In mid-February, the annual New York Toy Fair held their conference at the same time as the virtual world conference called Engage Expo. Both industries compete for kids’ interest and at times, even collaborate in engaging them through both online and offline play. The two conferences offered a rare opportunity to hear how both industries are thinking about engaging kids through digital play.

At the end of both of these events, a number of industry experts gathered together to discuss key trends with kids, technology, virtual worlds, and play. What were some of the key findings for 2010? Less virtual world announcements. Deeper virtual world experiences. Less technology toy announcements. Lower price points across all products. Less “watch me” toys. More touch screens for tech products that were screen-based. The desire by kids to stop being “micro-paymented” to death.

These and other trends can be heard in the video recording of this group get-together offered below. Also included in the video are photos of new products announced at the show that you will see rolled out later in 2010.

For those who would like to simply cut to the chase, I’ve also included a look up table below to find the location within this video where the group talks about specific products you’re interested in. After you’re done viewing, share your thoughts about what key trends you see in the world of digital play. Enjoy!

• FunFare Magazine’s Hot Dozen Toy List
• KMart’s Fab 15 Toy List
• Time to Play’s Most Wanted List
• The Toys R Us Fabulous 15 List

I thought it would be interesting to see what could be learned by mashing together all of these lists. After doing so, a few trends did make themselves apparent. From this new mashup list of 44 toys, I could see:

• a little more than half of the toys are technology-based
• a little less than a quarter of this list uses well known branded characters
• four of the toys cited involve some sort of virtual world along with a tangible toy (Dora’s Explorer Girls, Littlest Pet Shop Adoption Center, Liv Dolls, Nanovor Nanoscope)
• only two toys on the list could be considered educational (Color Me a Song, Zippity Learning System)
• two toys on the list are video games (Beatles Rock Band, Wii Sports Resort)

I also found that three toys in my mashup list were recommended on three out of the four separate toy lists:

Bakugan 7-in-1 Maxus Dragonoid is a toy that folds up, expands, and connects to build a much larger toy. This toy feels a bit like a mashup itself between Transformers and Pokemon. From what I’ve heard from classroom teachers, many 8 year old boys are buzzing about this product.

The Nerf Strike Raider is a full sized, automatic toy machine gun and looks pretty threatening. The Nerf line is a very popular toy product for Hasbro, but I wish that toy guns didn’t make it to the list!

Zhu Zhu Pets are little robotic hamsters that react in some way, with noise or motion, when you touch them. These critters can be sent to live in a super hampster wonderland, similar to the real world animal Habitrail concept, complete with its own hampster ball. This product is just a little misleading. The price of the pet itself is really affordable! What parents will most likely miss is that if you buy the pet, they will also end up spending a fortune on all the accessories. None-the-less, I think this toy will be the hot product for kids under the age of 10, if you can find it. It already looks like stores are already all sold out of this product.

This next list below includes toys found on two of the four lists:

The toy I think will be a big seller from this list is the Girl Gourmet Sweets Candy Jewelry Factory by Jakks Pacific. It’s a little like the old Easy Bake Oven, but instead of making baked goods, it makes candy jewelry. The catch to be aware of with this product is that it does not come with the special 40 watt bulb you need to make the product work. It has to be purchased separately.

I’m also watching the Printies Design Studio by Techno Source. This is a clever product where a child can create all kinds of unique crafts using a specially prepared (and pre-perfed) paper that your child can design, print, cut out, and then stuff with cotton. It uses low end color printers, like the kind you most people have at home.

Some surprises? First, I was surprised to see the LeapFrog TAG & TAG Jr. reading systems did not make it onto any list. Once I realized that LeapFrog was missing from the list I then noted that not a single toy from VTech was on the list either. Maybe just a bad year for electronic learning products? Also, WowWee, the amazing robotic toy experts did not have a single mention as well. The Nintendo DS and DSi were not on the list either, but that may be more of an issue with toy experts not specializing in reviewing software and gaming platforms than anything else.

I was also surprised not to see more website toy tie ins on the list. There certainly are a number of them out there, but not so many captured on these more traditional toy lists.

If you are interested in my complete mashup toy list, you can download a copy as an Excel file here. Note the tabs on the bottom of the spreadsheet, I have arranged the list by product, age, cost, etc.

