Virtual Worlds Forum

Twinity has announced that it has been awarded funding by the government of Singapore for its development of a virtual equivalent of the city. Twinity is a virtual world which aims to create virtual replicas of the leading cities of the world. They have already built Berlin, with Singapore and London next in the pipeline. For more background, check out my interview with Twinity's Chief Marketing Officer from our Unplugged gathering earlier this month. As part of the deal, Twinity will also be launching geo-tagging capabilities in the virtual world. Presumably this will involve media assets, such as pictures or videos, of real world places being connected to the virtual equivalent in Twinity.

The aspect of the announcement which most interests me is the fact that that they have attracted government funding for this. Metaversum are quite open about the fact that developing mirror worlds is an expensive operation – a potential disadvantage against competitors such as Second Life which can mostly rely upon users for content generation. If Metaversum could attract local government funding for development of more cities, that could go a long way to alleviate the problem. Whilst I'm sure many governments would not be easily persuaded to put money into a virtual world, some could embrace it, perhaps as a tourism marketing exercise or to help in a real world regeneration effort by improving the virtual environment first to create a buzz around an area.

"We're very excited about being awarded funding for launching virtual Singapore, geo-tagging and our other Co-space™ projects. We see it as recognition of the strategic importance of a real context for virtual cities for city authorities and local business alike," commented Jeremy Snyder, Managing Director of Metaversum Asia Pte Ltd. He continued, "We look forward to helping Singapore transform itself into the virtual information and communication hub for Asia."

Muxlim, a social network and community for Muslims, has announced that it is to launch a virtual world for its users in the next few weeks. Muxlim aims to provide a virtual world that is suitable to the cultural expectations of Muslim people and (in some cases) governments. It will not, for example, include sexual content and will provide opportunities to 'wear a hijab and go to prayer rooms'. This is in response to a ban on virtual worlds currently in place across the middle east, including in comparatively liberal countries such as the United Arab Emirates.

Does a separate virtual world for Muslims make sense? I think it probably does. The internet is often dominated by broadly American (and certainly western) culture, which of course takes its roots predominantly from Christianity rather than Islam. Assumptions which might be made perfectly reasonably by a US or British virtual world developer may significantly reduce that virtual world's value to users who do not consider themselves part of Western culture.

Second, the existence of flourishing Muslim communities outside the Middle East seems to demand a tool to join up all of these communities to facilitate the international Ummah – Muslim community. Whilst as a non-Muslim I have little feel for the extent to which this second factor would be a real driver of adoption, on an academic level at least the idea of using technology to enhance both cultural and religious connections between a worldwide community seems fascinating. And the size of the market is certainly not a problem, with over a billion adherents to the religion worldwide.

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Linden Lab and Rivers Run Red have announced that Immersive Workspaces is now on the Second Life Grid. Immersive Workspaces is an enterprise solution for a virtual business environment, in which users can have meetings or share content, for example. The fact that it is on the Second Life Grid enables businesses to take the decision regarding how much connectivity to the Second Life mainland they want – they can either have it fully integrated or keep it as a secure and separate facility.

At the Virtual Worlds Forum in London earlier this month, I lost count of the number of delegates from different enterprises who were bewailing the lack of business-friendly features on Second Life. Given Linden Lab's ambitions in what will clearly be a very important part of the virtual world market, this is something they need to address. It is a substantive problem as a perceived problem. It is not, at the moment, possible to have a Second Life instance behind a firewall – something many CIOs demand before they will consider adoption. Linden says that this is on the way in Q1 next year, in an important step.

Another problem is the lack of control. One delegate from an enterprise explained to me that it was not possible for them to use Second Life at present because of the inappropriate content elsewhere on Second Life; if they required an employee or client to download the software, and (for example) sexual content was encountered, that enterprise believed it could potentially be held liable for that content. The Second Life Grid will to some extent alleviate that, as a Second Life area, separate from the mainland and all other content, could be used.

Sports brand Reebok has announced that it is to advertise in forthcoming MMO Football Superstars. Football Superstars is a free-to-play MMO created by British firm CyberSports and developed by Nottingham-based Monumental Games. Players enter a persistent virtual world, in which they must achieve football greatness. The game encompasses both football matches themselves, and the rest of the life of a virtual football superstar. It certainly seems like a premise which could gain significant traction: wildly popular football games such as Pro Evolution already include some aspects of strategy beyond simple football game play, and the persistent virtual world aspect to Football Superstars is likely to make that dimension far more meaningful. The fact that it is free-to-play also puts it at a significant advantage versus the expensive titles currently dominating the space.

The off-the-pitch aspect to Football Superstars opens up two key business models – advertising and microtransactions. Players can visit shops and purchase virtual kit and equipment. This is where the Reebok deal announced today fits in. It appears that Reebok-branded virtual goods will be available for sale. On top of that, Reebok will be running a competition, as part of their 'Ambassadors Programme', to find an amateur to form a professional-style sponsorship deal with. This would include real and virtual Reebok gear, among other perks. Reebok are also going to be on virtual advertising hoardings, although that seems to be such an unimaginative way to advertise in virtual worlds given the breadth of innovative and more successful opportunities available.

Andy Law, Head of Business Development at CyberSports, said: "This is a great deal for us and Football Superstars. Reebok are a high profile and firm favourite football brand and they will bring an even more realistic dimension to the game play, blurring the reality between the virtual and the real worlds which is what Football Superstars is all about."

Forbes carries an article which suggests that virtual worlds could stand to benefit from the economic slowdown. Essentially its argument is that users may decide to purchase cheap virtual goods in substitution for the more expensive real-world goods which they can no longer afford: "As the 'real world' gets worse, virtual worlds get better," Gaia Chief Executive Craig Sherman told Forbes.com in an e-mail. "As things get worse, people spend more time at movies or spend more time on a site like Gaia Online, which provides a relatively inexpensive respite from the offline world." Gaia, which targets U.S. teens and twenty-somethings, had more than 7 million unique visitors in September.

The argument that microtransactions could see a real boost seems strong to me. It is obvious that not everyone loses out in an economic slowdown; in the real world I would expect Aldi (a discount supermarket) to do very well, and Waitrose (a relatively expensive, high quality supermarket) to perform more weakly at the moment, for example. The same could apply as a user decides not to buy that Nike outfit on the high street, but to buy its virtual equivalent in-world. Microtransactions are very cheap, and still provide a feel-good-factor. Similarly, if virtual worlds can position them as a cheaper alternative to going out in the real world, they could see some benefit from tightening of belts.

The risk, though, is surely that other sources of revenue dry up. Surely it is possible (and perhaps even likely) that significant numbers of users decide to abandon their subscriptions to MMOs. It also seems probable that new purchases will fall. We may see an increase in free casual games as users want to spend their time on the computer more cheaply.

The credit crunch and the consequent meltdown in the financial system over the past month seems sure to have consequences in virtual worlds. No country has been hit harder in this financial crisis than Iceland, with many key banks in dire straits. It's no surprise, then, that speculation has been building up about whether Eve Online, an Icelandic MMO (see my interview with Arend Stuhrmann from last week), can survive the tough times. Today, Hilmar V. Pétursson, CEO of CCP (Eve Online's creators) has addressed concerns on his blog.

In a nutshell, Pétursson argues: "CCP is fortunate enough to be well isolated from the current banking crisis we see around us on both sides of the Atlantic (and here in the middle of it, of course). Not only do we enjoy the privilege of a global customer base bringing a diverse array of cultural influences into our single shard world of EVE Online, but that same diverse nature inoculates us from short-term fluctuations in sentiment or economic turbulence."

The whole of the Icelandic economy is sure to suffer the aftermath of this crisis, and it seems inevitable that Eve will be totally immune from the impact. But Pétursson is probably right; Eve has a global user base (so global consumer spending, for example, will be more relevant than Icelandic consumer spending). I would argue that virtual worlds are, structurally, a strong prospect for growth, even if that is slowed by the economic cycle somewhat. Where the impact of economic troubles might be felt more acutely, though, is in-world economies. It will be fascinating to see whether a measurable slow-down occurs in conjunction with the real-world slow-down.

Dubit Research has produced an exclusive report for the Virtual Worlds Forum giving key statistics for how tweens use virtual worlds and their attitude towards advertising. Dubit Research, a youth marketing agency, runs a standing panel of 600 7-12 year olds in the UK, and has asked them a series of questions relating to which virtual worlds they use and how they feel about advertising in virtual worlds.

The results show that 73% of British 7-12 year olds are using some sort of virtual world. Club Penguin leads the pack with 43%, Habbo following with 27%. There is remarkably little fragmentation in the market: only 8% use a virtual world other than the top 10. What surprised me most about the statistics is how even the gender split is on many virtual worlds – entirely even on Club Penguin, and similar on most other games, although Runescape is, as one would expect, far more popular with boys.

In my interview with Richard Bartle last week, he argued that the reason children play virtual worlds to a far greater extent than adults is because they are simply more comfortable with a new form of media, rather than because virtual worlds are inherently more attractive to children. His thesis was that 'the mainstream will come to virtual worlds' as the children literally grow up. Yet that isn't an argument that seems to be supported by these statistics. There is a clear drop off in the percentage who visit virtual world usage after the age of ten, rather than a sustained level. This is far from conclusive, however, since it is entirely possible that not as many current 11 and 12 year olds are playing virtual worlds for precisely the same reasons that adults don't – because they were older when they first appeared. Only after a few years of this kind of data will we be able to come up with some conclusive results.

There are also some statistics on advertising. On the downside, only 45% of kids definitely remember noticing advertising, suggesting that it is often missed. The good news, though, is that about 70% of those asked rate brand presence in virtual worlds as 4 or 5 out of 5, indicating at least a lack of antipathy.

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There will be 33 million users of virtual worlds in 2013, argues a new report from Parks Associates. This represents an increase of about 260% over the report's estimate of today's numbers at 9m. It's worth noting that the report is looking specifically at 'PC-based 3D virtual worlds'. At present, of course, these represent a fraction of the overall virtual world market in terms of user numbers, with Flash-based virtual worlds like Habbo and Club Penguin enjoying far greater popularity than their 3D counterparts such as Second Life.

The report's author, Yuanzhe (Michael) Cai, argues that in order to achieve this substantial increase, 3D virtual worlds need to abandon user-generated content: "Without appealing content and applications, virtual worlds are nothing but empty shopping malls. The industry needs to move beyond its obsession with user-generated content and make 3D virtual worlds more interesting to average consumers." That's all well and good – it's easy to see why 3D design and user generated content don't necessarily go together at the moment, given how hard it is to create a 3D object relative to shooting a video or posting a twitter. But would 3D worlds really amount to much without UGC at the moment? Professional content at its most successful in 3D virtual worlds needs to be monetised – usually through microtransactions for virtual goods. Yet there's no evidence to suggest that 3D virtual goods are any more lucrative than 2D virtual goods: Stardoll does just fine without full 3D works. So if users don't like UGC in 3D worlds, and they're not bothered by whether their professional content is 2D or 3D, why bother with 3D at all?

Of course, the answer to that question is that 3D promises to provide far more immersive experiences. Clearly 3D worlds have a very strong future, but not unless they offer something beyond the possibilities of 2D worlds. Providing more exciting possibilities for user-generated content is one way in which 3D worlds could differentiate themselves.

That was a question being asked at a session at Virtual Worlds Unplugged about how the industry can drive adoption of virtual worlds in the enterprise. The business cases for all sorts of applications seem compelling, and are well rehearsed- from collaboration to e-learning, virtual worlds seem like they could add enormous value to business practices. Yet virtual worlds couldn't be much further from the ubiquity that enterprise tools like Blackberries enjoy.

Why is that? One suggestion was that the reason that virtual worlds don't yet have a place in the workplace is because they rarely have a place in the home (at least anywhere other than the child's bedroom). Social networking, starting to make its way into the enterprise, certainly started as a consumer phenomenon, and virtual worlds is closely related to this. If businesspeople aren't entirely comfortable with virtual worlds as a consumer, how could they be expected to embrace 3D worlds and avatars and even flying in the enterprise? IBM's Kevin Aires pointed out how alien virtual worlds often are, even to IBM salespeople: 'With converting sales people [to virtual world users], you spend the first ten minutes explaining that there's more to virtual worlds than Second Life.'

I don't think that the lack of consumer adoption is really what is holding back enterprise virtual worlds, though. Email, for example, was a business tool before it was a personal tool. Blackberries overcame the technophobic tendencies of millions of middle-aged men and women of the 'I just want my phone to talk and text' school of thought to become the instantly recognisable badge of a commuter. History shows us that businesspeople can 'get' new technology very quickly indeed, whether or not they have experienced it as a consumer. What determines adoption is not something fuzzy like how comfortable people feel with the concept, but about the business benefits.

And the truth is, the business benefits just aren't clear enough yet. There's the issues of security, of user interface, of development costs, of old business client hardware to name but a few. These can and will be solved in the near future, and enterprise virtual world providers certainly don't need to wait for consumer virtual worlds to get their act together to experience huge rewards.

Avatar chat application Visitoons has announced that it is to officially launch worldwide on 15^th October, although the site is available now. Visitoons has been available to the Spanish-speaking market since July of this year, and has now launched a global service, in addition to a development platform for third parties. Visitoons is an application which is designed to be embedded by a site owner. It will then allow users either to chat in a 2.5D environment, or in a Rocketon-style overlay, on top of the website.

The case for a site owner installing some sort of avatar chat application is clear. It could foster a stronger community around the site, hopefully making it more sticky and certainly creating greater engagement with the brand. If done with a more heavy-weight solution, then a company could leverage a tightly integrated virtual world to sell virtual goods, for example, perhaps even making decent money. There is a whole spectrum of providers catering to this space, however, so Visitoons will have a tough time gaining decent traction. On the expensive end, Webflock is a 2.5D platform developed by Electric Sheep which can build a virtual world for a 'six figure sum' – this requires no plugin other than Flash. Another option might soon be Lively; it's already possible to embed a Lively room into a 2D website, and with an enhanced platform on the way, that could become an even more attractive option (although with the need to download an extra plugin – a potential barrier to adoption). Rocketon is slightly different, in that it is a web-wide virtual world, which allows users to control avatars on top of web pages, chatting to others and operating the site.

Visitoons' plans for its API aren't totally clear, but it appears that the flexibility is mainly in the ability to alter the 2.5D environments. From the press release: The Visitoons Platform has been specially developed to allow the creation of highly customized virtual environments using a variety of forms of art, including illustrations, photography and 3D renders, and not just only 3D models resembling online games. This will enable businesses to present their brands in the most appropriate ways, allowing for traditional creative professionals and existing marketing teams to tackle the quest for developing branded Virtual Worlds, as no special 3D design or programming skill is required.

I had the opportunity to chat to Richard Bartle, the inventor of the first virtual world, at the Virtual Worlds Forum Unplugged event on Tuesday. Richard Bartle is a legend within the virtual worlds industry. He co-wrote the first ever virtual world, MUD, in the 1980s and has since had an active role in the development of ideas as Professor in the Computer Science Department of Essex University. In 2003, he wrote the book Designing Virtual Worlds.

In the interview we cover a broad range of subjects. We discussed, for example, how virtual worlds might eventually reach the mainstream, and Richard argued that this will only happen once the kids currently using virtual worlds on a massive scale literally grow up – something which those developing adult virtual worlds with the need to turn a profit sooner than 10 years will not be pleased to hear!

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At VWF Unplugged I had a chat with Jim Bower, founder of kids virtual world Whyville, for a chat about the role which virtual worlds will play in education. Jim argues that traditional education is going to have to come to terms with the fact that its methods may no longer be the most effective way for learning to happen. Whilst there will always be some place for didactic learning, Jim sees great potential in virtual worlds (such as Whyville) which teach kids things without them even noticing it.

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It's a well known fact that we like to party at Virtual Worlds Forum. Even in the face of adversity, attendees turned out in force to network and party at the joint Virtual Worlds Forum and South By South West shindig at the Digress City club in the square mile. For those of you who couldn't be there, we've put together a little 'virtual party' of people you might have spoken with – some of the leading lights of the virtual worlds space giving you some views on virtual worlds. These people are all part of a fantastic community who have been so supportive over the past few days with the emergency rescheduling of the conference, and it's worth reminding ourselves from time to time that Virtual Worlds Forum, the conference and the year-round activities, wouldn't be possible without the support of so many great people.

