets 1999 WeeWorld 2006
Habbo Hotel 2000 Orkut 2004 Xanga 2000
Hi5 2004 Piczo 2004 Zwinktopia 2007
NOTE: The year listed next to the social networking site indicates the time that the site launched or the time the site first began offering social networking tools.

When the above two sets of data are mapped out over time and placed on top of each other, adding up the number of new social network products launched within each year for both age groups, some interesting trends present themselves.

Line chart showing new social networking website starts by year.

[NOTE: This line chart above showing the two sets of historical data layered on top of one another did not make it into the magazine article. I am adding it here to the blog post only. -ST]

It’s impossible to ignore the recent growth in new social networking products launched each year that target children ages 12 and under. In 2007 alone there were at least 13 such products announced for this demographic. And 2008 is shaping up to be a banner year for new announcements. During this year’s Toy Fair, I counted 12 new social networking and virtual world announcements, products that have, for the most part, yet to go live. What’s surprising is that over the same time frame, social networking products that appeal to teens have remained somewhat steady in new business starts and consistent year over year. Yet, both demographics are experiencing significant activity in new membership growth and Web traffic month after month. So why is it that the younger demographic is experiencing a greater surge in business startups? Let’s explore a few theories that may answer this question.

Not all social networking products that are appealing to teens are developed specifically for teens. These destinations are often developed to appeal to audiences over the age of 18, but have found success with users between the ages of 13 and 18. Conversely, almost all sites for kids ages 12 and under are intentionally developed for these younger audiences.

It’s possible that older users of social networking products are more loyal to a specific social networking site, whereas the younger demographic is more transient in its social networking choices, preferring to use multiple sites over time instead of staying with just one.

The younger demographic may have greater turnover in users and shorter life cycles (churn) with social networking products that target them than their older counterparts. In the children’s magazine space, for example, it’s not uncommon to hear that an audience base and related subscriptions changes every 18 months. The same could be true for an online world created for younger audiences.

Many younger social networking services are tied to consumer products like plush toys or are affiliated with on-air television programming, whereas services targeted at older users are usually not. While an older demographic has more expendable income than the younger, it may also be a harder group to sell a specific consumer product to in a social networking manner based on ever changing consumer tastes.

Social network destinations that appeal to our older group may see significant growth in add-on services like widgets and other related micro businesses and technologies, whereas the younger social networking destinations do not have the ability to tie in other, similar business extensions.

While both age groups use avatars to represent themselves in an online world, the younger services rely more heavily on avatar use than services for older users. Representing oneself with an avatar online may have greater appeal with younger users.

Services targeting older users take advantage of additional forms of social engagement, like media exchange (photos, music and video). These are offered in addition to engagement through written communication. Few destinations for younger audiences offer the same opportunity to share different media types.

Social networking services for older users do not need to mask a user’s identity, though identities can be hidden, changed and altered at will. Younger services hide all possibility of making oneself identifiable online. The need to protect the identity of young users is a clear distinction that separates the two groups.

Revenue models differ as well. The services for older users rely heavily on ad-driven models. Some younger services also rely on “in world” advertisement but can also take advantage of tangible product sales and/or monthly subscription models.

A number of toy companies have taken steps into the online social networking world for kids, resulting in varying degrees of success. Some companies simply offer an online destination alone while others offer a tangible product (like a plush toy) together with a virtual product, each touching on a different play pattern or desire. Webkinz World and Club Penguin are often cited as exemplary successes in the kids’ space. Others, less so.

Almost, but not quite right

An offering like Mattel’s Barbie Girls is a high profile example of a site that hit kids’ engagement levels correctly but fell short with the related MP3 product that tied into it. It was a case of a strong online solution with a weak tangible product. Ty’s Beanie Babies 2.0 has the opposite problem. Ty’s plush toys are loved by many a child but its online offering falls short in ongoing engagement after its initial use.

