My kids have abandoned Club Penguin for a new child friendly MMO called Buildabearville.
Bearville has a lot in common with Club penguin. Kids can create avatars, dress them up, interact with their online friends and play mini-games. Just like Club Penguin you can join for free but in order to access everything you have to spend some real money. In Club Penguin that means paying for a monthly subscription but in Bearville all you need to do is purchase a bear from the Build a Bear Workshop. Given that just about every child under 10 in the western world already has several of these build it yourself bears that makes a pretty big potential market for Bearville.
The really big news though is that in the opinion of my resident child experts Bearville is better than Club Penguin. It looks better and seems to offer more things to do. Player housing and items are a big feature of this type of game and Bearville stuff just seems better and more desirable than Penguin's. Unlike Penguin, Bearville allows players to trade with each other opening up rich possibilities in terms of game economy. Bearville has only been around a few months and is still in beta but it has a lot of content and seems very stable and polished.
Can Bearville's buy once play forever revenue model compete with Club Penguins subscription based model in the long run? Hard to say, but it is unlikely that Build A bear's revenue stream from selling bears is going to dry up any time soon. Also the vast majority of Club Penguin players don't pay a subscription (but 700,000 of them do according to Wikipedia). A previous mmo / toy tie in called Bratz Miuchiz turned out to be a dismal buggy mess but Bearville is much much better.
From my own brief exploration I would say that Bearville has one Achille's heel. A few of the mini games are downright hard. I struggled with a soccer game and a diving game. This is an area that Club Penguin does brilliantly. Club Penguin's mini games are easy enough to be picked up in seconds but addictive enough to keep you playing for hours. If Bearville doesn't get that magical balance right they are going to first frustrate and then lose their young customers.
I would say that Walt Disney's €350m investment in Club Penguin is looking a little dubious at present. Disney haven't done much with the game since they bought it and it looks very tired in comparison to Bearville.
By the way if you know a child who has an older Build a Bear bear, they can retrospectively register it for access to Bearville. This is a time limited offer however so I suggest you encourage them to do it soon.