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We've got some more podcasts on the way in the coming days, so stay tuned!

In this podcast I'm joined by Norbert Meinike, Chief Marketing Officer of Twinity. Twinity is a mirror virtual world, which has initially created a virtual replica of Berlin and is soon expanding to London and Singapore. We've covered Twinity extensively here on the Virtual Worlds Forum blog, partly because of the fascinating potential I believe a mirror world has to really shake up the virtual worlds space, bringing both new users and advertisers to the market. Twinity on Friday announced a partnership with UK media company Twofour as part of their move into the UK with the creation of the virtual London.

A few of the topics covered in the interview:

• The potential of mirror worlds to make the virtual world concept more easily comprehensive to users
• Twinity's business model, and how they are going about attracting new brands to virtual world advertising
• The major disadvantage – the need to develop a 3D replica of a city rather than simply let users create the content themselves

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Can you give us an update on some of IBM's virtual world activities?

IBM's has been exploring and experimenting with the application of virtual world business models and technologies in areas such as commerce, collaboration, education, training & events and process management and rehearsal. We see incredible potential for the 3D Internet to transform customer experiences, improve business processes, enrich commerce and transactions, and to use virtual worlds and simulation to educate both customers, as well as to train and educate your employees.

Right now IBM is applying 3D Internet thinking across the entire human capital management "life cycle", where people are the center of our focus. There are essentially four parts to the HCM lifecycle – Attract and Retain(new employees), Motivate and Develop, Connect and Enable and Deploy and Manage employees. At each step in this process we are applying 3D Internet thinking and finding ways to bridge gaps across our global community.

Our CIO office has a wide range of initiatives to enable training and education, team building and collaboration across our global community of employees. Trying to 'make the world smaller' as it were.

In the area of training, IBM Research in Almaden is working on something we call "rehearsal services". Within IBM, we do a lot of complex client engagements and it turns out that some our employees in field go to quite a length to find ways to rehearse the activities in advance of the actual engagement - but it always typically done as one-off exercise, with no support from anywhere to make their preparation more efficient or replicable. So we wondered if we could create an environment where people could practice complex sales or project management interactions ahead of time. For one group, we built a rehearsal environment for practicing "extreme project management" for complex project management, like what is needed for ERP implementation. It is a totally immersive experience where we use a combination of a virtual company we created that include manufacturing, corporate headquarter and a view of production and sales data which changes throughout the scenario) and in-world facilitators – actors who play parts through use of avatars in the virtual world-- to take the team through a project management exercise. If the team asks the right questions and uncovers the true business drivers (and what needs to be done to improve the company's bottom line), the company thrives. If not, the company's revenues go down. We are building similar "rehearsal studios" for some of our sales teams.

There's been talk at the conference about IBM finding a way to merge instant messaging – a communications medium already widely understood – with virtual worlds, which are perhaps not so well understood. Perhaps you could talk a little more about this?

In September, IBM Research announced a project we called "Sametime 3-D," This is a great example of how we are looking at ways to enhance business value of virtual environments through unified communications. Our vision is to foster innovation and business agility by making it easier for people to find, connect to and collaborate with one another through a unified communications experience -- right from their familiar devices, applications, and processes.

So what does this mean- well in the prototype, a user can instant message a colleague and instead of only chatting with one another, they can launch into an immersive 3-D environment directly from within the SameTime chat session. "Sametime 3-D" creates a virtual meeting space 'on demand' – in the prototype the user is launched into an OpenSim environment, but we are working with other partners to provide similar capabilities. Forterra, for example has already enabled this capability for its Olive platform. As the 3-D meeting space is launched, people have the option to attach files, select a meeting space type and sign in using their existing enterprise authentication tools. We are developing some in world tools to help facilitate the meeting activity, and will be working with a few clients to pilot this capability.

Another project IBM's been working on in virtual worlds is the virtual data centre – what's the motivation behind that?

Oh yes, this is really great project, which Kevin Aires (AKA Boris) will be demoing in the "virtual camp" IBM created yesterday. Within our virtual business center, we have a Virtual Green Data Center. It provides visitors with the ability to easily access the "inside workings" of a data center, understand complex concepts and processes related to green technology, and gives us the opportunity to do customer briefings and sales team education with no travel expenses (how green is that!?). The exhibit allows visitors to learn how to manage and improve their data center energy efficiency and is available any time from anywhere, with a computer and an internet connection. Visitors are able to explore the Virtual Green Data Center by taking a self-guided, individual, or group tour. The business center itself is staffed by live sales avatars twenty-four hours a day, five days a week, making it easier for visitors to get the information and answers they need.

What are some of the other interesting business applications you are seeing?

Another area of great promise where we are already working with a number of clients on is complex systems management. In particular in the area of 3-D Data Centers. In these projects we use advanced visualization technology to recreate an entire data center or centers in-world.

The 3D datacenter application places users in an immersive environment with familiar 3D datacenter equipment- servers, power equipment and displays. The 3D datacenter provides a mirror image of an IT environment, but it is more that that. The models receive data from live enterprise management tools residing on the equipment, By aggregating information from these management systems and presenting it in a familiar 3D space, managers are able to respond quickly to alerts and events on demand. Also, since the 3D datacenter is a multi-user virtual world, users can effectively collaborate on elements of the datacenter together. While the 3D datacenter application can be used to manage real datacenters, it can also be used as a modeling and simulation tool. One interesting outcome of this is that clients realized that the virtual data center does not have to have the exact same layout as their real data centers- for example similar equipment located in different physical locations can be put together virtually, if that makes sense to them, so they visualize the collective set of enterprise resources and their individual states, for multiple physically distributed datacenters.

Yesterday I had the opportunity to sit down with David Helgason, CEO of Unity 3D. Unity are behind a development platform for 3D, with very strong virtual world and MMO capabilities.

Tell us about Unity 3D.

We do the 3D engine development tool called Unity which is being used as a development environment to develop 3D content really quickly and put it on a lot of different devices. Everywhere from downloadable games, to directly inside the browser, to the Nintendo Wii, with more consoles coming. We're also on the iPhone.

What basically happens is you create anything from a small casual game up to large scale MMO – both things have been done! The technology is insanely scalable. You deliver it to a lot of different devices.

The USP, what drives people wild, is that you can take the high end, graphically beautiful, complex virtual worlds and put them straight into the browser – an instant experience. You click once to accept the plugin, and you are then in the world, which makes it an order of magnitude more accessible than where you have to install a client or mail a DVD.

The whole world can be streaming in, so you start with almost nothing – a couple of hundred kilobytes data – and once that is in you can have an infinite universe. This is what Cartoon Network is doing with their full-scale children's MMO called FusionFall. Funcom are building a browser based MMO, the name of which has not yet been announced. At my last count, there about 10 different virtual worlds being built based on unity, from Hangout.net to Sosauce. Those are just the once which there is something to see – there is a bunch of others still in stealth mode, with VC funding. This has also happened since a year ago. It's only picking up now. Two years ago I wouldn't have foreseen it. I didn't think we would be able to deliver those scales of worlds.

So what do you think the advantages are of the middleware, Unity approach over developing it all from scratch.

First of all, developing from scratch is insanely expensive. Unity has some really nice workflows. The development tool is extremely polished and has had so much hammering. It's currently in use by several thousand people, and all of them report bugs and annoyances, and we just improve the tool in ways that home grown platforms simply cannot deliver.

The other thing is that actually making 3D work on all computers in the world, including old laptops with horrible integrated chipsets is really hard. It's not glorious to fix those bugs! We have a test lab. If we receive a lot of bug reports, of things not working properly on a particular piece of hardware, then we go to eBay and we buy those old computers. We install it in our lab, and we have a student who hammers it out until it works or he finds the error. This is something you can only really get from something which has scale.

Then as you get the plugin installed on more computers, that also becomes a value because then a lot of people don't have to install the plugin to use the game. This together makes it uniquely viable.

You were talking about how it runs in the browser, in contrast with other approaches. Why do you think it is important that MMOs and virtual worlds fun in the browser?

It's this sense of instant on- you're on the page and playing right away. This is a value which is hard to get with other approaches. Of course in the browser already you can run Flash, and you can get 2D or 2.5D virtual worlds. That's a perfectly viable solution, but if you want to up the graphics fidelity and deliver something that looks like console games then Unity is the solution.

Do you have any numbers on how much cheaper it is to use Unity, because of the extra work taken out.

A lot of people have asked me but I've never been able to figure it out. What we hear from a lot of our customers who are delivering all scales of games from really small to boxed retail is a lot of them say that we wouldn't have been able to pull this off without Unity because they would have had to have a team twice as large –an engine team and a content team. Now they can save the engine team, and in a lot of cases they wouldn't have been able to do it otherwise.

You're very cross-platform. What are the challenges of cross-platform development – for example the accelerometer on the iPhone isn't available on the PC. So do you just build different games, or is there a way to build the same game but have different interfaces.

It really depends on what kind of content you're doing. Of course, in all cases the input has to be rethought or re-engineered, so there isn't one answer to that. But in delivering to many platforms, you need to think with each platform. And Unity can only do so much of that –it can't solve game design or user interface design issues. We just make everything really easy; we make it work, now you just have to make it feel good again.

An announcement came from Lively recently that they are going to turn their product into some kind of platform for game developers, taking out a lot of the hard work from game development. How do you think that might fit into the market?

It's hard to say really: Google is Google and they do things in a certain way. Our approach is more flexible; they don't have to fit their approach into a certain platform or login system. It's also more powerful – you can actually pull more stuff through Unity than you can through Lively. More graphics, more different platforms, Mac and PC, and mobile devices. Down the line, I don't know where Lively will go, but our speed of development and traction is so great that I'm not too worried about them. In theory, at least, they might be a competitor, at least taking part of our addressable market, but fair enough, it's a free market!

Lively have been talking about enabling the much smaller developer, the individual or independent studio. Is that a market Unity might want to cater to?

We already do, and a lot of our developers are either students or very small studios. A lot of students came to Unity and now they are professional studios: two or three guys doing contract work for really big clients, because they were empowered. The pull of Unity content is so great that every single person who knows Unity right now is needed and getting hired by big companies. That's definitely something we cater to already, and something we'll always be very focussed on.

Do you think that the smaller studios and individuals will become more important in the industry? Do you think they might be able to out-innovate larger studios?

I think it's cyclical. Whenever something new comes out, like most recently the iPhone, a lot of small developers were incredibly empowered and made really good businesses out of it, and then things consolidated. I don't know if it's a fixed rule, but it always seems as if the big players end up owning each space. If you go further back, with casual development on the web, you had a lot of small studios, now it has consolidated. In the deep past, small studios and independent developers were doing console titles. That went away, and now they're doing console titles for Xbox Live Arcade and PlayStation Network. It seems like a cyclical thing. I think small studios will always have some channels; they just have to be very agile and find those opportunities by being innovative, fast and young, not being entrenched in old habits. In every generation of platforms and channels they can make good business.

Where's Unity headed in the future?

Going from being a very nice tool for a few platforms to being an even better tool for all platforms. That's where we're headed in the next 12-18 months. We're growing extremely fast, and are self-funded and profitable (and have been since day one). So we're a very healthy company and have a healthy approach. The traction we have is so great that we're able to start up new teams developing for new platforms, adding key new features. We see it as a sort of square. On one axis we have key features enabling more types of games, and on the other we have platforms. If you visualise that that's the addressable market for us, and by extension for our customers.

How are you going about driving adoption of your standard plugin. When I get a new computer, I download Flash straight after I've downloaded my browser, because it's essential. How do you make your plugin essential?

Technology is almost always content driven, so we have to enable companies to develop really good content, which then drives the plugin. As you have successful MMOs and virtual worlds that's an extremely strong force for adoption. When you buy a new computer, you will immediately login to your favourite virtual world. In the future, many of those will be built on Unity, so that way the plugin penetration is driven. It's a bit different for something like Unity that delivers high end content such as virtual worlds and MMOs because the hassle, even if its small, of accepting the plugin, downloading the three megabytes and going through the auto install, is still there, but seems minimal because of what it allows you to do after you have installed it.

How many installs of the plugin do you have?

Currently, not quite updated, somewhere around six million plus, but growing really fast. Currently its quite Western focussed, but as virtual worlds and MMOs get launched into Asia next year, that will change. Our ability to deal with non-standard hardware will also be useful in expanding into emerging markets.

In the first of a series of podcasts and interviews coming out of VWF Unplugged over yesterday and today, we have an interview with Arend Stührmann, Associate Producer of MMO Eve Online. Eve Online is unique in that it has a single server for the whole MMO, rather than the shard server model adopted by most others, with only a few thousand on each server.

One of results of that approach is that there is very limited scope to cater for different cultures within the game, since the whole world plays together (with the exception of China, for obvious legal reasons). Not only does Eve have to design a world which is suitable for everyone, but they also have to find a way to make people of different cultures and nationalities to literally play nicely, without offending each other. Arend talks a bit about how Eve Online has gone about solving those problems. Eve is also far more freeform than most MMOs, with no grind or structured tasks to complete. Arend explains why Eve went for that approach.

Download

To bring together the fantastic group of people that are still here in London we have now arranged an unconference tomorrow. Virtual Worlds Forum Unplugged will take place on Tuesday from 9.30am - 4.30pm. Arrive early to meet and shape the agenda, and there will be great informal sessions throughout the day.If you're still in London, come, share ideas, talk, network, do business. It's already shaping up to be a fascinating and enjoyable day.

The event will take place at The Hospital, 24 Endell Street, Covent Garden, London WC2H 9HQ.
Map here: http://london.thehospitalclub.com/location_map.html

The Show Must Go On

Following the sad events leading to the disruption of today's conference we understand that many will now no longer be travelling into London to meet at the Hospital. However, IBM are kindly setting up a virtual "refugee camp" expo for displaced avatars at their Virtual Business Center in Second Life so that everyone can still meet up this afternoon. IBM will also be broadcasting the event live on-line and will include their regular "Boris in Wonderland" chat show from the Business Center live to the internet, so that those wanting to see what's going on can also watch on-line without entering Second Life if they don't wish to.

The virtual expo will be available from 1pm-4:30pm UK time (8am-11:30am EST) and will include the opportunity to

• Meet and greet over a virtual coffee
• Setup a virtual trade stand free of charge (arrive early if you want to do that!)
• Go on a tour of IBM's new Virtual Green Data Center exhibition
• Attend the "Boris in Wonderland" chat show sessions

To attend in Second Life click this link: http://slurl.com/secondlife/IBM%20Business%20Center
To watch live online, click this link: http://www.mogulus.com/borisinwonderland

As you can appreciate there is not yet a fixed agenda, so if you would like to help form it by running a trade stand, being a guest on the chat show, or running a presentation, please contact Kevin Aires from IBM asap: and attach a jpg of your company logo.

The VWF Conference has successfully regrouped at the Hospital Private Members club in Covent Garden - click here for a map.

Participants - please come along for coffee, tea, free wifi and networking with the great and the good of virtual worlds in Central London.

You may wish to follow us on twitter for more updates as they happen - we will also update via the blog and email.

Sasha and the VWF Team

To keep you in the loop on our rescheduled VWF08 event.

We know that a number of people are already in London, and want to meet.

Your Four Day members pass to the Hospital is still available - please go to 24 Endell St, London, WC2H 9HQ to collect your pass from 9am – there’s quite a few people in town, so please come, network, hang out and maybe do some business.

You can find a map to the Hospital location here.

To plan your journey within London –go to TFL's Journeyplanner.

The South by South West party on Monday night is still going ahead at Digress City from 6.30pm

We’re working on the rescheduled date and other events, and we’ll keep you updated via email, the blog and Twitter.

Once again, we are very sorry for the inconvenience.

Sasha and the VWF Team

Early this morning there was an incident at the venue in which a member of the public was shot. The police have closed off the venue for three days, which means that we cannot use it for Virtual Worlds Forum.