Let me know if you see any other trends. I’d enjoy hearing what toys are on the top of your list!

I raced out the door last night with one of my young friends for a trip to Toys R Us. By the time we arrived, we had 15 minutes before closing time. We would not let this fact deter our mission, to purchase a very specific Nintendo DS title.

Walking into the store, we were immediately confronted a five foot tall box portraying the tweenage Dora. It welcomed visitors to the store with an announcement for the Dora Links online world that would become available in another week or so. My young companion was pulling my hand, trying to steer me in the direction of the video games department. “Please! Hurry up! They’re going to close!” she yelled as we passed the Star Wars section. My jaw dropped. An amazing display of new Lego and non-Lego Star Wars products called out to me. I immediately lost track of time and space, wishing to savor each shiny new Star Wars item displayed before me. There were many life sized Clone Wars images hanging from the rafters, but every one was labeled “Star Wars.” I wondered if other adults knew about the Clone Wars television show and if they too thought there was some mistake with the display’s labeling.

My friend continued to pull me by numerous Hannah Montana products until finally we made it into the video games section. We found the Nintendo DS isle, but the ScribbleNauts title we came for was nowhere to be found. Clearly this area was a hotbed of activity. We groaned out loud that the shelf was empty and a nearby clerk headed to the storage room to find another box full of ScribbleNauts titles to restock the shelf. It was at that point that I ran into the store manager. Now was my chance to get the inside scoop!

We exchanged some small talk around the successful launch of ScribbleNauts. There was a $15 dollar in-store gift card offer with the purchase of this title. I wondered what the video game store down the street was offering to pull people in. I was happy to avoid that’s store’s nine foot evil battlebot display that guarded the door to announce some futuristic XBox Armageddon game. I was excited to buy my copy at a toy store.

The TRU manager I spoke with was certainly on top of her game, despite the corporate cost savings measure to cancel this year’s event to share the latest and greatest product info with all of their store managers before the holiday.

We stood nearby a shelf lined with about nine different netbooks, those trimmed down laptop-like computers which are best used for web browsing and email. They typically cost between $300 and $350, a sizable sum for a toy store purchase. The only netbook I recognized by name was the Disney netbook. The recently announced Nickelodeon netbook was nowhere to be found. I noticed how each netbook was wrapped with three bulky secure straps, making them look less appealing. I asked the manager how the netbooks were selling. “Well, we’re seeing some movement with them, but not a lot. My assumption is that they’re doing better at stores like BestBuy and other consumer goods stores like that.” I asked specifically about the Disney netbook and she said it wasn’t moving any more than the others, though its light coloring and prominent shelf position made it easier to find over its competitors.

Thinking about the latest news in the video games world, I asked how The Beatles Rock Band title was doing.

“The title is doing well. The peripherals are selling nicely too.”

“Anything else of note that’s selling?” Nothing came to mind for her.

“How about that giant Dora display?” I asked.

“Well, I think people don’t quite know what to make of that one yet. Diego recently has been attracting more attention than Dora. While there are still many people that love Dora, Diego is hot. It’s doing well.”

The manager left to follow up on a call in another part of the store. My young friend told me the reason why Diego is doing better than Dora is because there are animals on Diego’s show. “Oh,” I said. “That makes sense.”

I then brought my ScribbleNauts title, along with the latest Professor Layton title to the counter. I was so excited about a new Professor Layton game, the last one was fantastic.

Trying to strike up a similar conversation with the clerk who was ringing up our purchase I realized there are two kinds of toy people in the world; Those who love toys, love talking about toys, love the business of toys and those who are simply there to punch a clock. I wondered how could anyone not love the toy world, warts and all?

Having completed my purchase, it was announced over the store’s sound system that the store was closed. Now it was my turn to grab my young friend’s hand and drag her through the outside path of the store quickly looking at products we had yet to see.

We scrambled through preschool. Nothing noteworthy stood out which I found very odd. There is always something of interest in this part of the store.

Opposite of the preschool isle there was an end cap display that offered Transformers masks complete with voice pitch shift capability. Cool!

Then we passed a dozen or so miniature, battery powered jeeps and SUVs, the standing out from the crowd. They were all so gigantic in size! My friend wanted to stay here and explore, but there was no time. I wondered how anyone would have space in their garage for such a thing?

