I still think there is an element that MMOs bring to the table that drive a lot more collection because there is established value in the community for the virtual benefit the toy delivers. When you buy a Club Penguin toy, you know what that coin is worth and its part of a bigger play experience. Trying to communicate all those things at once is a tricky proposition, especially when traditional media is losing its effectiveness with the audience. That’s why I have become converted to the “world first” viewpoint. The best marketing for the toys is the world. We spend zero in marketing on Penguin toys and it is more successful than most web toy attempts that are TV advertised.

I have wondered about the importance of rolling out both physical and virtual at the same time. How important is this to the success of a new venture? A strong brand certainly helps, but maybe more important is the strength of the engagement being offered online and off. One such product I’m following is Xtractaurs by Mattel. It’s a set of dinosaur toys with an online battle game (not necessarily a virtual world, but the example still works). Xtractaurs is a web connect toy that shares data through a USB cable connecting dinosaur to computer, and then the computer uploads that data to the online site. The dinosaurs can be used offline, but connecting these dinosaurs to a computer benefits the online gaming experience. Other web connects have not done well in the past, but this one toy may broaden new ideas in the toy/virtual space.

The thing I like about tangible/virtual offerings as opposed to a pure virtual play are the many more business models available beyond the monthly subscription or advertising solution. However, even if you have everything working correctly with either scenario (the monitoring, the branding, the price, the engagement, the play appeal, the story, the community) it does not guarantee critical and financial success in the marketplace. Trying to capture lightning in a bottle, or develop the next breakthrough virtual world / physical toy offer, is a very elusive undertaking indeed.

There are a few chicken and the egg questions around these types of toys. Are you building the world as a “feature” essentially of the toy, or as a standalone product? Many of these toy-driven MMOs have failed because they are not rich enough to sustain interest and drive collection. The irony is that often times in designing the world only as an extension of the toy, you wind up hurting toy sales. Webkinz is really the only toy driven world that has worked in a significant way and that is because it reached scale. But will another one emerge that way? Remains to be seen.

Also, which do you launch first, the world or the toy? Which drives which? Ultimately, you want a virtuous cycle in which they drive one another, but you have to start somewhere. With Club Penguin, we had a massive user base into which we could launch toys. But if you are starting with new IP, that becomes a harder proposition because you are trying to educate people on the overall concept, the world, and the toy all at the same time. Not easy.

Lastly, how much standalone value does the toy have? You pointed out that a lot of the success of Webkinz is that the plush makes a great gift. In retrospect, this is where we struggled with Clickables. Most of the value of Clickables was in the online component but if you were not already a player, that value may have been lost on you. Plush has worked because it makes a great gift but also is a great starting place because the percieved value of the toy as a toy alone is there.

What I have learned in the past couple of years is that all these things are a very fine balance and that you have to get that balance right – both online and off – to make these types of ventures a success.

VW’s are a great place for kids to gain mastery and control, as you say. Your question about the depth of online experience/content is an important one. When content is too scarced or not frequently refreshed, kids won’t come back. Also, kids are getting much too savvy for re-skinned casual games. They are more likely to become a loyal follower of a brand/game, if they are engaged in truly rich, immersive experiences, complete w/tools, rewards and all the rest.

p.s. Not sure how Elf Island got left out–perhaps because there’s no toy component right now. Kids on that site are making a real impact on the world–through gaming. It’s worth a look, everybody.