With less than a day to go, we cannot find an alternative venue, so we have taken the very difficult decision to reschedule the event.

What it means for you:
1. Virtual Worlds Forum will not take place as planned on Monday and Tuesday.
2. We will carry on with some of the networking events and parties - we'll keep you posted on this.

We will update you regularly by email to let you know what is happening. We are very, very sorry for the inconvenience.

Sasha and the VWF Team

Virtual Worlds Forum 08, the event of the year for those in the virtual worlds industry, is almost upon us. It begins on Monday, and continues on Tuesday with optional workshops happening on Wednesday. If you wanted to come, you can still do a last minute registration online – but hurry!

We've mentioned what a fantastic conference this is going to be many times over the past few weeks. Regular readers have heard of our superb lineup of speakers, our fantastic sponsors and very generous attendee benefits. Suffice to say, if you feel like you need more details on any of these, full details are available on the conference website.

But don't worry too much if you can't be with us, because we'll be bringing you as much content from the conference as we can. We'll have podcasts from our keynotes, and liveblogging of many of the other sessions. In addition, we have a really exciting series of interviews lined up, some written and some podcasts. Keep checking this blog next week, particularly on Monday and Tuesday, to find valuable insight into our fast-changing industry from some of its leading figures.

Japenese 3D environment developer 3Di has announced that it is to sell a version of the OpenSim virtual worlds software. OpenSim is an open source virtual worlds platform. The version to be sold by 3Di – called '3Di OpenSim Standard' – appears to be a commercialised version of that product. Although details are hard to come by, since the site is mostly in Japense, it would appear that the model adopted here is similar to the commercialisation of other open source products. 3Di OpenSim is to the OpenSim product what Red Hat is to Linux.

According to the press release, features include:

• Makes it possible for users to create their own virtual world servers
• Allows users to express their own unique interpretations of the world
• Provides the ability to acquire and analyze user patterns and marketing data within their virtual worlds
• OpenSim technology used with the view to becoming the industry standard

OpenSim is incredibly exciting. It is probably the best hope for a truly interoperable metaverse, since it is in many ways similar to Second Life, and it has a broad industry following. Commercialisation of open source projects is usually an important step towards achieving their mainstream success, with the additional exposure and, crucially, investment that commercialisation brings.

A quote from 3Di: We have identified the 3D Internet business as a key area of next generation of Internet applications and we seek to quickly establish a leading position within this market segment. Therefore we will take aggressive steps to help support 3Di in its development of new applications of "3Di OpenSim" and other various services, in addition to providing support to help grow its sales.

Those of us involved in the virtual worlds industry, and particularly those who must write about it, have a consistent problem: how to find out how popular a given virtual world is. There are a few option. Some virtual worlds publish user numbers (Linden Lab, for example, is very open about Second Life's user numbers). However, these numbers may often be out of date, they may not be directly comparable (for example, definitions of 'active user' could vary) and at any rate by no means all companies publish them.

In the world of web start-ups, that isn't too much of a limitation – data taken from services such as Compete can be valuable, especially in showing general trends. However, they are not really very useful for virtual worlds in many cases. They show information such as pageviews – hardly a relevant metric even for a Flash game, since only one page could be viewed for an hour spent on the game. Add to that downloadable clients, and it is clear that better information is needed.

Some better information might be on its way now. Myrl have launched a new index of virtual world signup popularity. Myrl is a 'cross-platform entertainment platform', which seeks to act as a hub for users of multiple virtual worlds (see coverage here). Myrl is able to collect data on the relative popularity of virtual worlds by monitoring when users sign up to a virtual world through Myrl. This is a diagram of some early data (source K Zero):

The statistics certainly aren't perfect. Most signups to virtual worlds don't happen through Myrl, and it fails to give any account of subsequent account activity. Nevertheless, one of the key rules of gathering statistics on internet services from third parties is to use as many sources as possible, and to look for trends rather than particular numbers. There is every hope that from that perspective, the index will prove very useful.

Visitoons, a virtual worlds platform, has announced that it is to become available worldwide from the 15^th October. At present, it has only been launched in the Spanish-speaking market. Visitoons is developed by an Argentinean startup, and is best described as a 2.5D virtual worlds platform. It runs through Flash, thus removing the need for a plugin. Only yesterday we covered the launch of Oddcast, a similar service. Visitoons differs, however, as it is a product aimed at consumers as well as at brands.

2.5D is attractive at the moment for a few reasons. First, it doesn't require a download to operate. Flash can't cope with full-blown 3D rendering, but it can cope with 2.5D – essentially a trick whereby some sense of depth is added without full 3D rendering. In a similar vein, its demands on system resources are considerably lower, making it usable on many more, lower-spec, computers. Third, it potentially offers an easier user experience for a user new to virtual worlds to understand, since the special environment is less complex. The disadvantage is that it really does feel a long way from 3D, and also lacks the possibilities for sophisticated virtual spaces available in true 3D virtual worlds.

Another aspect of Visitoons worth remarking upon is the website overlay feature. This is effectively identical to the core feature offered by ROCKETON; users are able to move their avatars over a 2D web page, creating a virtual world out of the existing web in which it is possible to talk to other users on the same page. The practical uses are obvious, from playing games together to working on a research project. I think the avatar model of social browsing is among the most promising. It's also a metaphor which users are likely to be able to understand easily.

Avatar technology provider Oddcast has announced a new product: a white label virtual world which can be deployed on a brand's website. Oddcast is the company behind various avatar marketing products (such as Sitepal), although they had not previously offered a virtual world in which avatar-to-avatar was possible.

The product announced today – Avatar Chat – is a 2.5D chat environment designed to be deployed by brands on their website as a way to increase engagement. In some respects it is similar to Google Lively, in that both are essentially chat environments rather than whole virtual worlds; it is certainly closer to Lively than it is to something like Second Life. They also share the ability to embed videos into the virtual environment. However, in another respect it is comparable with Electric Sheep's WebFlock product: both are white label solutions and both require no additional plugins (unlike Lively). I would have thought, though, from looking at the technology preview, that Oddcast's solution will come in considerably below the six-figure price tag of WebFlock.

The service is easy to use, carefully avoiding user interface metaphors which users new to virtual worlds may not understand. Setup is extremely fast as well, vital if the platform is to be successful as a marketing tool, since it will have to be accessible to more than the ultra-tech-savvy or very determined.

Planet Cazmo, a virtual world aimed squarely at the KT&T market, has announced a content partnership with online poster retailer AllPosters.com. Under the agreement, Planet Cazmo's users will be able to decorate their virtual rooms on the service with virtual posters from AllPosters.com. The virtual posters are bought with Planet Cazmo's in-world currency, but users are also able to click through to purchase the real poster on AllPosters.com.

This is a textbook virtual content deal, following a model which has the potential to be highly successful. As Sibley Verbeck, CEO of Electric Sheep put it to me in an interview this summer, users are effectively paying to be advertised to. Users purchase virtual goods because they want to customise their experience in a virtual world, usually. Users also happen to buy real world posters because they want to customise their real rooms – a synergy between real and virtual which is so obvious that it is easily missed. It's a great deal for AllPosters.com because they get great advertising, and great for Planet Cazmo because it gives them access to far better brands for their virtual goods than they would have otherwise – the likes of Marvel and top music bands. It's worth remarking that AllPosters has done well to ensure that it has agreements with its content providers to enable them to redistribute content in this way.

"People of all ages are interested in creating a space that truly reflects their personal interests, and posters are a great way to make a space unique," said Mark Rupert, Senior Director of Merchandising for AllPosters.com. "We're excited with how Planet Cazmo has creatively integrated our world-class products into a virtual world, as a great way to introduce people to AllPosters.com's real-world assortment of over one million items, all at a great value."

Interactive entertainment firm 10VOX has announced the launch of two new virtual world properties aimed at the kids, teens and tweens (KT&T) market. The two properties, named KooKeys and Tracksters, are particularly notable because they are the latest example of an emerging trend in the virtual worlds industry to combine physical toys with virtual worlds.

KooKeys are soft toy animals which are purchased at retail. These then unlock a virtual world avatar. The user can then create a customise various aspects of the virtual world, including their home and clothes. There are also 'hundreds' of games, some of which are educational, to play in the world. As well as making money from selling the physical toy, 10VOX hopes to continue to monetise the product through microtransactions with the in-world currency 'KooKoins'. The KooKeys concept sounds very similar to that of WebKinz – also a soft toy which unlocks a virtual world avatar.

The second property announced today is Tracksters. It is broadly in the same vein as KooKeys, except with cars rather than toy animals as the focus. The virtual world is centred upon racing different cars which have been physically purchased. 10VOX have done a series of deals to offer real-world car brands, including Ford, Chevy and Shelby. It is probably reasonable to assume that Tracksters is aimed at boys, and KooKeys at girls. The most relevant competitor for Tracksters, therefore, is probably ROBOTGALAXY, which operates a similar model, but with customisable robots.

"10VOX is very excited to announce the launch of our first two toy and massively multiplayer online games for kids: KooKeys and Tracksters," said Alex Reece, 10VOX Entertainment partner. "The toy and online game hybrid category is the hottest segment in both the traditional toy and video game markets. At 10VOX, we have teamed up with toy industry veterans, top licensors and first rate video game developers to take this fast growing category to an entirely new level – by adding higher production values, deeper gameplay experiences, educational content and a more compelling pricing model for parents."

MDY has agreed to pay World of Warcraft operator Blizzard $6m in damages resulting from its MMOGlider product, pending appeal, reports Virtually Blind. MMOGlider (previously WoWGlider) was an automation program able to perform basic tasks on WoW without the need for any interaction from a player. It became popular as a means to solve the problem of 'grind' – performing repetitive, boring tasks in order to advance to higher levels or abilities. Blizzard's successes against developer MDY started coming in July of this year.

Blizzard had tried several lines of attack, but was most successful with the argument that MDY breached Blizzard's copyright in the operation of the program. In order to perform its task, MMOGlider copied WoW into RAM, which was apparently enough to breach copyright. Despite this agreement to pay damages, the legal wrangling is not yet over. Several other issues are still going to trial; according to Virtually Blind, the trial scheduled for 9^th January 2009 will look at issues including whether MMOGlider breached the DMCA, and whether MDY founder Michael Donnelly is personally liable for the damages, since it is very unlikely that MDY will have that money itself.

Blizzard will no doubt be pleased to have achieved significant success against MDY and MMOGlider, but it is arguable that it is a symptom of a wider problem. Grind is regarded by many as a necessary component of an MMO; it's what makes them addictive, because users have to keep playing them to advance. On the other hand, it means that an enormous time commitment is often required to do well in the game, and that much of the playing time is relatively boring. Several companies are looking at ways of solving the problem. One idea is to have a series of casual games, thus needing a lower time commitment, which are integrated together, making them a little more addictive. It will be interesting to see where innovation heads in this area.

Fatfoogoo has announced the appointment of Stevana Case as VP BizDev and Sales, North America. Fatfoogoo is a leading supplier of in-game ecommerce systems to third party developers. Most recently they announced that they would be providing the ecommerce for Sun Microsystems' Project Darkstar, an open-source virtual world and MMO development platform. That's a particularly significant deal, given the number of MMOs and virtual worlds which are powered by Darkstar, including Call of the Kings and Dark Frontiers.

Microtransactions are becoming increasingly important. They've been a business model which has been talked about since the earliest days of the internet, and many a doomed bubble company pinned its hopes on it. Now, though, they've been made to work in spectacular style. As Sibley Verbeck, CEO of Electric Sheep put it to me, users are now effectively prepared to pay to be advertised to. Sites like Stardoll, where users can purchase clothing for their virtual doll, are making a vast amount of money from microtransactions. The challenge now is to see if they can be rolled out on a wider scale. Adults have not shown quite as much enthusiasm as children for virtual goods to date, for example, and Fatfoogoo will certainly be looking to encourage that.

"Stevana is widely respected in the videogame industry with impressive experience as a professional gamer, designer, author and more," said Martin Herdina, co-founder and CEO, Fatfoogoo. "Her knowledge of the industry and deep passion for gaming is a winning combination for Fatfoogoo as we expand our business in North America." "I am excited to join Fatfoogoo; the team's experience with microtransactions and modular platforms will serve both developers and publishers nicely," said Case. "As a gamer, I love buying items and the complexity that microtransactions bring to the game experience. As a professional, I find Fatfoogoo's technology the most comprehensive offering on the market."

Nexon America has announced the commercial launch of its free-to-play PC MMO, Combat Arms, a first person shooter. Combat Arms had previously been in beta. Along with the launch announcement, Nexon has released several new features, the most notable of which is the introduction of paid-for items. The business model of Combat Arms is microtransactions, and in many ways this is a sensible decision; FPS lend themselves very well to the collecting of upgrades – weapons and armour being the obvious examples.

Several upgrades will be available for purchase on the 'Black Market'. These include mercenaries, which can be hired for a period of time to help in completing missions. Players will also be able to purchase 'fresh start' options to help in completing missions. Finally, it will be possible to purchase a statistical reset to enable a player to demonstrate their most recent abilities without the need to create a fresh account, losing all of their past successes.

Nexon needs these options to be appealing. The game is a full 3D downloaded game, which cannot have been particularly cheap to develop. There is no 'freemium' option, and so it is exclusively microtransactions which will be funding the game.

"Combat Arms had a great beta run, with players of all levels loving the fast-action FPS game play and in-game community features for ranking and challenging other players," said Min Kim, vice president of marketing for Nexon America. "With this launch, gamers now have access to additional play options that help the player stand out without compromising the fairness of play.

When one talks about an open source virtual worlds platform, OpenSim – the platform initially built by reverse engineering Second Life's open source viewer – is the first one which comes to mind. But there are others, and one of them is called realXtend. It is a Finnish project, a collaboration between consultants Global Connexus, developers ocraft Ltd., a dynamic games studio, and Admino Technologies Ltd., specialized in scalable server technologies. In addition, further involvement comes from the City of Oulu, Finland, Oulu Innovation and Nokia.

Today they have announced an ambitious project to make realXtend a key part of the real world operation of the town of Oulu, already something of a technology hub in Finland. One example they are give is to improve the education system, as part of their 'school of the future' project, but the implication is that they intend to use realXtend to fulfil other civic functions. This is a remarkable way for an open source virtual worlds project to come into being, essentially being driven by local government as a not-for-profit enterprise. This sort of vast partnership across many public and private institutions is not something which I could see happening with great ease in the UK, but it looks as though it could be a successful way to do things. The city of Oulu gets to have a custom virtual world platform, and to enhance its status as a technology hub, and the technology companies get money and a platform to build on in the future.

Nokia's involvement is also potentially interesting. In the future, it is obvious that mobile devices will be a crucial part of the way that users access virtual worlds, as graphics capabilities and network access speeds improve. The potential use cases for a mobile-accessible rich virtual world are innumerable, and it is probably a good sign for the industry that Nokia is getting involved in this space early on.

"Our strategy in Oulu is to support companies that combine technological expertise with cultural and artistic skills," said Matti Pennanen, Mayor, City of Oulu, Finland. "Interactive content and creative industries are a part of our future mission. The City of Oulu already provides free wireless internet access to citizens and visitors. With the creation of realXtend in Oulu, our region steps in the exciting frontier of virtual world technology."

Linden Lab has announced the appointment of Tom Hale as Chief Product Officer. Hale was most recently an Entrepreneur-in-Residence at Redpoint Ventures, 'investigating the intersections of gaming, virtual goods and virtual worlds, online communications, community and social networking'. Before that he was SVP and General Manager of the Knowledge Worker Business Unit at Adobe, in charge of products like Acrobat, as well as Adobe's expanding software-as-a-service activities. Apart from the obvious fact that Hale has strong experience at a high level of managing technology products, I think there is a more subtle reason that he was Linden's choice.