Then there was a VTech end cap displaying two different “laptop” computers. These simplified electronic toy computers were targeting young children, but would the 3 inch black and white screen display be enough of a toy offer to maintain a child’s interest, even if that toy was priced for 60 bucks? I began to wonder if the rapid pace of technology change would result in five year olds demanding a real laptop with a real screen next holiday season.

At the end of another isle I was surprised to find that Publications International was still selling their talking books. VTech also had a similar, but smaller talking book display. Okay, maybe I’m jaded, but didn’t the LeapPad and PowerTouch talking book craze move on already? I wondered if the buzz around the Amazon Kindle was behind the decision to keep selling these talking books for another year. Couldn’t any new features be introduced over last year’s model in the domain of toys, reading and technology?

On the way towards the store exit, we passed the Star Wars display again. “No! We have to go!” shouted my young friend. As I was being dragged by the giant Dora display for a second and final time I said “Adiós amigo” and headed out the door. There was so much left to see, so much more to talk about with the store manager. It would have to wait for another visit. Maybe Dora the Explorer is a fitting guest to welcome you to the store after all, whatever her age happens to be, especially if you like to explore the business of toys.

When toy companies talk about new toy products, there’s often a lot of discussion around a toy’s play patterns. What is it about the toy that resonates with a child? What play patterns will the toy tap into? Will the play pattern extend across age and gender differences?

Sometimes answering play pattern questions like these are pretty straight forward, other times their answers are not as clear cut. Potentially even more complicated is describing the play pattern around a toy product tied to a virtual world or online experience. What kind of play pattern are we talking about now? How does the play experience through an avatar in an online world differ from that of a child playing with a physical toy in the real world?

These are hard questions to answer, but they are ones I’m betting more and more people will be asking in the world of youth marketing.

The 2008 American International Toy Fair was a big year for virtual world toy products. Unlike years before, 2008 saw many virtual world product announcements, a first for the show. Some of the biggest announcements came from the likes of Disney and Techno Source with Pixie Hallow and Clickables, iToys with the Me2 Universe, Ty with Beanie Babies 2.0 and TyGirls, and 10Vox with Tracksters and KooKeys. Each of these companies offered a virtual play experience through the purchase of a tangible toy product—the business model of preference being one in which the consumer buys a tangible product that grants access to an online world.

Fast forward to 2009. It seems almost every few days we learn of a new virtual world for kids. While a number of virtual worlds were announced on the show floor during the 2009 Toy Fair, even more were announced outside of the walls of the Javits Center. What was surprising was the number of new product announcements, not just updates to old products launched a year or two prior. Take note for the future: February could very well become the product announcement month of choice in the virtual world space. Such announcements started in 2008 and today appear to be picking up steam.

As you can imagine, any announcement attached to a toy industry event will include some tangible toy product as part of the virtual world offering. Most often plush toys are the vehicle of choice for promoting virtual worlds to kids, but changes are underway within the toy-related niche of the virtual world space. Just about anything these days can include a password key on a piece of paper to allow access to an online destination. Also added to the mix are new solutions that include USB thumb drives that plug into your computer and become the keys to playing in these online destinations.

When I look back on the last two years of tangible toy/virtual world product announcements, I notice two trends, in particular, related to the software portion of the announcement:

1. At the time when a company first makes a virtual world announcement, the virtual world is generally far from completion. If the virtual world has been in development for a long time and is in the process of a sizable public beta effort (meaning many actual consumers are testing the virtual world to flush out problems and improve the quality and stability of the product), this is a good thing. A sizable public testing effort should be the norm with all such products, but sadly it is not. As a result, first-year launches can be challenging for both the companies that make the products as well as the children who use them, typically resulting in poor reviews out of the gate.
   
   
2. After a product has officially launched, it tends to be improved and expanded upon as sales grow or as web traffic proves what is working and what is not within the virtual world. These sorts of improvements are generally seen with products that have been in the marketplace for at least two years.

As it relates to the overall offering of both the physical and virtual parts of the product, I have these additional observations related to the buying and selling of these items that can lead to consumer success:

• How “giftable” is the product? For example, one of the things I love about Webkinz is that the current line of plush toys makes for a great gift idea. They are priced right and are easy to give. Also, the cost to get online is attached to the purchase of the tangible item. This removes the burden from a child of figuring out how they may have to pay for the online experience.
  
