SecretBuilders Acquires Dizzywood Assets

Youth virtual world SecretBuilders has acquired assets from rival youth virtual world Dizzyworld for an undisclosed sum, according to VentureBeat. While both sites will remain online, SecretBuilders will try to acquire as many of Dizzywood’s 1.5 million users as possible. SecretBuilders typically serves users aged 5 to 14. This announcement follows news that Gaia Online has laid off staffers and begun moving into social game development, suggesting that the once-robust youth virtual world market may finally be going soft.

SecretBuilders was founded in 2007. The site currently serves 2 million registered users, with 1 million monthly active users, and employs 24 people. SecretBuilders says that it’s now acquiring new users at a rate of about 500,000 per quarter without spending any money on advertising. The site repositioned to focus more on offering kid-friendly casual games than building out elaborate virtual world features, which SecretBuilders says lead to its current success. In the past four months, peak user concurrency has tripled.

The SecretBuilders world is split into 12 areas where kids can play mini-games to learn about educational topics like art and literature. The educational nature of SecretBuilders’s games has gotten the virtual world into over 1500 schools. The virtual world plans to expand to new platforms like Facebook and tablet computers. SecretBuilders CEO Umair Khan says that he wants the virtual world available on all “electronic babysitting devices,” pointing out that parents often give kids their smartphones as a distraction.

The Electronic Babysitter

Khan points out that kids are going online at younger ages now, with many kids playing games on Facebook with their parents. Kids are also getting mobile phones, including smartphones, at increasingly young ages. He sees this as a major business opportunity for bringing casual and social gaming content to children. Through a virtual world, SecretBuilders can hook kids with proven mechanics like personalization, avatars, virtual homes, quests, and mini-games.

Dizzywood launched in 2008 and raised $1 million from Charles River Ventures and Shelby Bonnie. SecretBuilders has raised $4.7 million to date through two rounds of funds. Investors include Launch Capital, The Entrepreneurs fund, and a host of angels including Google founder Scott Hassan, former Adforce CEO Michael Tanne, former Google Director of Applications David Jeske, Care.com CEO Sheila Marcelo, MakingFun CEO John Welch, Informatica CEO Sohaib Abbasi, and 3COM co-founder Ken Morse.

Both SecretBuilders and Dizzywood came out of a major 2007 boom period for youth virtual worlds, driven by Disney’s $350 million acquisition of Club Penguin. The deal also included a $350 million earnout, but Club Penguin failed to meet the milestones required for it. Despite that, Club Penguin’s remained strong enough to buoy soft earnings from Disney’s troubled Disney Interactive division, which handles Disney’s video game and Web properties. Disney Interactive was recently split to allow the games division to be overseen by Playdom’s David Pleasants and the Web division to be overseen by James Pitaro.

By January 2009, there were over 200 youth virtual worlds on the market and more have been launched since then. Major hits to emerge in that time include Poptropica, Moshi Monsters, and Ganz’s Webkinz brand. When virtual worlds targeting more general audiences like Metaplace, There.com, and Vivaty began to shut down and Second Life began laying off staffers, the youth sector initially appeared unaffected. The coming months will show whether the Dizzywood acquisition and the Gaia Online layoffs are blips, or the beginning of a genuine downturn in youth virtual worlds.

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