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Big Media Eyes Virtual Worlds

Sony and News Corp. have their eye on Club Penguin, a community site where tweens chat with friends in the guise of avatar penguins in an Antarctic virtual world. For Club Penguin owner New Horizon Interactive, a bidding war could end in a major windfall; the media companies are said to be interested in paying as much as $400 million for the site.

Does this mean virtual worlds are the next trend in big media acquisitions? Could be. Call it social networking 2.0: Google, Yahoo, Microsoft, Time Warner, News Corp., Viacom -- all demonstrated an interest in it. If one goes, others would follow.

As online advertising booms, virtual worlds have started to generate real business. Second Life, for example, has not only become a place where consumers dump money into their avatars, it's also become a desirable destination for national companies to splash their brands. And usage is growing: Screen Digest, a media consultancy firm, predicts that 80% of active Internet users will become involved in a virtual world by 2012.

But Second Life isn't anywhere close to the top, according to Hitwise. The most desirable takeover targets have far more traffic and they cater to kids. Webkinz, a site where kids take care of virtual pets, saw its traffic rise 1,462% in the last year, says Hitwise, while Club Penguin saw its share jump sevenfold over the same period.

Read the whole story at Business Week »

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