Virtual World Gold Rush?
Reports that Sony or News Corp. could snap up Club Penguin
highlight the growing allure of such sites to potential
by Olga Kharif Copyright 2000-2007 by The
McGraw-Hill Companies Inc. All rights reserved.
Kids who immerse themselves in Club Penguin, the online virtual
world for youngsters from 8 to 14, can chat with friends'
penguin avatars in icicle-covered cafes and earn coins for
accessories like sombreros—a must-have in Antarctica. For Club
Penguin's owner, New Horizon Interactive, all that virtual
commerce could soon translate into a wad of real loot.
Sony (SNE) and News Corp. (NWS) are said to be interested in
paying as much as $400 million for the site, based on reports
from blogs paidContent.org and GigaOm. Neither Club Penguin nor
the would-be suitors would comment. But the reports underscore
the growing attractiveness of immersive online worlds as
takeover targets and are fueling speculation that a wave of
purchases may be on the horizon. Some of tech's titans—including
Google (GOOG), Yahoo! (YHOO), Microsoft (MSFT), and Time
Warner's (TWX) AOL—have cause to engage in a round of purchases
reminiscent of the social network land grab touched off when
News Corp. bought MySpace.com for $580 million in 2005.
"The Next Big Thing"
Like social networks, virtual worlds have become big business.
Online advertising is booming, and a growing number of
companies—from Coca-Cola (KO) to IBM (IBM)—are promoting their
brands in virtual worlds such as Second Life, owned by Linden
Lab. Subscription sales from online virtual worlds rose to $526
million in North America in 2006, according to media consultancy
Screen Digest. And consultancy Gartner (IT) predicts that 80% of
active Internet users will join a virtual world by the end of
In the coming years, surfing the Web may more closely resemble
the immersive experience of virtual worlds (see BusinessWeek.com,
4/16/07, "The Coming Virtual Web"). Potential acquirers "are
thinking virtual worlds are the next big thing, and they want to
get in early," says Joe Laszlo, an analyst with consultancy
JupiterResearch. Considering it can take two years or longer to
build a flourishing virtual world, acquisition may be the
fastest way in.
And while Second Life has come to typify the rise in popularity
of virtual worlds, it may not be among the most attractive
target, some analysts say. In April, Second Life didn't even
break into the top 10 most popular virtual worlds, as measured
by percentage of traffic, or market share of visits, according
to consultancy Hitwise.