VentureBeat

The virtual world business is turning into a virtual galaxy with lots of competition. But the founders of the Neopets kids virtual world are diving into the fray today with Meteor Games, a new independent game development studio working on a fantasy/sci-fi massively multiplayer online game.

The company plans to launch its stylistically animated world for children ages 8 to 18 in 2009. That age group is well above the target for Neopets, which has more than 45 million users.

“There is a gap between games like ‘Age of Conan’ and ‘Club Penguin,’” said Adam Powell, co-founder of Meteor Games with Donna Williams.

It’s certainly going to be harder to start a new MMO today, given the competition. There are dozens of companies trying to challenge Blizzard’s “World of Warcraft,” which has 10 million paying subscribers. Gaia Online, which described its own MMO today, will be more direct competition in the MMO space, though Meteor Games is going to shoot for higher graphics fidelity than Gaia Online.

There aren’t many serial entrepreneurs in the virtual world category because it’s really hard to come up with a hit in the first place. But if you’re going to bet on anyone to come up with an encore, Powell and Williams are a good choice.

They started Neopets in 1999 and rode it to success until they sold it in 2005 to Viacom’s MTV Networks for $160 million. That was early to sell, considering how big Neopets is now and how Disney paid $700 million for Club Penguin. But the money was enough to allow Powell and Williams to bankroll their new game so far. They waited to start their game because they had a no-compete clause with Viacom. They were also obsessively playing “World of Warcraft,” creating a dozen “level 70″ characters between them. (That means they poured a ton of hours into their, um, game research.).

They have 42 employees in their West Hollywood, Calif., studio. Powell is chief executive and chief creative officer, while Williams is president and chief operating officer. Powell said they are talking to possible investors now but are under no pressure to publish their game by a certain deadline.

The new game won’t be a simple Adobe Flash-based application played in a web browser. Powell said he looked at the competition in that area and wanted to have much better graphics. Meteor has licensed a 3-D game engine to build the graphics for the world but won’t yet disclose the engine maker. The company will publish the game on its own site.

Meteor will likely have a free version to entice gamers and charge $5 to $10 a month for access to the full world. The company will likely also create a virtual goods model where they can charge for certain items. Williams said the world will combine an MMO, casual game play, and social networking.