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August 2nd, 2007 at 1:40 pm

Forget Second Life. It turns out that kids, not adults, are the ones whose virtual worlds translate into real bucks. On Wednesday, Disney bought New Horizon Interactive’s Club Penguin, a website where kids pretend to be penguins and decorate digital igloos. The price tag for putting mouse ears on the penguins? $350 million, and Disney’s willing to double that if Club Penguin hits earnings goals in 2008 and 2009. Unlike the wasted budgets of corporate marketers setting up empty shops in Second Life, Disney’s money seems well spent. Here’s why.

Club Penguin eschews advertising; instead, it’s supported by a base of 700,000 subscribers who pay $5.95 a month for the right to decorate an “igloo” — a penguin character’s virtual home. (Anyone can play for free if they can pass up an igloo — but what parent would deny their child a toy everyone else has?) Traffic to the virtual world has increased 329 percent since June 2006. Linden Lab, the creator of Second Life, claimes to make money by issuing virtual currency and collecting property taxes on digital real estate, wins praise from economists enamored with the abstraction of its virtual economy. But Club Penguin, which plays on feelings of parental love, guilt, and competitiveness, ought to be a more worthy subject of study.

Club Penguin’s founders explain that selling out will help fuel the site’s global expansion, a Disney specialty. But it’s also an acknowledgement of increasing competition.

Disney have to contend with Viacom, a familiar media competitor which owns Neopets as well as the growing Nickelodeon online empire. But there are also a growing contingent of free communities, like the kid-centric Whirled, soon to be launched by San Francisco online-game designer Three Rings. Whirled forgoes subscription fees, instead making money through virtual item purchases, a business model that has worked well for Korea’s Cyworld. Club Penguin is collecting its six-buck allowance from parents for now. But what happens when the kids start begging for a new toy?

Source:Valleywag

It appears that Michael Arrington is no longer devastated by the abrupt departure on Tuesday of Julia Allison, the New York-based TV commentator he’d begged to stay in town after she flew in for his TechCrunch9 party. The TechCrunch editor has found a new lust object: Morgan Webb, host of WebbAlert, yet another online tech-news show with a busty host in the vein of Rocketboom. After the jump, the hilarious homina-homina that the horny hetero slipped into his review.

Says Michael Arrington:

As an aside, she’s also fairly hot — Webb’s pictures have been in FHM and Maxim magazine, and in April she was voted the 51st sexiest woman in the world in a FHM survey.

Well, folks, now you know the real way to get your startup into TechCrunch. You don’t have to send flowers, or show up unannounced at Arrington’s doorstep. You just have to have long hair and a killer rack. Valley foxes, take note.

“How many of these ghastly tech reports can anyone watch?” asks a friend of Valleywag. One, of course — the one with the hottest chick. WebbAlert is sure to do some damage — to, say, the GigaOm Show. Blogger Om Malik, with his face for radio and voice for magazines, just can’t compete with the likes of Morgan Webb, even with comely cohost Joyce Kim.

To save his show, Malik should turn it over completely to Kim. And he’d better do it soon. More competition is on the way: We hear that NakedNews.com is launching NakedTechNews.com. Now that’s sure to get an Arrington review.