1. A method of generating virtual characters, comprising: a) receiving, via a processor executing a virtual character generation program stored in storage of a computer system, first image data from an imaging device comprising at least one image of a physical character constructed of at least two toy construction elements, each having at least one product identifier visibly displayed thereon; b) comparing the image data to a set of product identifier data storage in the storage to identify at least two product identifiers in the received image data; c) determining a set of properties for a virtual character corresponding to the at least two product identifiers; d) generating a virtual character having the determined set of properties; and e) executing a virtual environment in which the virtual character operates; and f) presenting the virtual character in the virtual environment on a display coupled to the processor.