Virtual Worlds Management has posted its update on Youth Virtual World sector. If it seems to you that the sector is crowded, it’s probably because it is : they numbered 200+ of them.
They published a detailed analysis here. The most impactive change since last year is the offer getting younger, with most worlds targeting kids up to 7 while last year tweens 8-12 were leading the pack. Teens and adults worlds are the least competitive segment.
A few comments :
- Today’s kids are spoilt for choice. The next generation will really have grown in free to play virtual worlds/MMOs. As the previous generation grew up on consoles and the one before on PC games, that will probably form their entertainment tastes for the rest of their lives. It seems very unwise to wager that they will “graduate” back to playing pay to play or offline games at any point.
- Targeting younger kids seems more difficult than tweens and teens, as you need to target the parents more and have less chance in succeeding without a huge IP they already know and trust. Furthermore, as the article points out, younger kids are harder to monetize and ARPUs are lower. Most young children’s virtual worlds use subscription models, since the kids are unlikely to have a lot of pocket money to spend in micro-payments and parents are the ones to convince, and so ARPUs are pretty much capped. In these conditions, can the rush towards younger crowd be a way to try to differentiate oneself in the packed tween offering by catching the children younger and hoping that they will stick for a long time?
- There is already significatively less investment in 2008 than 2007 in the sector , down to $594M from$1B+ (well, the Club Penguin deal was also so huge that it made all numbers look small), so the number of new worlds is expected to grow much smaller, while competition and tough times for advertising and the economy in general will make it hard for all to survive.
- European-developed virtual worlds are a very small minority in the list. Probably because it’s harder to get funding for such projects in Europe, but also because some EU ones are less publicized and missing from the list.