IAC Asks for a Change and Targets the Kids

Barry Diller’s IAC InterActive is busy these days. Yesterday the Internet conglomerate named Jim Safka as CEO of its Ask.com search unit, replacing Jim Lanzone, who has been at Ask since 2001. Lanzone, who chatted with Om about local search in Dec. 2006, will join Redpoint Ventures as an entrepreneur-in-residence.
IAC, which is in the process of spinning out several of its businesses, among them TicketMaster and the Home Shopping Network, owns other well-known Internet properties as well, such as Match.com, CollegeHumor.com and Evite. And now it’s also joining the rush for pretween eyeballs by building a virtual world for kids.
A company spokeswoman declined to give details about what she says will be “an entertainment site for kids,” but did offer that it would launch within “months,” She also says it isn’t related to IAC’s virtual world for teens, Zwinktopia. Creating an online virtual world for kids has become somewhat of a no-brainer for media and toy companies trying to reach the nexit generation while they are most susceptible to branding.
Disney last year purchased Club Penguin in a competitive deal valued at $700 million. Since then, attention has focused on Ganz, the plush toy maker whose Webkinz world is the hottest thing since Cabbage Patch dolls, Furby and Tamagotchi. Oh wait, those aren’t hot anymore.
And that may be one of the reasons why, despite the Club Penguin deal, there’s been more world building than world buying taking place these days. Kids may be finicky about their outfits or their breakfast cereal, but so far, they’ve proven that they’re willing to play with cheaply rendered animated dolls, penguins and other animals in a 2-D online environment. That type of virtual world doesn’t cost a lot, and if a media property already has access to an audience, it should be able to draw in users cheaply as well. Mattel’s Barbie Girls site, for example, signed up 3 million member in its first 60 days.
Since kids are fickle and their parents are rightly squeamish about advertising, it may make sense to build on the cheap rather that spend a lot of money buying up an established player and dealing with the pains of integration and a potentially alienated community. Because IAC is comfortable doing deals, their decision to build may say lot about the potential for deals in the market for online virtual world for kids. Or it may just mean Ganz didn’t want to sell.