Interview: Scott Arpajian on Bucking Trends with Dizzywood

We reported yesterday that kids world Dizzywood had received $1 million in funding led by Shelby Bonnie and Charles Rivers Ventures.  The world, still in beta, has seen a fair amount of success, with just under 50,000 registered users since its launch in November. With a pedigree of developers and online media execs, we were curious why Dizzywood hadn't scared up any previous funding. "We originally bootstrapped the company," explained Co-Founder Scott Arpajian. "We did a small seed round back in the late spring, and that was also led by Shelby Bonnie. We always intended to do a more complete Series A, and we've been raising that as we've been going.The timing just worked out where we were able to launch in beta before getting that."

Dizzywood is aimed at educating users, but not necessarily in the traditional three Rs sense.

"We've envisioned the idea to help kids develop and build certain skills in a world based on achievement and activity," Arpajian explained. "It doesn't follow a traditional academic plan. We're about helping kids learn to be members of the community and interaction and engage in activities that focus on problem solving and cooperation. It's more of what we call 'active learning.' They're more engaged as they go. Ultimately the thing we hope to deliver is to build confidence in a social world. We're looking at a higher level."

Making Money

The other twist that Dizzywood is putting on current trends in kids worlds is the monetization scheme. While major worlds like Disney's ToonTown have switched from subscription to ad-supported models or embraced the sale of virtual goods as a revenue stream, Dizzywood is free to play, but plans to offer subscriptions for premium items. (To be fair, though, Disney did go out of its way to pick up another subscription world and Neopets reportedly lost 15% of its users when it opened a cash shop. So maybe Arpajian is on to something.)

"We've looked at a lot of different models," he explained. "My background was at C-Net, so I'm well-versed in online advertising, but we selected subscription for a number of reasons. Number one, given our target age range, it gives kids and parents the comfort of knowing it's not going to be overly commercialized. That said, there are a number of models we could pursue down the road. The other thing I like about subscription is that it aligns our interests with that of our users and parents. We're paid on our ability to create a great experience."

Charles Rivers Ventures' Susan Wu has  a lot of experience thinking about virtual goods, though, and Arpajian says the company has been discussing other opportunities with her.

"We are planning, just to be clear, on pure subscription," he said. "Concepts like virtual goods we envision as being packaged in tiers of subscriptions. There could be different levels where kids get access to different items. For us it still ties back to our beliefs that it aligns the interest of the company with the users."

Arpajian says Dizzywood will likely roll out an initial, single-tier program "in the spring, sometime in the next few months" and work from there to test the market for pricing and demand. It depends on when the founders feel the product is ready, but it sounds like they're in a good place.

Partnering Up

"One of our core philosophies is that we want to deliver substantially more engagement and education than what's out there for competitors, both that we develop in house and license from partners, so we'll continue to explore that side," said Arpajian.

One of the strengths of Dizzywood is that it's built entirely in Flesh on a Flex back-end. Not only does that allow the 2D world to incorporate 3D effects and easily scale out in terms of geography, but it also gives the designers access to the work of a multitude of other developers. While much of the content is developed in-house, Arpajian says the developers are also licensing engines for other Flash-based minigames that can then be re-packaged with different content and presentation throughout the world.

"We're building them out to adapt to kids' skill levels in different areas," he said. "As a child becomes more skilled, the game becomes more difficult. I would contrast that to other sites where the mini-game experience is very repetitive and starts at the same place each time. We want the experience to grow with the child. In Webkinz you go into the arcade and play prepackaged games, but in Dizzywood, the games are broken apart into segments that fit the storyline."

Dizzywood is also looking for partners in distribution. Arpajian says the group is in active discussion, but has yet to settle on any models. While even giants like Habbo Hotel have partnered with casual game portals to increase their numbers, Dizzywood is still a firm believer in word of mouth.

"The worlds grow on smart distribution, but very much quality content," said Arpajian. "Kids literally pass these along on the playground based on their experience. So, for us, a lot of our marketing just comes in developing a quality experience."

And it seems to be working so far: "The early results are great," Arpajian said. "We're seeing great adoption and usage patterns of kids being online for chunks of time and, more importantly, coming back frequently."