Linden Lab need to become a firm which makes money from technology standards it develops, rather than the product of those standards. In the light of OpenSim, and of the march towards interoperability, Linden Lab are looking beyond the situation where they are able to make money from the artificial scarcity of land in Second Life. Instead, they want to become a guarantor of virtual worlds infrastructure, to build a business from the mechanics of consumer virtual worlds rather than exclusively from running one. That's a model shared by Adobe with several products. Flash is one example – Flash is free to the end user, but costs the developer. Whilst that's not necessarily the model Linden will follow, the fundamental is the same: Adobe has to promote Flash as a standard, in the same way that Second Life has to promote its Second Life Grid if the business model is to survive. Another similar example is Acrobat, over which Hale had direct charge.

"Tom brings deep experience at every stage of the product lifecycle – from creating, launching and marketing great products to building large businesses around them," said Mark Kingdon, CEO, Linden Lab. "Second Life is made up of an unusually complex array of products, and few executives have the range required to craft and execute a product strategy for such a rich, vibrant and diverse experience. Tom does. He will play a pivotal role in taking Second Life to the next level and will be a great partner for me."

"Linden Lab has a tremendous opportunity to redefine the way people create, connect, play, work and learn," Hale said. "I'm incredibly excited to join a leadership team that can bring the future of social computing to a broad audience and build a great business."

In an interview with GamesIndustry.biz, Creative Director Kevin Hanna – who works at Google partner X Ray Kid – has talked more about Google's plans for opening up Lively. We reported earlier this month that Lively is looking to make developing for Lively much more accessible and powerful. At present, it is possible to place some Google Gadgets into a Lively environment. This would, for example, allow a user to insert a YouTube video into their Lively room. But according to Hanna, Google's plans go far beyond that. Initially, they are looking to make the 2D API more open – a plan revealed by Hanna at Austin GDC. This would allow, for example, a developer to embed a 2D game which they have developed into their environment. The use case given in the session was a virtual arcade, with a series of games embedded, which users could play together and watch each other playing.

It is, however, Google's plan to release a 3D API which is by far the more exciting. Hanna: "There is a longer term goal of opening up the API so the architecture of Lively could be used as an online games platform". This could help developers, particularly smaller operators, in several ways. If the Lively plugin could become a 'must-have' on a computer, like Flash is today, then that removes a barrier to adoption straight away – there is no need to persuade a potential user to download a new piece of software to their computer in order to play your game. In the 3D game space, no such widely used standard exists today.

An open Lively could also lower the operating costs for a game developer, if Lively hosts the infrastructure. Gone would be the need for an MMO to operate its own servers. It may be that Google would introduce some sort of pay model for this infrastructure, along the lines of its App Engine for conventional web apps, but that would surely be easier for the smaller developer than purchasing and running its own equipment. Finally, it could make development much faster. It may be possible for the Lively platform to accelerate development by providing a series of shortcuts to a rich 3D experience. It is unclear how this would work at the moment, but one could envisage the option to use a standard avatar, for example, which could then be controlled using simple commands, rather than having to design an avatar from scratch. As Hanna says, "[the corporate mentality of the games industry is] sucking the life out of what should be the most creative and innovative medium out there, and I hope that this inspires those same 'passionate start-ups' and kids in college to actually go and produce games where they don't have to worry about the visual bar or the accessibility, because those things are already pre-established."

To hear more on Google's plans for Lively, come and hear their Director of 3D, Mel Guymon, at the Virtual Worlds Forum in London this time next week (6^th and 7^th October). Guymon's giving a keynote that promises to provide a fascinating insight into the activities of one of the world's biggest internet companies into the virtual worlds space.

Are virtual worlds a place or a tool? That's a question which is, I think, increasingly being asked by the virtual worlds industry but to which few firm answers have yet emerged. On the one hand, a virtual world can be regarded as a very real place which just happens to lack a physical existence. One might see Second Life, for example, as interesting because of its otherness from the real world, because of the possibilities opened up by a more flexible location with space for alternative culture and commerce to emerge. On the other, a virtual world can be regarded as a tool to help complete a real world activity more effectively. Coming from this view, Second Life becomes a tool to keep in touch with friends (whether met in real life or on the internet) or to conduct real world business meetings virtually, for example.

I hope the distinction which I am attempting to draw between the two does not seem nonsensical or false. I believe the fundamental debate comes down to this: is a virtual world actually just a tool of the real world, or is there an important sense of 'otherness' about it which means that it makes more sense to regard it as something akin to a parallel universe?

To try and come up with an answer, I think it helps to use an analogy. The first option – the virtual world as a 'tool' viewpoint – corresponds to a supermarket. You visit a supermarket to accomplish a specific task, namely to buy food. It might be a place, but it is acting as a tool. The second option – the 'place' viewpoint – corresponds to a tourist destination, perhaps the beach. One might go on holiday to a beach resort to relax, or to have fun, but they are only expected benefits of a general desire to go to the beach. It isn't about pleasure; tools can be as fun as places. Facebook, I would suggest, is better described as a tool rather than a destination. It is a utility with which to keep in touch with friends.

So why does this matter? Because depending on how virtual worlds are regarded, strategy (particularly development and marketing) needs to change. My view is that virtual worlds of both types exist, and some are both. Second Life is an example of a virtual world which is both a tool and a place. I would argue, however, that the sense of place is over emphasised. The introduction of innovations such as SLiM (Second Life Instant Messaging), a piece of software which allows a user to communicate over Second Life moves in the right direction, but there is a way to go yet. At the moment, it is still too hard to explain to a consumer why they should join Second Life. Think about how you would persuade someone who knows nothing about virtual worlds that to use Second Life isn't a bizarre waste of time – a surprisingly difficult task. A clarity of purpose is brought about once you view a virtual world as a tool, which in turn makes it easier to market to new users effectively.

The inaugural issue of Landslide, a journal for the Intellectual Property Law Section of the American Bar Association, has a cover story on virtual world law, co-written by Benjamin Duranske (of excellent virtual world law blog Virtually Blind) and Sean Kane. The article is available in full online as a PDF, which is lucky, because it is a superb introduction to some of the very complex legal issues. The focus on US law rather than other jurisdictions is hardly a surprise (or a point of criticism), but it does mean that European readers will need to remember there's an extra dimension to their legal situation. Nevertheless, the US is the dominant market in virtual worlds and MMOs, and so their law is important to everyone in the industry.

The article is extremely comprehensive. It covers areas including the management of a virtual economy, the importance and limitations of EULAs, trademark and copyright law, the enforcement of intellectual property rights and the difficulties in a future environment of interoperable virtual worlds for effective enforcement.

The authors also take a look into the uncertain future of virtual worlds law. It is uncertain because virtual worlds occupy an uncomfortable middle ground. They are not so different from the real world that no laws apply – intellectual property laws are an example of laws which are highly relevant to virtual worlds. Yet they are too new for there to be significant precedent, let alone legislation, which specifically relates to the application of those laws. The authors conclude: "The problems and legal issues involved in the virtual world are very complicated and still in a nascent stage. They cover the gambit from IP issues and contract law to the First Amendment. Only time will tell as to how courts will adjudicate these issues. However, the impact of such decisions will need to be considered and taken seriously, for they will likely have wide-reaching ramifications."

Mythic, the EA studio which has created Warhammer Online, has announced that over 500,000 user accounts have been created for Warhammer Online in the first week since launch. As the triumphant announcement states, "EA's most highly pre-ordered PC title, WAR has now become the fastest-selling new MMO of all time." This is a powerful vindication of EA's strategy of using an already highly recognisable brand for their MMO, rather than creating one from scratch. Perhaps more important, though, is that World of Warcraft's position at the top of the 3D MMO tree is not looking nearly as strong as it was a week ago.

According to one analyst's speculation, EA's bottom-end target for Warhammer is 250,000 subscriptions once numbers have stabilised. Whilst there's no guarantees that the half a million users already signed up will stay, that figure is arguably looking fairly achievable. At launch, 1.5 million retail boxes were shipped, reflecting strong demand for the game. It's just possible, though, that such good growth isn't at all sustainable and that there will be a very fast drop off in the number of subscriptions. We know that there are fanatical fans of the original Warhammer tabletop games, and I have always argued that the demographic which most of these fans come from – young men – made it a good choice for an MMO title. It may be, though, that these fans have already bought the game, and that the next 500,000 users are going to have to come from those not as familiar with the brand – something that may be a much harder sell. Nevertheless, for the moment it appears that WAR is a superb success for EA.

"In just one week we have a half a million people playing WAR online, and the ranks of Order and Destruction are growing at a record-breaking pace for a new MMORPG," said Mark Jacobs, co-founder and general manager of Mythic Entertainment. "We spent years working to provide players with the most stable, epic, and polished online world we could, but it is the players that have truly brought the Age of Reckoning to life."

Virtual Worlds Forum Europe - with ten days to go and looking great I just thought I'd give you an update of where we are with the event, expo and party nights...

So what've we got?

Well, hundreds of people signed up to the best virtual worlds show in London, 100+ speakers, great keynotes from EA, Jagex (who you hardly ever see speak), lots of cool sponsors and exhibitors. And great networking.

We like to party, and we know our delegates do, so you get a four day pass to the Hospital Club, the private members club for the creative industries, PLUS opening night party hosted by our friends at SXSW (you have to register quick to get on the guest list for that) and closing night party hosted by Sony Playstation. It's a party week.

And all delegates get three great benefits when they sign up - apart from the Hospital Club pass you get a 3 month subscription to FT.com, plus a complimentary copy of a in-depth Gartner Research report.

We've quite some press list, so you'll get to read all about it, but if you're into the business aspects of virtual worlds and online games, we're the place to be.

E-commerce payments firm Smart Voucher, which operates under the Ukash brand, has announced a multi-million pound round of financing. Gold Label Investments, a subsidiary of South Africa-based Blue Label Telecoms, is to purchase a 17.25% stake in the company, and DataCash is to purchase a 16.66% stake after three years, for approximately $7.08m.

Ukash offers many different services, but their key offering is the ability to indirectly pay by cash online. A customer can go into a participating shop and pay cash. They will then receive a code which can then be given to an online retailer or service provider as payment. The code replaces the cash. The key advantages of the Ukash system, they claim, are that it is instantaneous (with no need to wait for a card to arrive or the payment to clear) and that it does not require registration. In some markets Ukash will also work via mobile.

Ukash counts many virtual worlds among its clients. The reason is simple: worlds such as Habbo Hotel and Stardoll want to be able to enter into transactions with children. Children, however, are unable to have their own credit card. There is therefore a need to find a way for them to purchase services online if a subscription or microtransaction business model is to be deployed with any success.

Girls say they are spending more time on entertainment related activities than last year, according to a recent report from market research firm NPD. In addition, digital activities and particularly virtual worlds are forming an ever-increasing part in girls' play. The survey asked 1,541 American mothers about their daughters' activities, with the mothers asked to have their daughters (all aged 2-14) present when they completed the survey.

It isn't news to anyone that the female tween demographic is crucial to the industry. Virtual worlds like Barbie Girl, which owner Mattel claims is the fastest growing virtual world ever (with 13 million users according to figures released in June), are squarely targeted at such girls, and have achieved phenomenal success. It is, however, reassuring to have research which indicates that the size of the market is growing – more and more kids are choosing to play online, making growth more sustainable than if it were simply a question of winning users off competitors.

What is interesting about this study is that it reaffirms a growing realisation within the virtual worlds industry: that real world, traditional play remains important to children. "Some very traditional play patterns still are the most popular among girls, even in this digital age," said Anita Frazier, industry analyst, The NPD Group. "Over 50 percent of girls ages 2-14 engage with dolls, plush, and arts & crafts in a given week which is a testament to the evergreen nature of these types of activities for girls." It's this which is behind attempts like WebKinz to fuse real and virtual world play. Customers purchase WebKinz soft toys which can then be activated as an avatar in a virtual world. If virtual worlds can be linked successfully to real world play, they would become more relevant to more children, because they would tap into traditional expectations of how one should play. This in turn could make it easier to attract previously non-gamer children to virtual worlds and MMOs.

Microsoft's Ensemble studio were in the process of developing an MMO to form part of the Halo franchise, before work stopped when it was revealed that the studio would close following the completion of Halo Wars, according to a report in Gamasutra. Rumours of the project have been around since 2006, and it would appear that the title has been in development since then. The cancellation of the project seems to have occurred at some point in 2007; Gamasutra cites a blog post from Ensemble's Bruce Shelley, which states that Ensemble had "set up three prototype teams out of the staff of a major project that we cancelled. After six months of very interesting work, we have now stopped two of those prototypes, with one getting more time to demonstrate the value of its concept."

A Halo MMO would certainly have been interesting. The franchise has been massively successful for Microsoft (which owns the IP). The FPS genre of the game could potentially have lent itself well to an MMO adaptation, with the introduction of teams, for example. Xbox Live – the online component to the Xbox experience – is also thriving, which could have provided a useful infrastructure and pre-built userbase for a Halo MMO. Nevertheless, the development of good 3D MMOs costs a vast amount of money, and it may be that Microsoft and Ensemble no longer had the resources to produce a game which would have a good chance of success.

An analyst with Stern Agee has told Edge Magazine that he believes that the number of Warhammer Online – Age of Reckoning (WAR) subscribers will settle at around 250,000, with peaks following the release of future expansion packs. WAR, which has just been released by EA's Mythic studio, is positioned as a head on competitor to WoW. There has been a vast amount of hype around the game, hence the considerable interest as to how successful the game will be.

The analyst, Arvind Bhatia, suggests that his 250,000 figure is in line with EA's expectations for the game; the gaming giant hopes to break even. Further, it was recently reported that EA had shipped 1.5 million boxes. Bhatia: "Based on our estimates for sell through, it would require about 20 percent to 25 percent of the purchasers to remain long term subscribers--which we believe is achievable".

This is only the latest part in a debate over how many users WAR will attract. Just last week, we reported that Paul Barnett, Creative Director of Warhammer Online, had placed a bet of $27 on there being 1m subs by the end of the first year, eventually rising to 3m. It's incredibly difficult to work out which of the two wildly varying estimates is accurate. Now the game is out in the wild, the most important factor in its success will be simply how good it is. It has enjoyed a significant hype period, perhaps because of the pre-existing popularity of the Warhammer brand, notably among a demographic who are more likely than others to be MMO players. The question now is whether Warhammer Online can live up to high expectations and perhaps even usurp WoW's position at the head of the MMORPG table.

The Swedish developer of virtual world Interactive City, ICYou, has announced a partnership with e-commerce content personalisation technology provider magnify360. Under the terms of the deal, magnify360 will provide technology to enable the personalisation of the shopping experience within Interactive City, which launched in Sweden last year and hopes to become available globally in 2009.

Interactive City appears to be built around the shopping use case, although for real as well as virtual goods. The link between the real world and the virtual Interactive City world is strongly emphasised. ICYou intends to create a series of institutions and laws within Interactive City to make doing business there as close to the real world as possible (presumably both in terms of having a relatively ordered economy and lots of red tape!). They also boast, for example, that Interactive City will support the sale of real as well as virtual real estate. The emphasis also filters through to the user experience, with ICYou claiming that users will be able to create an avatar in their own image, with the same measurements.

A further notable point about Interactive City is that they are eschewing conventional practice with how one becomes a member. A 2D version, including shopping features, will be available on the web. However, if a user wants to experience the full virtual world in 3D then he or she must buy an apartment for a minimum of 50EUR. On the one hand, I would be surprised if there were many who would be prepared to pay an upfront fee to even join a virtual world, and if the majority of its users are using the 2D version of the service, how does it differ from other shopping websites? However, the hybrid 2D-3D approach may have some merit in bringing the service to a wider audience, and the emphasis on real estate would certainly prove lucrative if users could be persuaded to join.

Trion World Network, developer and publisher of games, has announced that it has raised $70m in a Series C round, bringing total investment in the firm to date to over $100m. This latest round was led by a 'global financial institution' and Act II Capital, and included further investment from all previous investors, including Time Warner and a slew of other big names. Trion has announced two games in development, both of which are MMOs. One of these is a fantasy game: "Gamers will enter a seamless, persistent fantasy world, where they will significantly affect the gameplay experience through dynamic events. Battles of enormous scale will create epic moments that an unprecedented number of players can participate in." The second is an MMO to be developed in partnership with the US SCI FI channel, operated by NBC Universal.

