Virtual Worlds — Real World Strides

A goth-style Bugs Bunny? With a mustache? Starting next year, expect Looney Tunes to get loonier—with Warner Bros. Entertainment's permission—as WBE seeks real profits from the virtual revolution.

The company announced the spring 2008 launch of the virtual world T-Works (“T” for toon), part of a larger Web media-plex that will bring together all the company's iconic characters from Looney Tunes, Hanna-Barbera, DC Comics and Warner Bros. Animation. The site, to be ad-supported, will permit users to customize animated avatars based on Warner characters and transport them anywhere on the Web.

Warner hopes to grab a share of the teen and pre-teen virtual audience currently dominated by entrenched sites such as Habbo Hotel, which made over $50 million last year and has 7.5 million average unique visitors per month.

The “virtual world” industry, while still in its infancy, has gained a reputation for seemingly limitless branding and profit potential among media companies.

Curiosity continues to grow about virtual worlds, which allow users to create avatars—lifelike digital personas—and interact with fellow users in three-dimensional online environments. Television programmers, now accustomed to seeking out each new vein in the digital gold mine, are using the worlds to build audiences and create new channels of advertising revenue.

Last week, HBO pushed the timeline ahead another notch, buying a documentary shot entirely in the popular Second Life virtual world about a man who “disappeared” from the real world and reappeared in the virtual one. The network, which paid a six-figure sum for My Second Life: The Video Diaries of Molotov Alta, is expected to air it in 2008.

While they pale in numbers compared to social network giants such as MySpace, which had 69.6 million unique visitors in July, many people believe virtual communities are the next powerful tools in aggregating online users.

Registrants for Second Life rose from three million in January of this year, to over nine million in August. Second Life has its own economy based on the “Linden dollar,” where users spend real cash for virtual money (currently, the exchange rate is $270Linden = $1US) to buy, drive and shop virtually.

Steve Prentice, VP of Gartner Inc., an independent research firm, says the real growth will come from the 10 million active users of teen and tween sites that will transition to virtual versions of MySpace as they get older. Prentice expects the number of active users of virtual worlds to hit 250 million by 2011.

Some TV networks are building sites to complement their shows. Second Life is home to sites for NBC Universal, Showtime's The L-Word, CW's Gossip Girl and The Weather Channel. And Viacom's MTV Networks last week announced plans to expand its virtual presence globally with worlds supporting the UK show Living on the Edge, and others that will be rolled out this fall in Southeast Asia.

Building an enticing enough environment is the key to bringing in users. The Weather Channel offers activities such as network-sponsored surf contests and snow skiing. This fall, it will launch a hurricane simulator integrating video and educational content, and network personalities.

Programmers also hope that having a virtual presence will keep viewers involved in the show when it's not on the air. After Gossip Girl premieres Sept. 19 on The CW, viewers can log in to the virtual site—which goes up on Sept. 17—to “mingle” on the show's Upper East Side, and compete for “gossip points” to attain inside information from the show to spend on virtual products.

Reuben Steiger, founder and CEO of design shop Millions of Us, which created the Gossip Girl site, believes there is significant interest from advertisers who, he says, are drawn to a TV site's ability to produce user data. Several takers have lined up. “You can measure everything [in the virtual world],” says Steiger, “where people come from, where they go, what they buy, how much they spend.”

Product placement is another big option. Pepsi and Cingular are finding innovative ways to engage users on MTV's virtual sites, such as Virtual Laguna Beach. Cingular developed its own spokesman, an avatar named Tony Fresh who hangs out with visitors and dishes out virtual event passes. Pepsi offers virtual clothing for avatars that users can buy with “MTV bucks.” They then have the option to click through to Pepsi's Website to buy the real version.

While MTV won't comment, Art Sindlinger, VP and activation director for social media and gaming at Starcom, says advertising costs can reach half a million dollars depending on a product's length of presence on a site, and its complexity.