  
• Related to cost, are there any hidden fees to gain access to the online world? Sometimes the purchase of the tangible product will not allow full access online. Some virtual worlds can be tiered or gated in a way that premium content is restricted until a credit card is used. A number of different financial models exist related the sale of such products. Be sure to ask if the purchase of the tangible good is the only fee involved or if other fees are part of the online experience.
  
  
• What kind of tangible toy selection is possible? Are there only a small number of items at one specific cost or are many SKUs available across a variety of price points? A variety of products and pricing options can be of benefit to sales.
  
  
• Is there more to the virtual world than just game play? Few of the latest virtual world announcements offer an experience beyond games. Two products to watch that offer something more include Jacabee’s The Jacabee Code, which promotes a unique approach to learning history and Tales 4 Tomorrow, a destination that is all about animal conservation (with plush toys from Fiesta).
  
  
• How deep is the online experience? How many activities and how much content is available? What is the mix of games to creativity tools? Newer sites may not have as much depth as sites that have been on the market for some time.
  
  
• Who does the product appeal to, boys or girls? Historically, very few of these virtual world offerings have had an appeal to boys 9 years old and older. However, this too is changing. New destinations with a greater appeal to boys include products like the car-centric Tracksters, Revnjenz (Revnjenz) and KizMoto (KizToys); and the dinosaur-themed Webosaurs (Reel FX) and Xtractaurs (Mattel).
  
  
• What about younger users? While it may be surprising to find even younger users interested in similar online destinations, many of the social and communication tools available to older users are just not of interest to younger users. Age-appropriate products for young users have been in short supply. However, Ganz recently announced a younger version of Webkinz called Webkinz Jr., and since 2007, Gigapals has offered an eponymously-named site with related toys for the same audience: ages 3 to 6. When thinking up products for younger children, consider the amount of reading and audio instruction provided within these worlds. This demographic may be computer savvy enough to get to your site, but they may still be challenged by the inclusion of too much text once they arrive there.
  
  
• If the online world allows its users the ability to communicate with one another, is the method of communication “canned chat,” “filtered chat” or “open chat”? In addition, what kind of monitoring is provided to prevent inappropriate conversation or cyber bullying?

It’s hard to easily describe the appeal of online worlds for kids. An answer may be found with the sense of independence or a feeling of being in complete control over the digital universe. There might also be an aspirational component to these worlds, as well, that is hard for an adult to fully understand. Part of this new play experience may be an extension of pretend play we’re all so familiar with, related to kids and toys in the real world. One thing is certain, virtual worlds are an expanding part of a child’s play options, however you choose to define the play pattern. And because new virtual worlds are being announced more frequently, chances are there’s one that’s a perfect fit for any girl or boy, or maybe even the child at heart.

Portable entertainment devices for kids have been on an amazing journey over the last five years. Advancements with small video displays, fast and affordable chip sets, and battery technologies that last longer than ever before have brought fascinating possibilities to the marketplace, and to this year’s Toy Fair.

Enter the latest handhelds for kids: The iPix, a portable video player for the preschool set, and the VEO for older children. Both devices were part of a stellar rollout of products from toy maker itoys. The two products are similar in that they both contain a small, backlit video display for watching popular television shows from Cartoon Network, HIT Entertainment, Nickelodeon, and Nelvana. Both have enough onboard memory to hold up to sixteen half hour shows. Onboard lithium ion batteries can last up to six hours on a single charge. While both devices have similar guts on the inside, their exterior form factor is made to appeal to either a younger or older audience. The video choices for each device are also age appropriate for the two different age groups.

So just how do you transfer TV shows onto the iPix and VEO? Each device can be connected to a computer via the USB port. Once connected, a visit to a unique itoys website allows users to purchase their favorite TV shows and transfer them onto their iPix or VEO. The whole experience is similar to that of loading content onto an iPod, but these online tools are customized specifically for itoys products.

The cost of the iPix is just under $70 and half hour television episodes can be purchased for between $2.49 to $2.99 each. The VEO has the exact same pricing structure as the iPix. Watch for these technology toys to become available in June of 2009.

Have you ever had something fall behind the couch, just out of reach, and you think to yourself “If I just could use my mental abilities to reach that item, I would have it by now.” Well, we’re a whole lot closer to successfully making this happen than ever before. Soon you’ll be able to channel that mental energy and grab that item by using your powers of the Force. That’s right! The Force.

