Mind Candy’s Moshi Monsters Roar to Life Through Toys “R” Us Deal

Facing bankruptcy three years ago, Mind Candy bet its last remaining VC dollars on building a kid-friendly gaming platform.

Already, the idea is starting to pay off.

Since then, the company’s game network (plus aspiring social network) called Moshi Monsters has registered 50 million users, mostly between the ages of 6 and 12 years old, and is adding a new player every second. It’s also on pace to generate $100 million in gross retail sales this year.

At E3 last week, I caught up with Mind Candy’s CEO Michael Acton Smith to hear about how he believes he can leverage the company’s social game roots to build a Facebook alternative for kids under the age of 12 and create an entertainment brand worth billions.

Acton Smith’s ambitious plans include bringing the monsters and other characters from the online virtual world into the physical world.

Mind Candy, which is based in London and has offices in New York, plans to officially announce tomorrow the availability of plush stuffed toys and mini-figurines based on the characters from Moshi Monsters. The toys will be sold exclusively at Toys “R” Us online and in stores nationwide starting in July.

The launch of toys in the U.S. follows the popularity of Moshi Monster-branded toys, books, video games, trading cards and a magazine in the UK and Australia, where the game is more popular. Of the 50 million users, only 15 million are in the U.S. today.

Acton Smith’s ambitions are like Harry Potter or SpongeBob SquarePants on steroids.

In addition to toys, he says they are working on music, live tours, a Moshi film and a videogame for the Nintendo DS.

In the game, players choose from one of six virtual pet monsters to name and take care of. They also get to personal and decorate a page and can post notes to a friend’s pinboard, which is a lot like the wall in Facebook. Subscriptions cost $6 a month, but not all users pay.

The company, which has 50 employees, has raised $10 million in venture capital from Index Ventures and Accel Partners.

Here’s a video interview with Acton Smith from the floor of the Los Angeles Convention Center at E3, where his Jimi Hendrix-type attire easily stood out from the rest of the hardcore gamers:

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