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Sony Online Entertainment said today it has registered more than a million users in 17 days for its kid-focused Free Realms massively multiplayer online game.

The game uses the free-to-play business model pioneered in Asia, where players start playing for free and pay for virtual goods one at a time in micro-transactions.

John Smedley, president of Sony Online Entertainment in San Diego, said the response to the game was overwhelming. Smedley, who gave the keynote speech at our recent GamesBeat 09 conference (video here), made a big bet on the game as the first major MMO from Sony that embraced virtual goods and the free-to-play model, which U.S. players have been slow to adopt.

In the game, players can customize their characters, adopt pets, explore, quest, battle monsters and play a wide array of mini-games. It also has a trading card game, social networking, and cash cards that kids can purchase at Target, Best Buy and 7-Eleven stores. You can play a ninja character, decorate your house, or grow vegetables and flowers. Players can get into the 3-D game world and play within minutes.

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Sony has operated a bunch of MMO games since launching EverQuest as a subscription game in 1995. It will be interesting to see if the players drive the company toward a virtual goods model. Wired has called Free Realms a cross between Disney’ Club Penguin and Activision Blizzard’s World of Warcraft.

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