For a long time we’ve advocated the strategy of linking on and offline play and activities in the virtual worlds sector – a theme examined in our 2010 report. And, with the high number of KT&T worlds in the sector coupled with the pressure to improve conversion rates and increase ARPPU’s, virtual world owners are increasingly seeking ways to drive new revenues.
One of these strategies is taking the VW brand ‘out of world’, typically with re-creations of virtual goods originally available virtually. Inversely, there’s also a growing trend to push users in-world, originating with a real world purchase. Of course, this is not a new strategy as both Webkinz and Neopets have offline brand retail experiences, but it’s definitely a growing trend in the sector.
Here’s a look at some examples:
Gaia Online: One of the pioneers of linking virtual and real world ‘products’ was Gaia, with their online store. Whereas both Neopets and Webkinz created offline retail catered for younger users, Gaia saw a merchandising opportunity to tap into their slightly older target market of mid to late teens. Users are able to purchase clothing (mainly t-shirts), accessories(hats, charms and hair accessories), and other items related to their world including plush toys. Some of the Gaia products are based on virtual goods available in-world – the first example of ‘real virtual goods?
Shidonni: “….One-of-a-Kind line of custom plush dolls. In doing so, the company has taken its virtual world’s original play experience — which animates a user’s 2D drawing, morphing it via the Shidonni software into an animated on-screen creature — one giant step further. The new line offers users the option to have their online creatures manufactured into a look-alike plush doll.”
Revnjenz: “..Revnjenz are fast, sleek, and sporty street racers that come to life once you enter your personalized “Secret Code” comes with every Revnjenz product you purchase. In Revnjenz World you can race and play games to earn BoostBucks to trick out your ride.”
Webkinz Jr: “..new line of plush toys aimed at kids aged 3-6, today as part of the January 2009 International Gift & Home Furnishings Market. The full line and accompanying virtual world is set to launch sometime late this spring.”
Poptropica: “…San Diego-based Skinit, which develops technology to personalize electronic devices with personalized graphic skins, has inked a deal with kids virtual world Poptropica, the firm said this morning. According to Skinit, kids and parents can now personalize over 3,000 electronic devices with popular Poptropica characters and scenes.“
Actionjetz: “…to launch the ActionJetz virtual world online and to introduce an accompanying line of die cast jet planes and aviation-based toys.”
Taking this approach has benefits over and above the direct revenues associated with purchases.
The primary additional benefit is brand reinforcement. Having a real-world presence, promoting a virtual world assists in positioning the VW as reputable and therefore should lead to increased conversion rates (and higher ARPPU’s) in-world.
However, it’s obviously important to bear in mind that economies of scale play a role here. With manufacturing and shipping costs eating into the margin, this is a strategy that needs volume.
Nevertheless, mixing real and virtual world brands to create new revenue streams is a strategy we’ll see a lot more of in the future.
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