It is difficult to gauge how successful Trion might be given that only sketchy details of their games exist. Nevertheless, they seem to have been very good at getting major deals, and the founders have a serious track record in the industry, including Lars Buttler, former VP Global Online at EA.

"Trion is set to redefine today's electronic entertainment sector through its ability to develop compelling broadband-connected games, innovative entertainment content and strong business relationships like its co-development deal with the SCI FI Channel," said Tom Byrne, managing director and group head of one of Trion's investors, Peacock Equity. "We are focused on gaming as an attractive space and are pleased to deepen our relationship with Trion as they bring together the best of gaming, the Web and television."

UK-based platform developer Monumental has received £300,000 from the Technology Strategy Board for the development of its middleware solution, Monumental Technology Suite. The £300,000 is part of a total of £700,000 funding for the project, which aims to make the suite 'accessible to all', and include the option for a browser-compatible development route. The project hopes to reach commercialisation within two years.

Monumental is the lead partner in a consortium which has received funding to do the work. The Academic Partner in the consortium is Staffordshire University, which will be doing some of the necessary research work. Staffordshire University is also, appropriately, launching the UK's first courses in Multiplayer Online Game Design & Programming. The Technology Strategy Board is a non-departmental public body, meaning that it is effectively part of the UK government. It is certainly good to see the government providing support for the research to improve the UK's competitive position in the MMO and virtual world industry – certainly a space in which we could hope to come a good second place in, behind the US. The way that this research has been tied to a specific commercial outcome in a clear time frame also hopefully gives it a greater chance of its findings being valuable to the industry.

Project Chairman Rocco Loscalzo (CTO of Monumental) praised the approach of the Technology Strategy Board. "This is the first year that the Technology Strategy Board has invited applications from the Creative Industries, and it is encouraging to see recognition for the contribution made by such industries to the UK economy. This award for Collaborative Research and Development has enabled us to kick-start a commercially viable but inherently high-risk project, and we can't wait to get going with our partners."

In a recent conference call with analysts, Blizzard revealed that World of Warcraft has cost $200m in operating costs since its launch in 2004, reports Kotaku. It is understood that the figure of $200m does not include original development costs, but it does include everything else: staff costs, hardware purchase and support costs and customer support, to name but a few. $200m is certainly a vast figure – one that would simply be unsustainable by all but a few of the most popular games. Nevertheless, given WoW's vast user base, all of whom pay, it is perhaps lower than might be expected.

It is difficult to come up with accurate estimates for how much WoW takes in revenue per month. However, even if one takes a conservative estimate of $75m per month, that is $900m a year. Suddenly the economics of WoW start to look rather more healthy, even when one takes into account the development costs on top of that (which are unknown, but must be substantial).

It is perhaps difficult to see, in the light of such figures, why there is any doubt over the future viability of the subscription model, with a slew of startups attempting to find ways to make the free model work. Yet WoW's apparent cash machine is not one which will ever be available to more than a very few of the most popular games. The development and running costs to provide a rich 3D game such as WoW to a high quality are so high that they require huge user numbers in order to be a success. At present, there simply aren't enough players of MMOs to make an even moderately fragmented market viable. That's why the free model starts to be attractive; if development costs can be lowered to the right level, then the game can be made available for free, massively widening the size of the potential market.

US MMO publisher OGPlanet has announced the launch of OGPlanet, its new 2D MMO. La Tale has been in closed beta since late July, and had previously been on full release in Korea. OGPlanet – which also completed a funding round in July, lead by DFJ Athena – essentially imports games from the Korean market to the US. La Tale, however, is to be released on a wider scale than OGPlanet's previous games, and will be available in every country which does not already have a local version.

The description of the game: "La Tale's whimsical art style and detailed 2D worlds bring a lighthearted touch to the MMORPG genre, and have won it a large following in Asia. Simple gameplay and intuitive quests make La Tale accessible for players of all ages, while the immersive storyline with a variety of characters, enemies, and challenges keep the game intriguing. Like all of OGPlanet's massively multiplayer games, La Tale is completely free to play, with optional micro-transaction items purchasable in the OGPlanet shop."

La Tale appears to be mainly targeted at younger people, through the style of the artwork (anime) and the language used on the website. It's therefore entering a crowded, but big, market of MMORPGs, and will have to work hard to prove itself distinctive. Anime – the cartoon style very popular in countries such as Japan and Korea – is building up an ever-increasing fan base in the west, and this game may well appeal to them. It is also 2D, meaning that it will presumably operate on much lower spec computers, and have a more casual feel to it than the immersive 3D environments of, for example, World of Warcraft and Warhammer Online.

"La Tale is a perfect addition to our portfolio of multiplayer games and a great first step into the international market," said Ross Park, the producer of La Tale. "The depth of the La Tale world, with its diverse environments, charming characters and engaging gameplay, will please OGPlanet fans old and new."

Metaversum is to launch mirror environments of London and Singapore onto its virtual world Twinity, according to AsiaOne. They will join the replica of Berlin, which has been available since mid-July. The two new environments will be online by the end of the year. Like the existing Berlin environment, users will be able to rent or buy apartments and customise them. Metaversum's business is charging a subscription for the right to set up a virtual shop, which can be used to sell virtual goods.

I think the mirror world concept could do very well. It is an easier concept to grasp than other worlds, such as Second Life, which are further divorced from reality. This means that users are more likely to sign up – city residents to inhabit and see the virtual equivalent of their city, and tourists to get to know the city without travelling there. Advertisers are also likely to be more attracted to it. First, it is more of a known quantity: the environment is likely to be smart. Second (and perhaps more important) is that there is the possibility for a stronger connection between a virtual business and the real world equivalent. It is one thing for a clothing brand to sell virtual versions of their wares in a virtual shop, but it is surely more attractive to do it in an exact replica of the real world shop.

In the 'Naked CIO' column at Silicon.com, the author claims that virtual worlds will never be adopted by enterprise. The piece suggests that, despite the promise of easier communication and collaboration which virtual worlds bring, they will never be adopted on a wide scale by business because they are gimmicky and run contrary to the technophobic tendencies of many business leaders. Needless to say, that's not an opinion that we at Virtual Worlds Forum share!

The charge that virtual worlds are really gimmicks is one which is easily dealt with. The adoption of new technologies by business has always been about whether they bring real benefit, and so the author is certainly right to point out that if virtual worlds were gimmicks, they would find a place in the CIO toolkit. However, they potentially provide real benefits. As the author asks, "Wouldn't it be great if problems could be solved in real-time by people in different buildings, departments and geographic locations in a seamless and collaborative manner?" Yes, it would. Virtual worlds can make communication easier, more meaningful and, crucially, cheaper, since fewer real-world meetings are needed. VWs present, for example, a real improvement on the traditional busy conference call. You can see a physical representation of the other callers, splitting into different conversations if necessary, seeing when a caller wishes to say something – all through a (mostly) intuitive interface. There might be some gimmicks with virtual worlds, but the core proposition to enterprise is surely valuable.

The suggestion that virtual worlds will not be adopted because of technophobic business leaders seems strong but is, I think, easily disputed. Sure, not many CEOs or even CIOs of large corporations are avid users of Second Life (or any other virtual world for that matter), and neither are many of their employees. But the same could be said of email and the web when they were in the equivalent stage of their adoption cycle. Blackberries provide a real business benefit, and so even the most technophobic businesspeople have found a way to use them. The task now is for virtual worlds to demonstrate conclusively that they can do the same.

Hollywood Interactive has announced that it has raised a $5m Series A round to fund the development of their forthcoming online game, MyHollywood.com. The round was led by Silicon Valley-based firm BlueRun ventures. MyHollywood.com is a game targeted at 18-34 women (certainly an underserved market by the gaming industry). It is based around the celebrity world of Hollywood. The centrepiece to the game is the MMO 'Red Carpet Game', in which users have to achieve ever higher levels of celebrity. Players earn their avatar points by playing celebrity-themed mini-games, answering quizzes about celebrities and recent news, and by persuading others to join the game. Points allow users to move up a level, or to purchase virtual items and move into special VIP-only areas. Given that virtual goods are involved, it seems likely that microtransactions will form a key part of the business model.

It is an interesting idea that may well go far. People love celebrities, and much of that love is (I suspect) fuelled by aspiration. It therefore makes perfect sense to allow users to role-play as celebrities. My only concern is that the target demographic is not one currently familiar on a wide scale with online gaming and MMOs. On the one hand, that means there is little competition, but on the other, there will need to be a lot of user education of the game is to gain traction. It is also worth admiring their superb domain name.

"With MyHollywood.com, Hollywood Interactive Group will entice their female audience by empowering them to collect virtual items and elevate their in-game status by doing the things they already love: participating in social groups and forums, reading entertainment news, playing casual mini-games and virtually shopping for their favorite high-fashion items," said Jonathan Ebinger, Partner of BlueRun Ventures. "Hollywood Interactive Group is a great complement to our Media and Internet portfolio."

Teen virtual world Habbo is to hold a 'Global Peace Gathering' in support of the UN International Day of Peace on Sunday 21^st September. The event is being held in association with War Child, a charity which protects children who become victims of war. Seven victims of war being supported by War Child will also take part in the event, sharing their experiences. In addition to the event itself, a poll was commissioned to investigate teenagers' attitudes to war. UK teenagers are particularly pessimistic, with 56% believing that they will see a third World War in their lifetimes. "Teens around the world are passionate about serious subjects and they are using new communication tools, such as virtual worlds and social networks, to make their voices heard", said Phil Guest, Habbo Regional Director.

This is another example of new communications tools being used to unite people behind a cause. First there were pamphlets, then blogs, then virtual worlds (with a few media in between). Second Lifers proved just how effective virtual worlds can be at achieving something when they raised a vast sum of money through a virtual run for cancer earlier this year. This Habbo initiative isn't quite as exciting because it comes from the top – the company – rather than the users themselves, but it is nevertheless worth looking at. On the part of War Child, this is extremely clever campaigning, directly reaching a demographic which should be their most enthusiastic supporters but which are often hard to get inspired to support a moral cause below university age. Other charities focussed on young people, perhaps such as the NSPCC, would do well to observe how successful this initiative is. Of course, it is entirely possible that none of Habbo's users will turn up, in which case charities may have to think again about how to engage with young people successfully.

In an interview with VentureBeat, Second Life CEO Mark Kingdon has discussed some of Second Life's options for making it easier for non-users to try it out, perhaps including the idea of a 'visa' which does not require full signup. VentureBeat asked: 'will you do a visa', and Kingdon replied 'we are thinking about the best way to do it'. Kingdon has talked before about his perception of the need to improve the new-user experience to Second Life, making it easier to signup, download and use the client, and become established in the world. The form which such a 'visa' would take is unclear, but if it were to be introduced, it would be part of a much wider programme of changes already introduced to help encourage new users.

Over the summer, Linden cut the length of the signup form from seven pages to one. Kingdon: "That really boosted the completion rate starting in early July. That's paying off now in concurrent users, we believe." Indeed, we reported at the end of August that a new record in concurrent users had been reached, finally rising above the plateau which had existed since March. However, to some extent the registration process for Second Life was never the main problem; it was the experience once one entered the world. New users were (and still are) landed on a special island to set up and customise their avatar. Nowhere in sight is the wonderful culture and commerce which probably persuaded the user to sign up in the first place. That was compounded by a viewer with a tricky user interface. The latter has now been addressed to some extent, with a new, easier to use design, with more changes coming over the next year according to Kingdon. The recent introduction of SLiM, a light-weight instant messaging and VoIP tool allowing communication with Second Life users without the need to enter the 3D environment, is also likely to help.

I am encouraged by Kingdon's apparent understanding of why Second Life isn't mainstream. The user experience will be absolutely crucial. Virtual worlds are still an alien concept to the vast majority of Second Life's target demographic of adults, and the transition into the metaverse must therefore be as easy as possible if the users are to stay. However, there are probably other factors in SL's slow growth. It still lacks a purpose which is easily explained to those not familiar with virtual worlds. It is easy to say 'join Facebook so that we can stay in touch easily', but I cannot think of such a phrase which would provide as compelling a use case for Second Life. Enterprise will help with that, as well as the users of kids virtual worlds literally growing up, but I think that Linden Lab could do more to develop such clarity of purpose.

Virtual worlds consultancy K Zero has published the latest update to their Universe Graphs, which are a series of graphical representations of the main players in the industry (those with over a million accounts). The graphs are a superb way to get a fast overview of activity in the virtual worlds space. Each product is plotted as a circle on the graph. The graph represents a series of key facts digitally. You can tell at a glance the target age group of a game, when it was launched, whether it has launched or is in private beta and how many users it has (the size of their dot).

One of the great features of the graph is that it becomes possible to literally see gaps in the market; if there is a specific age group which is under served and does not even have a private beta world targeting it, for example, maybe that group would be the one to target. It is also very useful at this stage in the development of the industry to have an overview which can give basic information on the products out there; at the moment, the number of virtual worlds with over 1 million users is low enough to allow all of them to be shown on a graph.

Paul Barnett, Creative Director of Warhammer Online, has revealed that he has money on Warhammer Online – the MMO which is in the process of release – reaching 1 million subscribers in the first year. Whilst he is at pains to point out that this is not an official EA or Mythic target, Barnett explains that in a staff pool, he has predicted that Warhammer will have 1 million subscribers by the end of the first year, eventually rising to 3 million. He stands to win the princely sum of $27 if proved correct. Rather more solid numbers were announced recently, with EA having shipped 1.5 million retail boxes of the game. Even if all of those boxes sell and the retention rate is exceptional, Barnett's stake does not look particularly safe.

I've written before about my belief that Warhammer Online has the potential to really cut into WoW's market. In particular, its established brand power with the key demographic of young males stands it in good stead to win many fans early on (provided that the game itself is good, which initial reviews appear to suggest that it is). It's clear that beating WoW is at the forefront of Barnett's mind as well. Asked how he would persuade a long-term WoW user to swap to Warhammer, he compared WoW to Blackpool: "I really like Blackpool, it's marvellous. Got a tower, you know. They sell fish and chips and it's got a golden mile, a whole mile of things to do," he began. "But you know what, I went on holiday to Blackpool 17 years in a row. Sometimes you just want to go to Vegas." The patronising sarcasm is refreshing from a senior executive, and I think it indicates a relish for the fight with WoW. Much of the MMO industry at the moment is focussing on how to find a business model around WoW, whether through free-to-play or casual games, for example, but it is surely a good thing that there remain a few prepared to wage war against the incumbent head on.

GamesIndustry.biz reports on the Lively session at Austin's GDC, in which Google revealed a couple of interesting plans. Google's intention to open up Lively to all game developers, beyond its programme which is currently restricted to 120, was confirmed. Whilst it is currently possible to embed a Google Gadget into a Lively environment, such as a YouTube video, there is very limited scope for interactive development. That is set to change, with creative director Kevin Hanna stating that an API for interactive gadgets is on the way. He gave the example of a virtual arcade, in which a user could stand over the shoulder of another watching them play a game. The game and arcade could be developed entirely by a third party. The intention is for this 2D API to eventually expand to full 3D capabilities, at which point it would become very exciting. One implication is that developers could directly reach an audience, without the need to go through a publisher. Another is that, if done right, ongoing costs would be significantly lower because Lively would handle the infrastructure load.

Hanna also confirmed that Google had no intention of creating a currency for itself, or of monetising Lively directly through microtransactions. They will, however, facilitate peer-to-peer microtransactions between users and developers. That comes as no surprise to me. It seems highly likely that Lively will be almost exclusively an advertising play, in the same way that the majority of Google's other products (and virtually all of their consumer-facing products) are. 3D advertising is going to be huge, and if Google can get people onto its platform, it has a highly scalable, high-margin revenue stream. Microtransactions are a different ball game because they require Google to become a content business, which it isn't. Google would far rather act as a link between the user and a content business, making money from sitting in the middle. Search is a perfect example of Google in this role. That's why they are building the peer-to-peer transaction system – because Lively's success or failure will depend on whether they can get companies to build content for it, and microtransactions will be the business model for many of those companies.

