Virtual Worlds….. Big Business

This is a short article i wrote for a UK newspaper. Linked to issues of browser based 3D games it discusses what I see as converging forces within Virtual Worlds, Casual Games and Social Networking. The winners will win big.

FREGGERS, Weemee, Minilife, Maple Story and Habo Hotel. They’re peculiar names, but potentially society-changing tools for a whole generation of young people – and they’re very big business.

These rather odd-sounding words are all names for so-called ‘virtual worlds’: online, computer-generated worlds in which people can (through virtual ‘avatars’) attend pop concerts, socialise, learn, exchange documents and do almost anything else you can do in the real world (as well as a few things you can’t).

 

Virtual worlds first hit the headlines a few years ago with the rise of Second Life, in which ‘residents’ can interact and trade with other players using the world’s own currency, known as Linden Dollars (L$). Helped by masses of media hype it became hugely popular, with an economy worth over 300 million real dollars.

 

The numbers involved are certainly big. And not just for Second Life.

 

The hundred-millionth avatar recently signed up to use Habo Hotel, and virtual worlds now serve tens of millions of users. What’s more, a convergence of technologies and services is now taking place that will magnify their power and, in the process, produce the next raft of technology billionaires.

 

So how is this convergence happening?

 

First, virtual worlds are integrating into Social Networking services such as MySpace, Facebook and Bebo – services that regularly serve hundreds of millions of users.

 

And second, another high engagement online activity – casual gaming – is being integrated into virtual worlds. These low cost, quick-to-develop videogames are simple to learn and play, and are already played by over 300 million people every month.

 

When all of these things are combined into one, the result will be powerful. Virtual worlds will be places where an entire generation of people under 35 will go for their entertainment, communication, and perhaps even business, politics and countless other activities.

 

These people will invest a huge amount of time, energy, effort and emotion into these services. Which means that there could be billions of pounds in it for companies – or virtual worlds – that get it right. If, that is, they can work out how to make money from them.

 

In the first wave of the web a multitude of business models were tried to make money from massive internet audiences. Then Google hit on paid search and the money rolled in.

 

Right now, huge amounts of venture capital are pouring into virtual worlds and casual games. Big technology companies and media giants are taking strategic positions, with subscription services, commerce and standard advertising among the business models vying for supremacy.

 

The winners will win big. And so I guess we shouldn’t be surprised that into this maelstrom have stepped Google again with their own virtual world, called Lively. I wonder if history will repeat itself…