No Recession in WeeWorld: Teen Socializing Drives Growing Virtual Goods Revenues

5/14/09Follow @wroush

Dinner party conversations with Celia Francis don’t go down the usual paths. “When people ask ‘What do you do?” she says, “I have to say ‘I sell animated ferrets.’”

Francis is the Harvard- and MIT-educated CEO of WeeWorld, a transatlantic virtual goods company with its U.S. headquarters in Concord, MA, and its European headquarters in Glasgow, Scotland. The company is most famous for creating WeeMees, cartoonish avatars used by more than 27 million people around the world to personalize their identities for instant messaging tools and digital voice applications such as Windows Live Messenger, Yahoo Messenger, AOL Instant Messenger, and Skype. But its real business revolves around WeeWorld, an online virtual world where members, represented by their diminutive WeeMee avatars, can socialize, play casual games, and collect virtual items.

The company makes money by selling advertising space on the WeeWorld website and by selling virtual gear and the corporate sponsorships that go along with it—think Boston Celtics or LA Lakers jerseys for your WeeMee. I couldn’t find an actual animated ferret in the WeeWorld shopping mall, but I’m sure Francis could have one designed for you.

Celia Francis's WeeMee AvatarThe virtual goods business “seems to be totally unaffected by the economy,” Francis says. In fact, Wal-Mart and Target would kill for WeeWorld’s sales statistics. Revenues from virtual goods have been growing at 15 percent per month throughout the recession, and advertising is “growing nicely” as well, she says. Part of that may be thanks to the relatively low prices of virtual goods: for the teens and twenty-somethings who are WeeWorld’s main users, $5 can buy quite a bit of bling. “It’s not a big spend compared to some other ways you can be entertained,” says Francis.

Venture funders apparently agree that WeeWorld is on to something. The startup has raised $21 million to date, with the most recent round of $15.5 million coming from Accel Partners and Benchmark Capital in May 2006. But the company’s success isn’t blinding its 40-some staffers to the fundamental strangeness of their business. “The whole thing is amusing, and the company has had a sense of humor about it from the earliest days,” says Francis, whose own WeeMee wears an emerald-green suitjacket and clutches a light saber. “It’s a cheeky, fun, entertaining brand.”

For consumer brands trying to get their message to young people—who are spending less time watching television and more time online—virtual worlds are one promising platform. Whether it’s through full 3-D worlds like Second Life or Boston-based Hangout.net or “Sims”-style “2.5D” worlds like Habbo and WeeWorld, consumer-dependent organizations like clothing brands, sports teams, and musical groups are thrilled to have young people decorate their avatars and their spaces with branded goods. In fact, the organizers of the annual Virtual Worlds conference held each year in New York renamed their event the “Engage! Expo” to reflect the new emphasis on virtual worlds as marketing platforms.

WeeWorld’s philosophy of engagement is to make time spent in-world feel like play. “The people on WeeWorld are mostly teenagers, and they need a place to express themselves and evolve their identities as people,” Francis says. “This kind of thing didn’t exist when I was a teenager. You can come onto the site and every single day play with a different look or persona or interest. That kind of playfulness is so core to being a teenager—and that’s really what’s driving the virtual goods sales.”

Every day, Francis says, the company gets hundreds of requests from members for new virtual items that they’d like to buy. “Brands are a big part of it, which is why we’ve been really successful with advertisers,” Francis says. “Kids want to identify with certain brands that express who they are.”

And not just any brand: Francis says figuring out which virtual items will sell, and which will make members will turn up their noses, is “a total black art”—but one that the company has begun to master over time. “We’re experimenting with all kinds of different items, whether it’s furniture or accessories for your WeeMee,” she says. “We constantly tweak the … Next Page »

Wade Roush is Xconomy's chief correspondent and editor of Xconomy San Francisco. You can subscribe to his Google Group or e-mail him at wroush@xconomy.com. Follow @wroush

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