It's now about three weeks until the Virtual Worlds Forum in London, on the 6^th-8^th of October –the annual conference extravaganza put on by the Virtual Economic Forum. Today we're pleased to announce new speakers and sponsors. John Burns, Senior Director of Online Publishing, will be giving a keynote. EA is extremely active in the MMO space, most notably with the imminent release of Warhammer Online, so it will be fascinating to hear what he has to say. He joins a superb line-up of speakers. Other keynote speakers include: Mel Guymon, Director of 3D at Google; Craig Sherman, CEO of Gaia Online and Geoff Iddison, CEO of Jagex (developers of Runescape).

We're also really grateful for the support of so many leading firms in the industry. For an event like Virtual Worlds Forum to work, it needs to have cross-industry support, and I think the sponsorships show just that. The sponsors announced today include: IBM, Unity3D, Linden Lab and Sony Computer Entertainment Europe. Support has also been confirmed by Freggers, a flash-based virtual world; Second Interest, a full-service virtual worlds agency; Daesign, a video-game based interactive training solutions and serious games provider; Paynova, the worldwide payments service for MMOG's and virtual worlds; Testronic Laboratories, specialists in multi-media quality assurance; Outso, who design, create and implement 3D real-time interactive environments; and Sloog, a specialist on tagging the New World. All in addition to already signed up sponsors Disney, sMeet, Entropia Universe, Forterra, Habbo Hotel, Fatfoogoo, Parature, Iovation, Twinity and Yogurt.

If you haven't bought your ticket yet, it's time to hurry over to the site to book your place. There are generous discounts available, including for smaller companies, freelancers, academics, government and not for profits. If you're still wavering, we have three fantastic registration benefits. You will get a free three-month online subscription to the Financial Times, a Gartner Research report ('Virtual Words: The Grand Challenges') and a four-day pass to the Hospital Club, a private members club for those in the creative industries.

Rocketon, a virtual world currently in private alpha, has launched a number of new features. Rocketon is a virtual world which exists on top of the 2D web; third party websites effectively form the 'landscape' of the virtual world. Users might watch a YouTube video together, or play one of Rocketon's games, or simply visit different pages. In all other respects, Rocketon is very similar to other virtual worlds targeted at young people, with cartoonish avatars, online activities and microtransactions.

The new features were announced in an email sent out to private alpha testers. Broadly speaking they can be divided into two main areas. The first is those features designed to increase activity on the service. 'Quests' have been introduced, where users may stumble across clues to solve a puzzle, with rewards for success. Rocketon is also taking a leaf out of Pokemon's book with 'Monster fights'. Users can grow their own Monster pet, and then battle it against others. Related to that are pranks; users are now able to, for example, cover other avatars in slime. These all provide more to do on Rocketon – something that was much needed, since web browsing is not exciting enough by itself to encourage users to take part in Rocketon.

The other aspect of the service which was improved today were the social features. Most significantly, Rocketon now enables users to create personal rooms. These effectively aggregate their content from around the web, including pictures from Flickr and videos from YouTube. In addition, profile pages are now available. This is important to create a sense of community in what is essentially a decentralised network. The risk is always that users simply can't find other users to interact with, and these features go some way towards addressing that.

Virtually Blind has turned up a patent owned by Philip Rosedale (Linden Lab founder) since 2006, recently transferred to Linden Lab. The patent is for a whole-body force-feedback device designed to allow a far more immersive experience with a virtual world than is presently possible. An extract from the patent: 'An input and feedback system for use with simulator devices immobilizes a portion of the user's body using a securement device which holds the immobilized portion in a fixed position. [...] Such immobilizing devices may be used to allow input and feedback based on the motion of various parts of the user's body, such as the head, arms, legs, and torso.'

On the one hand, this isn't particularly interesting. Such devices are so early in the technology cycle that they aren't going to be a reality outside the academic world for many years, on account both of their current technological limitations and cost. The patent isn't exactly a technological breakthrough either. However, I think the need for better interfaces is sometimes the elephant in the room with virtual worlds. Everyone knows that the user experience of virtual worlds is far from perfect at the moment.

Apart from difficulties with interfaces such as that of Second Life, which perhaps may be fixed in the shorter term, the reason which user experience doesn't receive as much attention as it needs to in the industry is because the solutions are so far away. So called 3D worlds obviously aren't actually 3D – they are shown in 2D. Using a mouse or a keyboard to move an avatar on the screen is doesn't feel like it is the best that can be done. Despite efforts to make VWs and MMOs as immersive as possible, there is still a clear disconnect between the real user and the avatar; the user doesn't feel that the avatar is them. These are hard problems to solve, and I don't for a minute criticise the industry for not having solved them yet. I do, however, think it is worth remembering that ultimately, the interfaces we are currently using to access virtual worlds and MMOs will fall by the wayside.

Online games technology firm Simutronics (a company which has been around since 1987) has announced the next version of its HeroEngine. HeroEngine is a platform designed to assist in all stages of the MMO and virtual worlds cycle, in development, deployment and subsequent maintenance.

The key aim of the new features is to reduce operating costs for MMOs and virtual worlds. The features include automatic data replication, object spatial awareness and bandwidth shaping systems. This is a series platform which is intended to reduce some of the monumental challenges MMOs face, given they have to be usable by many thousands of people simultaneously and require vast processing power, on both the client and server sides.

There are also additions to the development capabilities of the platform. These include new weather features, such as clouds or lightening, and the ability to move data between virtual worlds without the need to shut the virtual worlds down.

HeroEngine counts some major studios among its clients, including EA's BioWare and Zenimax Online. According to Simutronics CEO and HeroEngine Architect David Whatley, "Teams that use HeroEngine can develop their MMO games and virtual worlds faster than ever before with our unique realtime and collaborative features, and reduce their operating costs with fine grained control over exactly what data is communicated between servers and clients."

Toy robot company ROBOTGALAXY has raised $5m to fuel its expansion online with its forthcoming MMO. ROBOTGALAXY currently operates rather like Build-a-Bear, but targeted at boys. Customers can go into their retail store and build their own robot from thousands of different combinations, before naming and programming it. In addition to the two retail stores, one in New Jersey and the other in New York, USA, they publish a quarterly comic book series. The company wants to take its concept online to create an MMO in which users can control a virtual version of their real world robots, and it is for this which the funding will be mostly used for.

The concept sounds a good one. Boys love to build robots, with the success of Lego’s Mindstorm product serving as a good example. They also love to play online games, so combining the two seems sensible. Beyond that, the idea of combining real world products with their virtual equivalent is fascinating. Something similar, but obviously targeted at a different audience, is being attempted by WebKinz, which allows children to purchase a real-world soft toy which comes with a code to activate a virtual world equivalent, which then becomes an avatar. Only yesterday, I strongly agreed with a post from Nic Mitham, CEO of K Zero, arguing that combining real world and virtual world play is a key way in which the industry will be able to drive adoption beyond kids currently using virtual worlds.

Despite all this, there is a snag to the business plan. Requiring a retail base in addition to a technical development arm is an additional challenge for a company, as one comes to rely upon the other. Whilst it is possible to buy the robots online, the importance of the experience in the shop for this particular concept leads me to suggest that two real world shops is not realistically enough if ROBOTGALAXY is to be successful. It will have an easier time than WebKinz, because WebKinz does not need to run a whole shop for its product, whereas ROBOTGALAXY does. Nevertheless, it is an interesting way to approach virtual worlds for kids, which could prove very successful if executed well.

Virtual goods firm Virtual Greats has announced that its celebrity-branded virtual goods are now available for sale in popular teen virtual world Gaia. Examples of the goods now being made available to Gaia’s users are Snoop Dogg’s hairstyle and The Incredible Hulk’s purple trousers. Virtual Greats is a subsidiary of prolific virtual worlds development agency Millions of Us, and has been around since June of this year. Just this week, Virtual Greats also announced a deal with WeeWorld. The deal with Gaia has been public since launch, but it is only today that the goods are becoming available.

Gaia is a good virtual world for Virtual Greats to have attracted; with 7 million monthly users, and a recent Series C round bringing total investment in the company to date to $20m, the size of the possible market for such virtual goods in Gaia is huge. Teens also have a track record in being more than willing to purchase virtual goods, perhaps because it doesn’t seem as odd to pay for something intangible as it does to older generations. The popularity of sites such as Stardoll is evidence of that.

Virtual Greats’ strategy is an interesting one. It is essentially acting as an intermediary between the brands and virtual worlds, by acquiring the distribution rights itself and then signing distribution deals with various virtual worlds. It is appealing to the brands because they can distribute quickly through multiple channels, and to virtual worlds because there is no need for them to strike the deals themselves. The virtual goods sector is only going to become more important, I suspect. Users are increasingly unwilling to pay subscriptions for their virtual worlds, forcing worlds to find other ways to make money – virtual goods could fill that gap. Beyond that, as time goes on, both brands and users will become more comfortable with the idea. For brands, it could offer enormous benefits with users effectively paying to be advertised to. For users, they will gradually become more happy with spending money on something which is intangible and has no real use. After all, the drive to purchase a t shirt with a logo on it rather than one without a logo might just as reasonably be applied to virtual worlds.

Mythic Entertainment, the developers of the eagerly anticipated MMO Warhammer Online, based on the popular tabletop fantasy game, have announced that the ‘Head Start’ preview will open on Sunday 14th, four days prior to the official launch date of the 18th. The preview will be available to North American players who have pre-ordered the game.

It was announced that the game had ‘gone gold’ (finished and ready to be released) two weeks ago, after a beta period. The preview strategy is important for three reasons. First, it gives a final window to make sure that the infrastructure is up to the main influx of players on and immediately after the official launch date. Second, it provides an incentive to pre-order the game, helping to build early sales. Third (and related), those who do get into the preview are likely to be more active in the first few days as they will feel privileged to be in the preview. This helps to create an active community early on, vital for an MMO.

Warhammer Online is going head to head with World of Warcraft, in terms of both target demographic and price. It stands a reasonable chance of success given the massive popularity of the brand from the original game, meaning that Warhammer Online is by no means starting from scratch. The most important thing now is the quality of the game itself, as the community quickly decides whether to love it or loathe it within the first few days of release.

In a post/essay on the future of virtual worlds in the kids, tweens and teens demographics (KT&T), CEO of K Zero Nic Mitham argues that the best way for virtual worlds to hit the big time is to mimic real world behaviour. It is clear that brand is still important; the popularity of Barbie Girls virtual world (which claims to be the fastest growing virtual world ever) is strong evidence of that. Nic Mitham, however, argues that the crucial driver is not the brand but ‘the reason to play’.

So how does one construct a compelling ‘reason to play’? This post argues that the best way to do that is link your virtual world with the real world. Kids’ virtual worlds are all about play, as that’s what kids like to do. The classic model of a few casual games linked into a fun virtual environment in which avatars can communicate can go some distance. If the games are good enough, and the environment well enough designed, it may even be possible to build a sustainable business model. But Mitham argues that in a saturated market, the best way to reach a massive audience is to mimic real-world play activities in the virtual world. The examples he gives are certainly successful. Stardoll takes the paper doll concept and makes it virtual, upgrading it in the process to make it more fun and interactive. Neopets (a product of the first boom), where a kid can look after a virtual pet, is another example.

Some may argue that the KT&T sector of the virtual worlds industry doesn’t really need Nic’s advice. It is by far the best performing demographic in terms of both revenue and user numbers, and is the only age group which one can plausibly argue has embraced virtual worlds as mainstream. However, there’s still plenty to be done. Put simply, nowhere near all kids with access to the internet at home are on these games and virtual worlds, when there doesn’t seem to be any reason why not. Computer literacy is incredibly high among such children, and there doesn’t appear to be any structural reason why some kids just choose not to take part in virtual worlds. Perhaps it is down to an inevitable difference in taste, or perhaps it is down to virtual worlds not quite getting it right yet.

I have long argued that web products do best when they mimic the real world; Facebook does well because it fits well within the way that centuries old offline communications take place. Going back before the web, metaphors like folders and the desktop helped take computers to the mainstream by making UIs instantly comprehensible. Software is always at its best when it doesn’t reinvent the wheel, and I couldn’t agree more strongly with Nic that following real world behaviour is a well proven path to virtual success.

[If you are interested in what Nic Mitham has to say, check out my interview with him from last month and come along to the VWF conference in October where Nic will be leading a workshop on 8th]

Virtual world technology provider Multiverse has announced that its getting into the consumer business by launching Places. Places is actually two separate strands of the same strategy – namely to provide integration between different virtual worlds built on Multiverse, by creating a social graph and a central meeting place. The first aspect to the announcement is an application for social networks. This will allow users to display, create and customise their avatars from different virtual worlds on the social network. Users also able to send postcards to their friends, which can include interaction between the avatars (such as kung fu fighting and dancing).

The second part of the announcement is the creation of a central virtual world. All users who download the Multiverse client in order to access a virtual world created with Multiverse technology will automatically be able to access this virtual world. At launch, the environment is a virtual recreation of Times Square in New York City. As well as being able to socialise, users can do several other activities with friends, including listening to music and playing games. The whole environment is also open source, and they emphasis their desire for third party developers to add to the environment.

Thus far, Multiverse’s clients have been businesses wishing to create virtual worlds. This is about building on that, taking Multiverse direct to the consumer. It is easy to see why Multiverse wants to do that: if it can create a successful consumer-orientated virtual world of its own, it could potentially monetise that, providing an additional source of revenue. However, this risk is surely that it loses its business clients by pushing its own brand too hard. If done right, though, the addition of Places could be a good thing for the other Multiverse virtual worlds, by lowing the barriers to entry. If a user is already a member of one Multiverse virtual world, they are more likely to join another given that they already have the client and have a persistent list of friends across all the different worlds with which to socialise.

Jagex has announced that their Runescape HD game, launched a few weeks ago at E3, has announced that it has welcomed over half a million new users to the popular MMO since its debut. Runescape HD succeeds the original Runescape, already extremely popular. The Jagex team have more cause for celebration: runescape.com is the second most popular gaming site in the US, and the Guinness Book of Records has named Runescape HD as the world's most popular free MMO.

Jagex's continuing success supports the argument that in order to be a wildly successful MMO aimed at those beyond young children, it is not necessary to have WoW-standard graphics, and the associated development costs. Runescape, whilst immersive and played compulsively by some people, also has a casual element to it given that it is accessed through a browser. The consequent lower level of commitment required to play it is perhaps another reason that it continues to be successful.

WiM quotes Jagex's explanation for the massive growth: "With the total graphics overhaul introduced in RuneScape HD, new audiences were drawn in – the game is browser-based, requires no downloads and utilizes the graphics card within a player's computer to heighten visuals," stated a Jagex representative, explaining the growth. "Existing players are also still able to log in and play from the same machines they did when the game launched in 2001 -- no additional investment is required. Players can access the game from anywhere, at anytime."

We're pleased to be welcoming Jagex CEO, Geoff Iddison, to the Virtual Worlds Forum in London on 6^th-8^th of October as a keynote speaker.

Hangout Industries, a fusion of the concepts of virtual worlds and social networking, has launched at the TechCrunch 50 Conference this week. In some ways similar to Vivaty, Hangout Industries allows users to create their own room and furnish it themselves – the goal is to enable users to create a 3D web presence from which to socialise, rather than the simple 2D social networking profile.

There is a strong emphasis upon the sharing of media, not only uploaded onto Hangout but also around the web. It is possible to watch YouTube videos with friends, as well as view Facebook photos and listen to music. To me, this is an obvious advantage which 3D social environments have over the 2D social network, and it is good to see Hangout exploiting it. It is far easier to be both watching a video and communicating meaningfully with your friends in 3D than 2D, and the sense of destination makes the socialising feel more tangible and genuine.

They are also pushing hard on virtual goods. At launch, they have a partnership with poster retailer allposters.com, which will allow users to purchase posters to display in their virtual room. In a similar vein, they also have a deal with Threadless for virtual t shirts. This seems appropriate given that Threadless' t shirt designs are crowdsourced. Similar deals exist with 30 other brands at launch. This is good news, because if a culture of purchasing virtual goods can be established at launch, the monetisation prospects for Hangout down the road are far stronger.

