FT: Penguins offer safer surfing for junior web users

Penguins offer safer surfing for junior web users

By Maija Palmer

Published: May 12 2008 03:00 | Last updated: May 12 2008 03:00

The founders of Club Penguin - Lane Merrifield, Lance Priebe and Dave Krysko - are possibly some of the nicest guys in the internet business. They give millions of dollars a year to children's charities and are fierce advocates of family values.

Mr Merrifield looks more like a kindly primary school teacher than an executive, the kind of man you might trust to look after your children. This is what parents are, in effect ,doing as they let their children join Club Penguin, the virtual online world for six- to 14-year-olds.

What started out as a sideline project in the sleepy holiday town of Kelowna, British Columbia, Canada, is rapidly growing into a global phenomenon.

Club Penguin has 20m users and analysts estimate up to 10 per cent of them have persuaded parents to pay about £4 a month for souped-up access to the site. Stephen Prentice, senior analyst at Gartner, notes: "Kids' virtual worlds are the success story. If you exclude online games, around nine out of 10 virtual world users are probably under 12."

Club Penguin became so successful that last July it was bought by Disney for $700m (£350m). It is now building an international presence with Disney's backing, beginning with the opening of a UK office earlier this month. It is also hiring a marketing executive for the first time since it was founded in October 2005.

There is some irony in the fact that the Club Penguin founders now find themselves owned by a big US company. All three originally moved to Kelowna to escape the corporate rat race. And, they had started the site in order to create an advertisement-free zone for children that also offered entertainment.

The site's popularity - it made a profit within four months - showed the founders they had found a gap in the market.

Safety features were a big selling point from the outset. Mr Merrifield's wife is a clinical psychologist specialising in childhood and helped shape the site; his sister and mother, both teachers, also offered advice.

Virtual Worlds Management, which tracks networking sites and virtual worlds, estimates that there are more than 100 youth-focused virtual worlds either live or in development, with 52 of them aimed at children under seven. Disney alone is understood to be developing up to 10 virtual worlds aimed at children.

The fact that many of these sites are associated with commercial brands such as Barbie, Beanie Babies and Bratz worries parents concerned about their children being exposed to too much advertising online.

Safety is also a problem. A recent survey by Ofcom, the UK communications regulator, found that nearly half of all British children have a profile on a social networking site, including a quarter of all eight- to 11-year-olds with online access. These children are theoretically too young for Facebook, Bebo and MySpace, which have minimum age limits of 13 or 14. However, many find ways round the age restrictions. Given that last summer MySpace alone detected and deleted 29,000 convicted sex offenders on its service, parents concerns are real.

Their search for safer online alternatives - sites that are more closely monitored and where children cannot reveal personal information - plays to Club Penguin's strengths. It employs more than 100 moderators who monitor the site for unsafe behaviour. They are trained to spot bullying, or attempts to share contact details.

Pictures cannot be posted on the site. Instead, children are represented by a colourful penguin. Filtering software prevents phone numbers being published.

Club Penguin's culture of niceness is key to its success. But how well it can continue to walk the fine line between wholesomeness and commercial pressures is unclear. Mr Merrifield says that Disney has been very hands-off with the company and lets it do things its own way.

Mr Merrifield admits the company could create soft toys based on its virtual penguin characters but he pledges this would only be done with careful consideration. "It will be very purposeful. It will be based on what the audience want," he says.

The question is: which audience is he talking about? Eight-year-olds do not mind commercialism - they love toyshops. It is parents who resent it, and Club Penguin will have a tricky balancing act to please both sets of customers.

Copyright The Financial Times Limited 2008