Advertising: Virtual worlds, McDonald's and WildTangent

Advertising: Virtual worlds, McDonald's and WildTangent

Business models for virtual worlds and casual games are converging. As I mentioned in the blog “Money, Money, Money, Money”, players of the virtual worlds Second Life and Habbo Hotel are encouraged at every turn to purchase virtual goods in order to pimp their islands and their bedrooms.

In Nexon’s Maple Story, fans can purchase Minicooper cars for their avatar to drive. In the first few months, Nexon sold 120K cars for $10 each – $1.2 million in sales. “We probably made more money than Minicooper!” a Nexon executive told me.

And now advertisers are directly getting into the act, bypassing game publishers altogether.

  • Today’s big brands are themselves becoming game developers: McDonald’s announced the soft launch of its Flash-based virtual world on August 4th, 2008
  • McDonald’s has its eye on real-world integration: by entering a code from actual Happy Meal boxes and bags as well as McDonald’s milk cartons and Apple Dipper bags, users unlock exclusive items in the virtual world – including clothing for an avatar, interactive pets, or interactive characters from movies, comic books, and TV shows
  • Aside from the cost of a Happy Meal, the website says everything is free for its users. Users can also earn points towards purchases by completing activities in the virtual world

The game company WildTangent has a different but equally audacious business model. It makes money two ways: by selling ads on its site and by selling players ways to turn ads off.

For example, although the games can be downloaded for free, for $20 players can download an ad-free version. Only 2% of WildTangent’s customers choose to pay the $20. But in December 2007, the company started selling its own prepaid cards at Target. With the pre-paid cards, players can purchase “WildCoins” to shut off ads during a play session–kind of like a “pay-as-you-go TiVo.”

With the new game models and with iTunes, Target is also defining a new line of business; I call it “reverse eBusiness” where instead of buying real goods online, consumers buy plastic in-store that gives them access to online goods.