VentureBeat

When Disney bought Club Penguin last year for $700 million last year, it raised a lot of eyebrows. That’s why there are so many online game sites for kids being formed. One of the newest is ZooKazoo, which is coming out of stealth today.

ZooKazoo is a cartoon world for children ages 6 to 12, and its creators think they’ve done a better job of creating a cute, Flash-based world for the youngest virtual-world denizens than Disney’s expensive property.

“We think we can do a lot better,” said John Kim, CEO of the Palo Alto, Calif., company. “We can engage kids and provide assurances of safety for parents.”

Kim, a veteran of media companies including Sony and Disney, has assembled a good team. The company was founded in January, 2007, and it has received angel funding. They went on to design the sit be both entertaining and social from the ground up.

But the chances of success are tough. As I’ve been saying for a while now, I’m seeing an average of two casual games companies emerging from stealth each week. The reason? Well, in not so polite terms, “venture capitalists are stupid,” said John Vechey, co-founder of PopCap Games, the Seattle casual game developer behind hits such as “Bejeweled.” There are too many people jumping on a hot trend.

The site is getting a steady stream of users thanks to materials it put up on the Yahoo! Kids site. Players can join for free and earn a currency known as “Kazoobits” by playing games. But to spend them, the players need to pay a subscription of $5.95 a month. The currency can be spent decorate a character or room.

I watched my eight-year-old play with the site last weekend. She laughed out loud and played compulsively until I had to tell her to stop and get out of her pajamas. The world is easy enough for kids to learn. They start by logging in with the permission of a parent.

Then they pick an avatar from among a wide variety of colorful cartoon animals. They can play mini-games within the world, such as floating down a river and dodging rocks. My 11-year-old even had fun playing a game where a panda climbs up bamboo shoots and eats the leaves on them.

Next, they get to wander into a lobby and learn how to type-chat. They can go to a post office to send one-way messages to people in the outside world (such as parents). The messages can be used to support a cause, like getting people to help the environment in honor of Earth Day.

But, due to child-protection practices, outsiders aren’t allowed to contact the kids. The world is built so that there is no such thing as a private chat among avatars, said David Dwyer, a former Apple researcher and chief operating officer of ZooKazoo.

Kids also aren’t allowed to type known swear words or variants of them. If they do, they’re told they can’t say that. If they persist, a human administrator will intercede and give them a warning or eventually kick them out.

Beyond being cartoonish, the game constantly plays cute children’s music. Dwyer said he considers that an important part of the entertainment and the company works hard to come up with original tunes. There are two worlds: a nightclub city dubbed “HipHopolis” and a jungle world called “Jungaloo.” Kids can experience “informal learning” by exploring a cave where they learn why jaguars are endangered. That’s a selling point for parents, Kim said, but the game isn’t as explicity about learning as DreamBox Learning (our coverage). The company will add more worlds and mini-games over time.

Kim says a lot of the content will be social. The company will accommodate user-generated videos to a theater dubbed “ZooTube” in the future. For now, kids can go into comedy clubs and go up on stage and tell their own jokes.

The world’s design is good. But the 19-employee company has to compete against giants such as Club Penguin, Webkinz, Nickelodeon, and Neopets. Not to mention a lot of the other casual game sites for kids (such as Fluid Entertainment) that are sprouting every week. Those companies have the brands. But ZooKazoo can beat them if it’s more fun. That’s one of the things I like about the game industry. Fun wins.