Welcome to Zwinktopia. Population? Ideally, we're talking about 4.7 million virtual residents and counting.

This morning's official launch of Zwinktopia is IAC/InterActiveCorp's (Nasdaq: IACI) first attempt to squeeze into the suddenly crowded niche of animated online communities, but it's packing a shoehorn. The company launched Zwinky.com this past summer, a popular website that allows users to create avatars that they can dress up. Users can even adopt a "pet." The free service's gimmick is that it incorporates those customized, graphical avatars into social-networking sites such as MySpace, as well as into personal websites and blogs.

This morning's christening of Zwinktopia hopes to woo the 4.7 million active Zwinky users to come back home and expand their presence by being part of a virtual community. The new site offers 29 unique locations for users to explore with their avatars. Zwinky users can earn "Zbucks" by playing free online games and partaking in interactive activities. The virtual greenbacks can be used to hit the site's virtual stores for everything from new outfits to furniture.

If it sounds like a more kid-oriented version of Second Life, There.com, and Electronic Arts' (Nasdaq: ERTS) The Sims, you're not off the mark. However, there have been several virtual communities launched with young users in mind lately. Mattel (NYSE: MAT) launched BarbieGirls.com last week, and Disney's (NYSE: DIS) Virtual Magic Kingdom has been online since 2005.

Other dedicated sites, including Webkinz, Club Penguin, and Viacom's (NYSE: VIA) Neopets, have also targeted young users with walled and generally safe online communities that limit chat functionality to keep hooligans and predators at a distance.

So why is IAC so eager to jump into the crowded fray? It's not necessarily the online advertising, since kid-geared sites are usually pretty barren on that front. The catch here is that Zwinky encourages users to download browser toolbars that come with Zwinky icons, for instant connectivity. The toolbar also includes a Web search box. Providing sponsored search-engine results is a competitive, high-margin business.

Zwinky is another foot in the door for IAC in that sense. You could say it's the shoehorn that keeps on giving.

*Source: Fool.com, April 30, 2007