Despite clear differences, there are strong similarities with Vivaty, which also allows users to create their own room. Further, both run from existing social networks – a good way to get viral growth and dovetail with a user's existing web habits, but with the potential disadvantages of being over-reliant on the social networks' continuing good will and it being difficult to establish a brand which is distinct from the social network through which the virtual world is accessed.

User generated content moderating service eModerator has announced the launch of a new moderation system, NetModerator, in partnership with technology company Crisp Thinking, aimed at providing security from, for example, bullying and grooming in virtual worlds. The solution is a combination of automatic filters which identify offensive or inappropriate communication or content, and human moderators.

The company also claim that their technology is unique in that it is able to analyse communications behaviour over a longer period of time in order to identify trends of behaviour which are a concern, when the individual messages may not be. The example given is of questions such as 'where are your parents' or 'where is your computer'. Taken individually, these types of message are not necessarily a cause for concern, but if there is a pattern of one user frequently asking such questions to one or many other users, then there is a strong case for a manual review. A diagram of how the system works is available on Crisp Thinking's website. Another fascinating feature of the technology is its ability to dynamically update its blacklist as the usage of language evolves.

Moderation of virtual worlds is a difficult balance to strike. On the one hand, algorithms and automated filters are a vital component in preventing costs from coming prohibitively high. They also potentially offer, as with this system, to see things which humans could perhaps not by analysing long term trends. However, the human element is also vital because it simply isn't an option to get this wrong, for obvious reasons. Quite apart from the vital moral, and legal, duty of care which virtual worlds and MMOs aimed at children have towards their users, it is also crucial that parents are assured that a strong protection system is in place if a given product is not always in an uphill struggle against the will of parents. Perhaps humans will become unnecessary in the future, when semantic analysis becomes far better, but in the mean time technological innovation will happen about the interface between computer and human.

German mirror virtual world Twinity from Metaversum has entered public beta, after a private beta lasting several months. At present, Twinity contains a replica of much of Berlin, but the plan is to expand it to cover several other major cities. Metaversum raised a multi-million funding round in April of this year from Balderton Capital to fund the development of Twinity.

It has been a very busy private beta from Twinity: they unveiled their replica of Berlin in July, and then followed that up with a series of promotional events, including most recently a tie-up with the latest Batman film, The Dark Knight, as well as regular walking tours of the virtual city and events clearly designed to foster an arty community.

Whilst no user numbers have been published at this stage, I suspect Twinity is doing well. It has received a lot of buzz and coverage, and has produced a technically competent virtual world which is being well marketed. The fact that it is a mirror world is also likely to be attractive to many users: Berliners will presumably enjoy the opportunity to walk around a replica of their own city, and others will enjoy looking round a city which they do not know. The mirror world concept, whilst expensive, may also have significant business rewards. It could well be easier to persuade a company to create a virtual worlds presence in a virtual equivalent of a real world area than in an unknown virtual area – the mirror world could act as a halfway house for more conservative brands, because it is more of a known quantity.

After the success of our programme of regular Virtual Worlds Salon gatherings, including one recently held in Berlin, Virtual Worlds Forum has announced the date of the next Salon. The event is to be held in Borough Bar on London Bridge Street, close to the venue for this year's Virtual Worlds Forum conference. The salons are, like the main conference, an event where many of the key people in the virtual worlds industry come together to get to know each other, mull over latest events and trends, and have fun!

We are delighted that Field Fisher Waterhouse, a leading City law firm, are sponsoring the occasion. They have a strong track record in working with the application of law to virtual worlds, and partner David Naylor is very active in Second Life in particular.

This is an invitation only event, and spaces are limited, so respond quickly to guarantee space on the guest list (admission will only be for those on that list). The key details again:

Date: Wednesday 24th September

Time: 7 - 9pm

Venue: Borough Bar, 10-18 London Bridge Street, London, SE1 9SG

To get a taste of what it is all about, have a look at the pictures from the July event in London.

GardenParty, a virtual world targeted at kids aged 5-11, has been launched as a public beta after three months as an invitation-only product. GardenParty allows users to 'grow their own fun' by planting seeds to grow plants, as well as collecting 'orbs' – an in world currency which can be used to make purchases at the market. There are also a series of casual games, including a dancing game and a fishing game, in which success earns orbs. The developer's description:

Gardeners buy seeds, then plant and tend to them in their private garden by watering them till they are fully grown. GardenParty promotes collaboration and community, based round a stunning natural looking space. 'Gardeners' can explore, discover and take part in various activities throughout the world as well as buy and grow seeds in their own garden. Each seed may produce an exciting new toy they can play with along with the other kids in the world!

As ever with virtual worlds aimed at young children, safety is crucial. Asylum Entertainment, the developers of the game, have tested it in a school. They also implement a combination of automated filters and human moderation to try to ensure safety. In common with other similar virtual worlds, they also offer a 'very safe' option to parents with which the children can be restricted to sending and receiving restricted preset messages.

Asylum Entertainment anticipates that this public beta period will last about a month before the game is officially released.

In a blog post, Linden Lab has issued a deadline of the 1^st October for the removal of networked ads from the mainland. This follows on from earlier discussion on the company's blog about their desire to 'clean up' what has become a somewhat chaotic region of Second Life. In early August they wrote: "Unfortunately with the wonderful freedoms and creativity the Mainland offers have also come substantial problems that are unique to this area of the grid and so the time for change is now." They define networked ads, or ad farms, as 'the practice of using many parcels over multiple regions, especially small micro parcels where the predominant purpose of the land is to hold advertising.'

Linden is caught in a tricky position over what to do with its mainland in Second Life. Land is far more scarce on this Linden-operated part of Second Life, meaning that there is a certain pressure to make the most of the space. To that end they are talking of introducing planning measures one would normally expect to find in real-world cities, including 'zoning' – one area might be residential, the next commercial, and each have different covenants to enforce that distinction. Yet on the other hand, Second Life prides itself on the creativity, both in terms of the arts and in terms of commercial ventures, which exists in the virtual world. In their programme to clean up the mainland, they must be risking destroying the very thing which makes the SL community uniquely attractive.

The impact for real-world businesses is certainly not detrimental here; there is little to no value in them buying display advertising in Second Life in terms of building their business (interactivity and virtual goods have been shown to be far more effective), so the restrictions will have little effect. However, a cleaned up mainland potentially brings big benefits by making it easier to do business on the mainland. Just like in the real world, a blue chip brand will wish to avoid being associated with irritating chaos, and will find a premises in a smart commercial district far more appealing than a tiny plot in a mixed use mess.

German newspaper and media giant Axel Springer AG has taken a majority stake in the MMO provider Gamigo. Gamigo publishes a series of MMO titles, including >“Last Chaos” and “Fiesta Online”, the racing game “Level R” as well as the golf game “Shot Online”. These are then distributed free over the internet or via magazine cover discs, and monetised with subscriptions or purchase of virtual goods. Axel Springer had held shares in Gamigo since 2000. Before the purchase of the additional shares, it owned 47.4%, and now owns 94.8%. The remaining shares are owned by Gamigo’s CEO, Sven Ossenbrüggen.

Acquisitions of new media companies by old media giants – Axel Springer AG has been around since the 1940s – are always exciting because of the vindication they are perceived to bring. The more traditional, 2D end of new media has seen a lot of this: MySpace by Murdoch, Last.fm by CBS to name just a couple of the big ones, with countless other far smaller acquisitions. However, the same has not been the case with virtual worlds and MMOs. Perhaps they are seen as being too close to gaming and too far away from content for old media to be interested, although we know in reality that the distinction is irrelevant, and in any case content is just as crucial in virtual worlds and MMOs as it is with MySpace. With acquisitions like this, however, the tide of perception can start to turn from geeky fad to serious business.

Of course, that’s not why Axel Springer bought Gamigo; they bought it because of their ‘digitization offensive’: Dr. Jens Müffelmann, Director of the Corporate Division Electronic Media of Axel Springer AG explains the reasons for the transaction: “Gamigo operates in a fast growing market segment, it will quadruple sales this year and it is profitable. Due to that online gaming is to become an important pillar within the digitization offensive of Axel Springer.” I suspect that changes in Gamigo will not be particularly dramatic, since Axel Springer has had long involvement, the company remains separate and the CEO still in place. There may, however, be efforts to do something clever with advertising, since it could potentially attractive to have a unified campaign across different forms of media with the same company.

Vivaty, a browser-based virtual world, has added support for Firefox, as well as adding new 'scenes' and more integration with Facebook's newsfeed. Vivaty is designed to enable users to maintain a 3D web presence, in much the same way as they currently might keep a personal website or social networking profile. Vivaty is integrated into 3^rd party social networking websites, most notably as a Facebook application, giving them useful scope for viral growth on top of a pre-existing social graph.

They have launched the first 'social scene', a professionally designed public area, as opposed to the user designed private areas. This is a good step; anything which enhances the sense of community in the Vivaty virtual world will help keep users. It also begins to make it more obviously a single virtual world, rather than a series of loosely connected private spaces, and the sense of a world being a destination is important.

Facebook applications like Vivaty thrive on the newsfeed, which is why it is no surprise they are seeking to integrate with it more. For the few non-Facebookers, the newsfeed is a stream of reports on the activities of all of your friends, such as adding a photo, application or performing a task using an application. In other words, each time they publish in the newsfeed, they receive free advertising to potentially all of that user's friends. Specifically, it is the gift system which has been added. This is smart, because Facebook users as a whole are already used to the concept of virtual gifts (Facebook has its own microtransaction gift application), and so would be likely to click through.

Linden Lab have launched SLim, a thin client which enables voice and text communication with other Second Life users without needing to be inworld, or launch the Second Life viewer. The launch has been known about for some time: the first indications were in early August when it was discovered that Linden Lab had registered the SLim trademark. This was followed by an announcement of the coming launch two weeks ago.

This launch is probably most interesting when one considers its enterprise consequences. Users already understand IM and VoIP relatively well, and so less explanation of the concept of Second Life might be needed if the 3D aspect is viewed as an extension of that core functionality, rather than IM and VoIP being viewed as features of a 3D world. The difference is subtle but I believe that it is significant. CIOs are far more likely to chose to implement a system which offers robust IM and VoIP – standard technologies – with the added benefit of 3D environments, than they are to opt for an entirely new technology. It helps that the client is provided by Vivox in partnership with Linden, helping to bolster the enterprise credentials of the product.

With Second Life becoming integrated into more aspects of our Residents' daily lives, we saw a need to expand the world beyond its borders, enabling constant connection regardless of location," said Joe Miller, Vice President of Platform and Technology Development, Linden Lab. "In addition to all the enhanced communication benefits, SLim also helps solidify the value proposition of Second Life for enterprise use by providing a highly powerful VOIP and instant messaging client."

Browser-based virtual world developer RocketOn has announced a partnership with Animax to create parallel virtual worlds. RocketOn is a virtual world which operates through the browser on top of the existing web; you might walk your avatar on top of the Google homepage for example, or discuss a YouTube video with other avatars which happen to be on the same webpage. Animax is a full-service creative agency for virtual worlds. In the partnership, RocketOn will provide the technology and development, whilst Animax will provide the strategy and creatives for the project.

The appeal of the RocketOn virtual world concept for a brand is clear. For some websites, there will be a clear advantage in allowing users to create an avatar which then moves over that website. RocketOn has made it possible for a website to implement its technology without the need for a plugin download. An otherwise static web experience can therefore be made into a fast-paced social experience for relatively little cost, given that there is no need to develop a full 3D environment. "RocketOn is a great way to launch and manage parallel virtual worlds," says Michael Bellavia, CEO of Animax. "It enables us to create rich browser-based, virtual environments anywhere on the web without a user download. In a matter of weeks, we can literally build out a virtual space, deploy it on a website and populate it with content."

The RocketOn concept is not flawless, however. The avatars are scattered across the (very large) web, which may make it harder to build a critical mass on the service. There is also a danger of a 'build it and they will come' attitude. It has been consistently demonstrated that marketing campaigns in virtual worlds work best when there is a unique aspect to the campaign which goes beyond mere conversation. The most successful campaigns have involved far deeper and more exciting interaction than merely the ability to talk to other customers. That's not to say that the RocketOn platform can't support such innovation, just that it must be tempting for websites to simply add RocketOn to their website, given how easily it can be done, thinking they can now be certified 'Web 2.0 Compliant', without thinking through what they aim to achieve in business terms.

For a long time, virtual world There.com has been stuck firmly behind Second Life in the adult virtual world market. It has carved out a strong niche for itself as a virtual world ideal for marketing campaigns, but it does not enjoy anything like the number of users which frequent Second Life. They have launched a series of new features today which they will be hoping put them in a more competitive position.

A Facebook application, Facing There, will allow users to link their There account to their Facebook profile, showing information like upcoming events and groups. The convergence between Facebook and virtual worlds is a trend which is surely set to continue; by launching applications on Facebook, virtual world developers hope to generate viral growth and provide a way for users to gain more value out of a virtual world by making it relevant to non-member friends. Nevertheless, the There application is some way behind other virtual worlds applications on Facebook, the most notable example being Vivaty- designed to become a full 3D web presence.

They have also finally announced support for Mac OS X. Frankly, I was surprised to learn that they did not already support Macs, and it is a serious error that they have thus far failed to do so, despite launching in 2003. Adult virtual worlds have to be targeting early adopters hard at this stage in the adoption cycle, and many early adopters are to be found on the Mac. It is perhaps reasonable to launch a beta which only supports a single operating system, but to wait nearly 5 years before supporting a crucial operating system is surely madness. Nevertheless, they may now be in a better position to achieve more growth where it matters among early adopters.

In an excellent introductory essay to the business model of real money trade – where virtual world and MMO developers profit not directly from subscriptions but from the proceeds of a flourishing in-world economy, Richard Eisert and S. Gregory Boyd of Davis & Gilbert LLP argue that virtual currencies are, in many cases, a safer bet than many government currencies. They give the obvious example of World of Warcraft gold versus the hyper-inflationary Zimbabwean dollar, but the point is wider. With the increasing difficulties in monetising games through subscriptions being faced by the vast majority of developers, real money trading will become increasingly important in the industry.

The essay takes a look at the three main areas of real money trades: currency systems (like the Linden Dollar), microtransactions and virtual real estate. Whilst all three concepts are likely to be familiar to regular readers of this blog, Eisert and Boyd give a good background to how they work and their advantages and disadvantages. All three approaches are likely to become the subject of considerable academic investigation, I would imagine; the unprecedented economic structure which exists in-world operates on the same rules as the real world economy, yet in a much more controlled environment- macroeconomics on a micro scale.

There is also a brief overview of some of the US case law in what is a very new area for legal systems to be dealing with. Perhaps most interesting is the fact that it may no longer be possible for a VW to terminate a user's account for violation of the EULA, because of the virtual property they would stand to lose: 'These cases all suggest many other unresolved issues that may arise in the coming years. For example, acknowledging the value in virtual goods may actually increase the customer service burden on companies when it comes to termination. Traditionally, companies could merely terminate any user that violated its EULA. However, the Bragg case shows us that acknowledging the value of virtual property may create some additional obligations.'

Cross-world entertainment platform Myrl is set to launch its open beta today. Myrl isn't actually a virtual world; rather, it is a website which aims to act as something of a hub for users of multiple virtual worlds, with the ability to keep track of friends, send messages and discover new worlds. They argue cogently for its need: 'The extraordinary growth of the number of worlds available and the extreme diversification of the experiences that are now possible in the virtual space is changing the way we use virtual worlds, making our virtual experience more and more multi-world and content-driven, rather than world-driven. We want to support and foster this change, providing a platform that enables worlds-browsing and makes our virtual lives easier, richer and funnier.'

Myrl has been in closed alpha for some time, and is now launching into full open beta. Along with the launch come a series of new features. Most significant is that the system is now compatible with 19 virtual worlds, compared to the previous 2. It is now also possible to manage several avatars from the same dashboard, and to aggregate content from multiple sources to create something akin to a lifestream.

