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

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 pricing, the presentation, and the content itself, and every day every single person in the company gets a digest of the feedback from the audience, so we can quickly say that ‘What’s really going to be hot today is the animated lightning T-shirt.'”

Some of the best ideas for virtual products, Francis says, come directly from members. Unlike other virtual worlds such as Second Life, though, WeeWorld doesn’t give members tools to build and trade their own virtual goods. It’s not that these tools don’t exist; they’ve been part of the WeeWorld back-end infrastructure since the beginning, Francis says. The problem is that in a free-for-all virtual market, it would be too hard to maintain a consistent style, not to mention a G-to-PG-rated environment. (Which is an issue when your biggest advertisers are Disney and Procter & Gamble.)

“It’s tempting [to open up the world to community-generated content] and I know what the potential is, but there’s a conflict between doing that and the cost of moderation,” says Francis. “It may be a strength or it may be a weakness, but we like to stay a family-friendly brand that has a certain style and flavor.” Francis says she thinks the company will “eventually” figure out a way to let members create their own virtual items without compromising the company’s brand or the site’s family tone.

The "Mall" area of WeeWorld's New Dome CityYou may wonder how teens without credit cards buy the WeeWorld points they need to pay for all of that branded Jonas Brothers, Pussycat Dolls, Justin Timberlake, and NBA gear. Some use their parents’ cards, some use PayPal, and some use prepaid WeeWorld cards that they can purchase for cash at supermarkets and other locations. In fact, the retail cards are about to become a much bigger part of WeeWorld’s strategy. “We have cards at Safeway, Albertson’s, Vaughns, and Toys-R-Us, and we’re going to be launching in a ton more locations in the next month,” Francis told me in an April 14 interview. Members can also earn WeeWorld points by filling out marketing surveys.

The majority of people who encounter the startup do it only through their WeeMee avatars and never actually visit WeeWorld—but that’s fine, Francis says, because the WeeMees still operate “like a farm team for the virtual world,” drawing in a good number of people every month. They also help to bring in a few people from outside the world’s typical teenage demographic. But WeeWorld is the company’s permanent core focus, Francis says, and is only going to grow more elaborate over time.

“You might think of it as a constantly evolving game that never ends, where you socialize and play with your friends but where there are also various levels of achievement,” she says. “We add to it every month…so that you’re always coming back, always engaging in that quest for identity that, for teenagers and young adults, is something that just doesn’t get old.” At least, not until the users themselves do.

Wade Roush is the producer and host of the podcast Soonish and a contributing editor at Xconomy. Follow @soonishpodcast

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10 responses to “No Recession in WeeWorld: Teen Socializing Drives Growing Virtual Goods Revenues”

  1. john says:

    who is the hottest guy on weeworld? BLACKYNIKE56

  2. Mike Kinsella says:

    A small correction Wade but an important one none the less. Celia Francis is indeed the current CEO but hardly the founding CEO as stated, having been hired by the company founder Mike Kinsella (my good self) 5 years later in 2005. Thank you in good faith. Mike

  3. Wade RoushWade Roush says:

    Sorry about that Mike! Error fixed. I actually knew that Celia wasn’t the first CEO, so I don’t know what I was thinking when I wrote that.

  4. swagboy19 says:

    it is a good game

  5. it is a awesome game add kiraroxsox4u

  6. casey says:

    technolgy makes us stuip