Virtual World Money in ‘08 Targeted Kids, Kids’ Wallets [GigaOM]

Virtual World Money in ‘08 Targeted Kids, Kids’ Wallets [GigaOM]

A total of $594 million was invested in 63 Virtual Worlds in 2008, according to Austin-based trade show company Virtual Worlds Management. That may seem like a lot, but that’s down from the more than $1.4 billion in 2007 (their estimate), a figure that was hugely skewed by Disney’s purchase of kid’s world Club Penguin for nearly $700 million. While there weren’t any acquisitions of that size in 2008, much of last year’s investment also went into worlds aimed at kids and teens, which continue to enjoy enormous audience growth. (The largest, Habbo, is almost as popular as World of Warcraft, and profitable with far less development costs.) By VWM’s tabulations, 19 kid-oriented companies saw ‘08 investment, compared with 11 virtual worlds for adults — though in my observation, the latter category actually includes several worlds such as YoVille and Metaplace that also strive for teen appeal.

Most youth-oriented virtual worlds are free to play, depending on such methods as “freemium” upgrade subscription, microtransactions, and gift card purchases for revenue. Which explains why so much 2008 money went into companies that monetize virtual worlds in these ways and others — $64.7 million for five companies, according to VWM.

By contrast, on this list I see only three major investments in the development of adult-oriented, 3D graphics heavy, massively multiplayer online games: $70 million for Trion World Network to make a fantasy MMOG and a MMOG for the Sci-Fi Channel, $50 million for Realtime Worlds, which is creating a Grand Theft Auto-style MMOG, and $40 million for Turbine, creator of Lord of the Rings Online. WoW continues to dominate this category so thoroughly, however, most of the industry finally seems ready to concede defeat, and look for opportunities elsewhere.

Disclosure: My Second Life blog is a “media partner” for Virtual World Management’s Engage Expo.

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