At this year’s Toy Fair, the toy company called Uncle Milton announced their latest creation, the Force Trainer. It’s part of a collection of science products recently unveiled at the show called Star Wars Science.

The Star Wars Force Trainer comes with a headset that reads certain kinds of brain activity, and a base station that receives those brain signals. Inside the base station (the Training Station) is a ball (the Training Sphere) enclosed within a clear tube. As the headset captures focused thoughts from the user, it converts those signals into instructions to power a fan within the base station, which in turn lifts up the ball within the clear tube. The more the user concentrates, the higher the ball floats. The less concentration, the lower the ball floats. The voice of Yoda helps you attempt to master 15 different Force Training activities included within this technology toy.

The ability to capture brain activity and channel it towards some device may be something we see more of in the future. A number of video game companies as well as other business enterprises are exploring this brain wave capturing technology for commercial use. One company in the San Jose, CA area called NeuroSky appears to be the way out in front with developing the technology, and currently offers a licensing and training program to learn more about it.

The Star Wars Force Trainer will become available on July 23, 2009 and will sell for just under $120.

Now, if I could just use my newly acquired powers of the Force to find my car keys, I’d be on my way to saving the universe from powers of the dark side. Check out the video below to see how you too can master your feelings with the Force Trainer.

On opening day of the 2009 Toy Fair event in New York City, I began my search for new toy products that include unique application of technology for the benefit of enhancing play. While I only covered a small fraction of the show’s floor (7 hours of isle wandering), I came across a few products that caught my eye. One being a digital facelift to the classic Rubik’s cube, promoted by a company called Techno Source.

Let me start off by saying that I am not a Rubik’s cube fan. I never could figure out those darn things. But I thought a couple of tech features applied to this toy were really groundbreaking.

First, users interact with this non-twisting cube by touching the different surfaces with a finger. It immediately comes across as an iPhone touch interface. Slide a finger along a row of lighted tiles made the cube “rotate.”

Next, the cube has a built in accelerometer used to determine the active display face. Once the accelerometer has figured out which way is up, it only allows the upward face to be changed through touch. This way a users holding the cube with both hands from the side will not alter the puzzle’s surfaces in unexpected ways.

There’s a button to give you a hint if needed. Also included is multiple levels of undo so you can roll the surfaces back to a point where you think you may have made a mistake. When the TouchCube is rested in its docking bay to be recharged, the cube puts on a unique visual display. Think of this as your new digital lava lamp.

The Rubik’s TouchCube is available for purchase in the Fall and is being offered for a suggested retail price of $149.99. Check out video below to see the product in action.

Most people use TiVo to fast forward through commercials. For eight weeks this past fall, I fast forwarded to the commercials. Specifically, to commercials aimed at kids.

My curiosity about television ads that air during children’s programming started quite by accident. While incorrectly programming my TV’s digital recording device, I inadvertently found a wealth of new product information being advertised to children. Intrigued, I began to watch what I’d captured.

The numbers game

In any given hour of children’s television programming—especially during shows that air on Saturday or Sunday mornings—you’re likely to find about 10 to 16 minutes of commercials, depending on the station being watched. That’s about 25 to 40 commercials in an hour. During that time, you’ll see ads that promote other children’s television shows, places junior might like to eat, shoes and clothes kids might like to wear … and a wealth of technology products they might like to do just about anything with.

In fact, it would seem that 60 to 75 percent of child-targeted commercial time is dedicated to promoting technology of all types. This includes both electronic and traditional toys, dolls, video games, virtual worlds and websites. As you can imagine, all the big toy names are buying up ad time in bulk; companies like Hasbro, Mattel and Disney, Spin Master, Techno Source, Jakks Pacific, MGA Entertainment, WowWee, Play Along and Crayola are all promoting through television.

Video games grab attention

Having started my experiment just before the holiday season, I found a number of companies I didn’t expect to see in such heavy rotation, like Nintendo, Electronic Arts and UbiSoft—all biggies in the video game world. In that same hour, you were as likely to see as few as two or as many as eight different commercials for Nintendo’s DS or Wii. And because this was during kids’ programming, Nintendo’s campaign didn’t include ads for the Wii Fit or other products primarily for adults.

