Tuesday, June 17, 2008

Millions of Us Spins off Virtual Goods Company, Virtual Greats; Announces Celebrity Lines and Gaia Partnership

Millions of Us Spins off Virtual Goods Company, Virtual Greats; Announces Celebrity Lines and Gaia Partnership

Millions of Us
announced today the launch of a new company, Virtual Greats, aimed at
the virtual goods market with, it seems, an eye toward celebrity and
pop culture. With today's launch, Virtual Greats announced that it had
secured the rights for virtual goods based on Justin Timberlake, Elvis
Presley, Tila Tequila, Snoop Dogg, Paris Hilton, Raven Symone, and the
upcoming Incredible Hulk film. The goods will include likenesses,
catchphrases, animations, clothing lines and more based on celebrities
and entertainment IP. The goods will be available in 60 virtual worlds
and social media platforms.

Virtual Greats will be led by Dan Jansen, former head of the Boston
Consulting Group’s Media & Entertainment practice, and based out of
Los Angeles.

Open Market

"The inspiration for Virtual Greats came when I realized that this was a $1.5 billion market without any high-value copyrighted material," said Reuben Steiger, CEO, Millions of Us.

The former is certainly a big motivation to jump into the virtual
goods market, but the latter is definitely the kicker. In spite of the
fact that almost every week brings the announcement of a new celebrity
brand making an appearance in some virtual world, it often feels like a
promotional, rather than revenue-generating, move.

Even with the apparent demand for celebrity- or
entertainment-related goods from younger users, there's been a somewhat
limited supply. Paramount and Habbo broke ground
in the trend by signing a merchandising deal to distribute themed
virtual goods in January, but this goes in a different direction.

Virtual Greats, with support from Millions of Us investor Omnicom,
is working on a centralized platform for the sale and distribution of
virtual goods across 60 different virtual worlds and online
environments. The goal is to provide consistency across virtual goods
for IP owners as well as piracy protection.

The company will act as the "financial and technical clearinghouse
for trade in virtual goods," but it's not clear whether if a user
purchases a Justin Timberlake-branded hat from Virtual Greats, it will
be available to use in all partnered virtual worlds--planned platforms
include Gaia Online, Habbo Hotel, and Second Life--or aimed at only one.


Regardless, Gaia Online is at least available. Gaia, which has its own robust market for virtual goods, has partnered with Millions of Us before
and was announced as the first partner for Virtual Greats. Revenue will
be split between Virtual Greats, the IP holder, and the distribution
partner. With that revenue split, it does sound like items would be
limited to the world their purchased for.

Gaia Online already earns over $1 million/month in virtual goods sales. There's been intense interest whenever celebrities have come to the world, but most of Gaia's virtual items are more fantastical than branded

It seems like the biggest advantage for partners is the single point
of access: Virtual Greats can bring the celebrities. Steiger and Jansen
worked with entertainment attorney Skip Brittenham to broker the
initial talent deals, but, even if Brittenham phases out, having a
go-to partner for both virtual worlds and celebrity brands could drive
even more attention.

With Habbo looking for access to Hollywood through its partnership with the William Morris Agency, it'll be interested to see whether the spinoff of the ad or talent agency gets more reach.

I'll be following up, but it seems that promise of security and one
point of entry is the big draw for IP holders, which, in turn, makes
Virtual Greats' collection appealing to the various worlds. Regardless,
it could be a big move for the virtual goods market.

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