May 18, 2007 4:00 AM PDT

Barbie's last online stand?

By Stefanie Olsen
Staff Writer, CNET News

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Mattel, the maker of Barbie, is preparing one of its biggest updates of the toy's image; this summer, it will start selling plastic "Barbie Girls," a handheld MP3 player that can be accessorized like a doll and used to unlock special animations, make friends and shop in a virtual world on the Web. The toy is likely to test Mattel's ability to stay relevant in a Digital Age that has changed the way little girls play and socialize.

Certainly, Mattel has tried to keep its brands Internet-savvy for more than a decade. Mattel's Barbie.com and EverythingGirl.com have the highest concentration of girls age 2 to 11 on the Web, according to researcher Nielsen NetRatings, but their overall audience hasn't grown much over the years.

The company is also being pressured by toys like Webkinz and an avalanche of virtual worlds designed for kids. Bratz, for example, the racier fashion dolls that have eaten into Barbie sales in recent years, plans to launch a virtual world called Bratz World (Be-Bratz.com) and a Rescue Pets (my e-pets.com) this summer.

"Mattel is the 800-pound gorilla in the toy industry, and it's worked hard to continually reinvent itself," said Lisa Bradner, senior analyst at Forrester Research. "I think they'll continue to be a very strong player, but it's hard to innovate at the speed and agility that a company like Webkinz can."

The overall audience for Barbie sites has declined slightly over the last year, and has failed to grow over the last three years. According to Nielsen NetRatings, the Barbie site attracted about 1.9 million unique visitors from home and work in April 2007, down from 2.1 million in April 2006. Those numbers are in line with about 2 million visitors in the same month in 2004.

In contrast, Webkinz--plush pets with corresponding virtual homes on the Web--have exploded in popularity over the last year. In April, Webkinz attracted 3.6 million unique visitors from home and work, up from just 285,000 a year before. Webkinz has even usurped the long-reigning virtual pets site of the Web--Neopets, which went from 2.6 million unique visitors in April 2006 to 3.2 million in 2007.

Another major contender in the kids category, ages 2 to 11, is Club Penguin, a virtual community of penguin avatars for children. It drew more than 4 million unique visitors in April. And Disney.com, the generalist playground of Mickey Mouse and other characters, attracted more than 11 million visitors that month.

"Certainly it's a competitive market. It's going to be up to Mattel to keep up with kids' interests," said Heather Dougherty, a senior retail analyst at Nielsen NetRatings. "They need a wildly popular Webkinz-like product."

Still, Mattel is hoping a Barbie MP3 player can lure an audience of little girls through music, and eventually outpace other real-to-virtual-world toys. (The music player, which will begin selling in July for about $60, can hold up to 120 MP3s or 240 WMA-file songs. Girls can buy $10 accessory kits to dress up the toy MP3 player.)

"This is a new type of play experience, with a real world and online experience," said Rosie O'Neil, brand manager in marketing and "chief Barbie girl" for Mattel. "In the real world, it's a next-generation fashion doll, an MP3 player that works like a Shuffle. It has a USB key to unlock a bunch of new features on BarbieGirls.com, where they can do things like adopt pets and buy furniture."

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