Some big items that first jumped out at me with technology included toys that require being connected to a computer in order for kids to fully experience their value. Two toys of note were LeapFrog’s handheld Didj or Bandai’s Mega Mission Helmet, which includes a USB cable as part of the play experience. Build-A-Bear Workshop also ran a series of ads to promote a unique virtual world along side its tangible teddy bears. Commercials for other virtual destinations included Disney’s Pixie Hollow, Radica’s Funkeys and Cartoon Network’s own FusionFall, a massively multiplayer online game featuring characters from many of its most popular shows. According to advertisements, animatronic robots also continue to evolve, be it Thinkway’s Wall-E toys, Fisher-Price’s interactive version of Ming Ming from The Wonder Pets, or even Kota the robotic dinosaur from Hasbro’s Playskool division.

And so, after consuming volumes of weekend commercials, I began to develop a sixth sense for advertising in the toy space. No matter when I watched, my newly acquired powers allowed me to notice other product differences across time slots. For example, preschool toys, on the whole, were promoted most heavily during weekday mornings. However, learning products’ ads have a different time slot; they aired during both weekday mornings as well as early/late evenings, presumably after parents have tucked their little ones into bed.

While toy advertising remained largely daytime fare, video games spanned all hours, but even then there were some surprises. Nintendo DS and Wii games’ ads could be found just about any time of day or night. However, commercials for Microsoft Xbox 360 titles only appeared during the day if the title being promoted was also released for the Nintendo Wii. Otherwise, Xbox-exclusive titles didn’t appear at all until later, during the nighttime hours.

And as much as there was to learn about technology products advertised on television, I stumbled upon a unique find regarding what was not being promoted. In all the time I watched, I did not see a single Sony ad. Not one for the PSP. Not for the PS3, nor for any Sony product whatsoever. I’m not sure what this means, but I found this absence odd—and surprising.

The other tech ‘toy’

After looking at so many child-friendly technology-based products, I also started to wonder about cell phones and kids. The number of kids ages 9 to 12 that own a cell phone is growing. Whether that’s good or bad, there’s no denying the trend. I asked myself, after seeing so many great Apple iPhone and iTouch commercials, how long would it be before I start to see similar Apple ads targeting children? Could Apple make a play for the younger set with an ultra-slick tech toy? Or could we also someday see cell phone plans being promoted specifically to kids during children’s programming?

Midnight madness

After the holidays, I noticed some differences in commercials for kids’ products; primarily, almost all of the toy offerings went away, literally evaporating the very first minute into December 25th. However, ads for video games, virtual worlds and web-connected toys did not. The difference between toy product and video game product promotion couldn’t be more striking as I watched in the days and weeks after the holidays. What does this say about the earning potential of technology toys in general? Can toys that are considered “platforms” benefit from ongoing advertising in the same way that video games do?

My exploration only included advertisements found on television, though there are a number of other media outlets where tech products for children can be promoted: online, magazines, radio, movies, email, even in-store events. While it may seem that technology products will be the future “must have” item for kids, I often remind myself that in order for toy companies to successfully benefit from a large investment in technology-based products, large advertising budgets must follow in order to increase exposure, revenues and profits to cover that investment. This might just mean that the economics for tech-free toys do not require as much of an advertising commitment, but product awareness certainly appears to benefit all.

Frankly, I can’t tell exactly what all of this says about the future of technology and kids, but I do spend a lot of time looking at the play patterns of children with traditional toys and how these patterns change when technology is introduced.

I think that if we see more technology at this month’s Toy Fair—more even than in prior years when companies did debut a lot of technology toys—we might well get a glimpse of an answer.

I’m organizing my notes to write a longer article on technology toys for sale this holiday season. All kinds of interesting things are coming up by watching, like USB connect toys, digital cameras, experiences that are driven by a screen, be it a computer or a toy’s screen, virtual world tie-ins, and much more. I’m also noting many interesting trends related to video game advertisements. Almost as interesting is what is not promoted on air.

I welcome you to view the video clip below that includes a small sample of commercials that aired before the election. (Some toy companies held back on airing their advertisements until after the election.) Please fire away any questions you’re curious about. Where do you think the future of toy technology is headed? What do you notice? Thanks for watching!

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.

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.

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.

[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.