It’s easier to correct an online shortcoming by continuing to evaluate, test, build and expand such sites than it is to correct a problem with a tangible consumer product once it’s in the marketplace, but getting both virtual and physical products correct from the first day of launch is vitally important. In the early days of Club Penguin, before the official launch of the site in October 2005, an earlier iteration of Club Penguin called Penguin Chat existed for a couple of years. It was extremely limited compared to other social networking products offered today. But the creators of Club Penguin continued to build and add to this first step with additional features and games. The same is very much true for Ganz’s Webkinz World. Both sites’ initial offerings were smaller than they are today, built largely on a shoestring budget, sweat equity and love, but both offered an acceptable level of quality content, quality experience and user engagement with kids right from the start.

Looking towards 2009, we will continue to see even more ways to engage in virtual worlds, resulting in unique and specialized methods of socializing and participating in communities online. Some technology products for holiday 2008 will connect to the Web via USB ports. Additional connectivity through cell phones or other mobile technologies could provide ongoing social opportunities when access to a computer is not available. Stay tuned for more innovation and opportunity in this ever-changing, ever-expanding online world for children, teens and adults alike.

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Sunday, October 5th, 2008

The Nintendo DSi,  the latest handheld in the DS familyThere’s a cell phone ad on TV currently that asks why we still refer to our cell phones as “phones” since their capabilities have expanded far beyond that of just making a call. Cell phones today include digital cameras, web browsers, media players, games, and more. As cell phone features continue to expand, so too does the latest game playing device announcement from Nintendo.

On October 2, 2008, Nintendo debuted the next iteration of its popular Nintendo DS handhelds called the Nintendo DSi. It’s similar in appearance and functionality to the widely popular Nintendo DS Lite handheld, but the DSi will include the following additional features:

  • Not one but two digital cameras, one that is a 0.3 megapixel resolution, the other a VGA resolution, both saving images at 640 x 480 pixels.
  • a built in web browser
  • an SD card slot
  • a built in hard drive for storing downloadable games and photos (the hard drive size has yet to be announced)
  • improved speaker quality and the ability to listen to MP3 files
  • slightly larger screens (17%)
  • a thinner footprint (12%)
  • The DSi battery will recharge faster than the DS Lite battery, but the amount of time a user can play per charge is slightly less than that of the DS Lite (link)

Some minor UI changes have also been made, largely the power up slider switch is now a button on the lower left face of the device. The biggest news about the DSi is it will no longer be backward compatible with Game Boy cartridges, quite a change from Nintendo’s long standing effort to be as reverse compatible as possible. In order for Nintendo to shave 2.6 mm from the thickness of this new device, it decided to part ways with the GBA slot.

It’s also rumored that both of the screens found on the DSi would be touch-screen capable, but the rumor appears to be incorrect. The DSi will have only one touch-screen as is found on the original DS and DS Lite.

The new Nintendo DSi handheld will be available for sale in Japan starting November 1, 2008 but won’t make its way to North America until sometime later in 2009. One reason for the delayed US rollout as suggested in a recent Wired Magazine interview and detailed in PC World is that the Nintendo DS can be found in one of every two households in Japan (also one in every five people in Japan own a DS) while in the US only one in five households have a DS. US sales of the DS continue to be strong while sales in Japan are starting to wane. This DSi rollout strategy suggests that the DS still has a lot of selling life left in the US market before the new platform should hit North America, thus the delay.

Maybe one day if Nintendo adds cell phone capabilities to its handhelds, such a device will still be referred to as a gaming platform and not a cell phone, whereas cell phone companies that add gaming features are still selling cell phones. I imagine how we refer to this device has everything to do with Nintendo’s business position, that is to bring fun to everyone through its products. So let’s call a cell phone a cell phone, and a video game platform a video game platform. No matter how feature rich they become, it’s all about the company’s intent. Play on Nintendo!

(For some great images of the Nintendo DSi, visit Nintendo World Report.)

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