Myrl is particularly interesting because it presents a very different side to the task of integrating virtual worlds. When one thinks of interoperability, it is typically examples such as the Second Life to OpenSim teleport which spring to mind as key stages along the way towards a universal metaverse. Yet it may be that something like Myrl is needed, even if such transport systems eventually come about. If done right, it could provide some clarity and order to what could otherwise be chaotic. Interoperability is thought by almost everyone to be a Good Thing, yet it has certainly been noted that it brings with it considerable risks and challenges. Perhaps a tool which sits on a layer above the worlds themselves has the capacity to really make true, inter-world interoperability work.

A training programme for prospective Canadian border guards in Second Life, designed to simulate the interview of those wishing to cross the border, has boosted the marks achieved by the trainees in interview by 28%, reports New World Notes. A video demoing the training process was also released. It shows trainees speaking over a headset to an instructor in a role playing exercise, with the instructor playing the traveller. Such an exercise would be unremarkable if it did not also involve the trainee and instructor controlling avatars in Second Life, presumably providing more realism than would otherwise be possible. The training programme was created by the Virtual World Design Centre at the Loyalist College in Ontario.

'Serious games', used to train new recruits, are big news in many other areas – the military is a particularly notable, and perhaps obvious, example. The resources needed to hold a large scale, realistic, military exercise are vast. Virtual training offers a cheaper and easier way which still has room for complexity. One can also safely allow more inexperienced commanders to hone their skills than on a real-world exercise.

Another is the training of new workers on oil drilling platforms. Within the first few weeks, the chances of an accident are far higher than during any period thereafter. It therefore makes sense to try and do some training in a safe environment to prevent accidents during the training without simply postponing the point at which the danger begins.

Last week I reported that Second Life had broken a new record for concurrent users, breaking through its five month plateau to achieve new heights. Today, courtesy of Reuters, comes news that the Second Life economy is in good shape.

According to Reuters, over 61,000 avatars in SL earned more Linden dollars than they spent. Bear in mind that there are a total of 34.7 registered users in Second Life, and that does not sound too impressive. However, when one considers that the current record for Second Life concurrent usage is 67,335, it sounds far better. That 61,000 people are able to profit from Second Life is both a positive reflection upon the entrepreneurial spirit of the individuals involved and, perhaps more importantly, on the platform itself, which has enabled a creative economy to survive and flourish.

Second Life will live or die by its economy. It is one of very few virtual worlds to have a comparatively unregulated economy; one could even argue that it is ahead of its time in this respect. If it can achieve a healthy ecosystem in which users either extract money or enjoyment from the economy, then Second Life will remain healthy and continue to be able to collect premium user fees. The shadow hanging over the virtual world, though, is that premium user numbers are falling: 1,410 paid user accounts were shed in July – a far from ideal situation for a business derives the vast majority of its revenue from such accounts.

Second Life, and Linden Lab, are going through a period of fascinating transition as they decide what the best position for Second Life is within the market. Within the next year, I would suggest, we will have a much better idea of what sort of virtual world Second Life will become, and able to make far more accurate predictions as to its future success.

Lord of the Rings Online Executive Producer Jeffrey Steefel has gone on record stating that Lord of the Rings Online will be the first MMO to achieve mass market success since World of Warcraft. Whilst Steefel clearly has a vested interest in stoking up hype for Lord of the Rings Online, it is nevertheless interesting to analyse LOTRO's chances of unseating the powerful incumbent, WoW. In an interview with EuroGamer, Steefel said: 'There's another level of success, which is reaching a certain mass-market critical mass, which to be totally fair, only Blizzard has achieved completely so far. We think that we are the game that has the most likelihood of being the second to do that, but we're not there yet.'

Perhaps most interesting is Steefal's certainty that the subscription model of $14.95 a month is not here to stay. There is clear evidence that subscriptions are under threat. WoW is one of only a tiny handful of MMOs which have been able to make the model work. Firms are increasingly looking to create casual gaming products, which potentially could attract a much larger audience than conventional games at a fraction of the cost, making it possible for the game to be released for free.

So despite a business model which looks a little shaky at present, how will LOTRO expand? Mostly through reaching more global markets. LOTRO has the luxury which most MMOs do not have: sharing a brand with a wildly successful film. This gives global recognition, and means that if done right, LOTRO could be a popular MMO all over the world. At present, global expansion is probably wiser than trying to expand in the existing market, given that the existing market has probably already made its mind up as to which MMO to play. The big money in the future will be made from people not using virtual worlds or playing MMOs at the moment, but who start in 10 years time.

Security firm McAfee have published an extensive report (PDF) into the security risks facing virtual worlds, both at the moment and in the light of likely future developments in the industry. That security should be a key concern of virtual worlds developers is not a surprise. The in-world economies, with links to real currency, mean that it was always inevitable that criminals would seek to exploit the system. Add to that the potential for remote code execution through a vulnerable virtual world client, and the possibilities for crimes such as identity theft become clear.

The report covers a range of these risks, and gives advice to developers building virtual worlds on how to make secure software. It also gives some interesting statistics on the shady world of malware. It reveals that a zero day exploit could reach $50,000-$120,000 on the black market. Perhaps even more alarmingly, it shows a dramatic increase in the number of password stealing trojans over the past eight years.

I was most interested, however, by the section of the report which dealt with the security risks of the future, as a result of trends in the industry. One which we have been covering extensively on this blog is that of convergence between the 3D web – virtual worlds – and the 2D, HTML etc web. Muttik, the report's author, argues that links to the web from virtual worlds (which are becoming increasingly common, and are already extensively used in many VWs), pose a new security risk as it becomes possible to persuade a user to click a link by its context in the virtual world, and then link to a malware site. A related, but different, trend is that of the integration between different virtual worlds. This is generally a good thing for the user, although it does bring its security risks. Linden Lab, for example, is working on the ability to teleport content, as well as an avatar, from Second Life to OpenSim. Muttik argues that if that content is active, then it creates the possibility of cross-world viruses, which can spread between virtual worlds. The same would be the case for virtual spam.

Despite the clear risks, Muttik is optimistic that we can get it right: 'It is possible to make most attacks in virtual life impossible or uneconomical. There are no good reasons why virtual characters should suffer from the same troubles—spam, phishing, adware, spyware, Trojans, viruses, worms, and other malware—that currently plague our real day-to-day lives.'

Enterprise virtual world platform ProtonMedia has announced a 'Go Green, Go Virtual' initiative and not-for-profit foundation to champion the environmental advantages of virtual worlds, and to provide support to 'worthy organizations dedicated to promoting environmental responsibility through energy conservation and alternative energy use'. A portion of ProtonMedia's profits from the sale of its ProtoSphere product will fund the foundation.

The environmental case for increased use of virtual worlds in enterprise is strong. Probably billions of miles are travelled every year in business travel, and aviation is known to be one of the main emitters of greenhouse gases. Videoconferencing and, of course, standard voice calls have long been an alternative to travel, yet businesspeople continue to seek face-to-face meetings. It may be that virtual worlds can go further than other meeting-replacement technologies have thus far; the spatial environment in which meetings occur may improve the experience further, making it feel more genuine. It may also increase efficiency, avoiding some of the irritating problems of conference calls, for example, such as working out who is speaking at any one point.

This is also a savvy marketing move from ProtonMedia. Companies are desperately trying to improve their green credentials, both for marketing and (in some cases) for reasons of conscience. Pitching a product along those lines, which also happens to promise the ability to cut down on transport costs, is therefore a wise move. There are so many enterprise virtual world platforms out there that standing out in the market can be hard, so if ProtonMedia can successfully position itself as the virtual world platform to help the environment, even if it has no material advantage on that front over any other such platform, it stands to gain.

Crucial to the success of any company's project in a virtual world, or related to virtual worlds, is understanding and buy-in across the company; it simply isn't enough to have one person or a small team who 'get' VWs if the project is to have any coherence. That means that a primary role of anyone wanting to push their company towards forward thinking in terms of virtual worlds has a massive education job on their hands: they have to explain VWs successfully to as many people across their organisation as possible.

A newsletter published today by Social Technologies, a global research and consulting firm, may help with that. Whilst little of its content will be new to those experienced in the industry, it is an excellent, and relatively short, way to get a non-expert executive up to speed. The articles in the newsletter include:

• Virtual worlds @ work. As more companies crack the code on how to effectively interact with consumers in virtual worlds, businesses are starting to use virtual worlds for their own internal activities--more than for marketing.
• Imports from World 0. Clothing, cars, and jewelry are just some of the items that have been, or have the potential to be, exported from virtual worlds to the real world.
• My Second Life. Learn why five professionals have flocked to virtual worlds, including Kelly Trent, associate marketing manager at Wiley Publishing, and Randal Moss, director of the American Cancer Society's Futuring and Innovation Center.
• How we got here. Learn about developments over the last 25 years that have helped pave the way for today's virtual worlds.
• Brave new world. An interview with author and blogger Wagner James Au.
• Making money in the metaverse. An interview with Daniel Terdiman, author of An Entrepreneur's Guide to Second Life.
• Do you speak World 0? The virtual world comes with its own language, so we've defined a few basic terms.

Apart from the bizarre need Social Technologies feels to coin a new term for virtual worlds – World 0 – the newsletter provides useful background information and cogent analysis of the space. It is available as a PDF. I should also add that another, even better, way to get up to speed with the very latest in virtual worlds, hearing from the best and brightest in the industry, is to come along to the conference on 6-8^th October. On the final day, there are a series of optional workshops designed to equip attendees with the knowledge they need to be successful in VWs.

Hitwise has some statistics on Kohls' recent promotion with Stardoll. Stardoll is an ideal choice for clothing brands wishing to market in virtual worlds, due to the strong emphasis placed on avatar apparel by Stardoll. The shape of the Kohl promotion was the same as many others: Kohl setup a virtual storefront through which it sold apparel to avatars, also linking to products in its real-world online store. This sort of campaign is a dream come true for marketers: users effectively paying to be advertised to.

Hitwise data show that Kohls.com was the number one shopping and classified site downstream from Stardoll.com; in other words, Kohls was the site related to shopping or classified ads which users were most likely to visit after Stardoll.com, indicating that Stardoll was sending Kohl a good deal of traffic. Further, in the week to the 16^th August, Stardoll was accounted for 0.26% of visits to Kohls- a relatively large number, only just behind Ask.com.

This kind of data makes the case for advertising in virtual worlds easier to make. Quantitative return on investment is sometimes tricky to see in virtual worlds campaigns – particularly those which aren't aiming to sell anything or drive traffic anywhere in the short term. Highly focussed and relevant campaigns, however, have been shown to work, and it is likely that these will increasingly become the norm, rather than the exception. It will also have an impact on the development of virtual worlds. Targeted and measurable campaigns will tend to favour virtual worlds with a clear premise, such as Stardoll, over more general services like Second Life.

Online game developer and publisher Webcarzz has announced a $4m Series A round, led by Meakem Becker Venture Capital. 'It intends to use the money to support the full cost of development, deployment and marketing of the company's upcoming multiplayer online game.'

Details of the forthcoming game have yet to be released, although there is some information to be gleaned from today's announcement. They have announced a partnership with MCS Games, an online game development house, to build the game. It is fair to assume that it will be built in flash, given that is MCS' area of specialism. The release also states that 'The company is developing a casual multiplayer online game that offers a social space in which users can engage in play amongst others, but which does not require fixed play patterns, or skill levels, for success.' The casual-but-social game is a route also being explored, albeit perhaps in a different way, by many others, including Moondo. The highly immersive environment of full-blown 3D MMOs such as WoW are not for everyone, and the grind (repetitive play) required to reach the higher levels is resented by some. In any case, full details of the game are to be released in the coming months.

"With over 300 million online gamers today, the time is ripe for virtual worlds and multiplayer online games," said Chris Bergstresser, CEO of Webcarzz. "Competitive play, multiplayer activity, and exploration make up the foundation for Webcarzz. Together with MCS Games, we are creating a very unique and highly engaging online destination aimed at a very specific and underserved market segment. With MBVC and MCS Games as our partners, we will be able to execute on our vision and deliver a truly innovative consumer experience."

Virtual Worlds Forum are delighted to announce that South by Southwest Film, Music and Interactive Festivals will be co-hosting the opening party of the Virtual Worlds Forum on the evening of Monday 6^th October. The party will be at Digress City in Moorgate, and there are expected to be about 300 people at the party, from the Film, Music and Interactive industries, as well as some speakers, sponsors and delegates from the Virtual Worlds Forum conference.

Best known in the UK for the legendary music festival, SXSW annually attracts more than 13,000 music industry delegates and features 1800+ showcasing artists from around the globe. In 2008, more than 1000+ UK delegates made the annual pilgrimage to Austin, Texas, which has also featured many well-known British acts over the years, including Amy Winehouse, Duffy, the Darkness, Kaiser Chiefs, Lily Allen, Artic Monkeys, Joss Stone, Franz Ferdinand, Jamie Cullum etc

However, SXSW also incorporates two other stand alone festivals - SXSW Film and SXSW Interactive - which run at approximately the same dates as the music fest. In 2008, more than 7500 people attended SXSW Interactive, and once again the largest international presence outside of North America came from the UK.

Virtual worlds have repercussions for all three fields covered by SXSW, making them an ideal partner for our party. Sasha Frieze, Executive Conference Director Virtual Worlds Forum Europe, says there is significant cross-over between the two organisations. 'We're delighted to be working with SXSW for the second time, especially after the success of last year's partnership. Both SXSW and Virtual Worlds Forum Europe share a love of exploring creative and digital innovation, as well as promoting new business opportunities through these kinds of networking events."

For more information on the conference, including our all-star line up of speakers, go here. VWF08 is shaping up to be a really fantastic event – I look forward to seeing you there!

Technology Intellegence Group has released its Virtual World Industry Outlook 2008-2009 report, available online here. The report is aimed at those ‘investigating and or launching a virtual presence in a public virtual ‘Intraverse’ within their firm or institution.’ The report argues that the over-hype/backlash cycle has played out: we are all aware of the vast coverage that Second Life in particular recieved, followed by the reaction against an endless stream of empty stories about a company dipping its toes in the water of virtual worlds.

I very much agree with the report’s identification of a trend towards virtual worlds becoming a feature, rather than something distinct from the rest of the internet: ‘Virtual worlds [now] assimilate other Internet functions such as social networking and voice communication, and are assimilated themselves into other platforms as a feature of a website or a browser convention, making the Internet more graphically intuitive, entertaining, and collaborative.’ It is this which is virtual worlds’ best hope for reaching the mainstream, by becoming something which augments the online experience rather than existing in parallel.

The report contains a look aheard to the coming year. It argues that what it describes as ‘Brand Balkans’ - exclusive, bespoke virtual worlds created by a brand - will grow in popularity. It cites the availability of new tools such as WebFlock which will shorten the development cycle, yet still alllow for the creation of impressive user experiences. Nevertheless, costs remain relatively high, with WebFlock costing in the six figures. Another prediction is that overlay experiences will reach the mainstream. These provide an avatar dimension to an existing web experience - Rocketon is an example of this.

The report is very wide in its scope, also dealing comprehensively with the legal issues which will continue to be crucial in virtual worlds, particularly as they become more popular. The summary: “In summary, we believe that the virtual world industry is emerging from primarily boutique and experimental uses to the mainstream. Over the next year we will see further vendor innovation in this space with new market entrants, casualties of earlier entrants from either market or execution failures, and consolidation in the form of the market-leading firms being acquired by larger technology and media concerns who wish to mark their territory. With all of the creative energy, financial capital, customer interest, and ‘eye candy’ to show the press, 2008-2009 should see considerably greater growth in the industry than years past.”

EA has announced that their eagerly anticipated MMO, Warhammer Online, has gone gold; this means that it is effectively finished, and will be in shops for the September 18^th release date. The game's brand comes from the battle strategy game played with painted figures – particularly popular among teenagers. This was always a concept which would fit well into an MMO. EA described the game earlier this month: "Enter a grim world of perpetual conflict to fight for the Realms of Order (Dwarfs, High Elves, and Empire) or Destruction (Greenskins, Dark Elves, and Chaos). Invade enemy lands, besiege imposing fortresses, and sack sprawling capital cities for the glory of your Realm. Wield devastating magic and deadly weapons, battle monstrous creatures, and join your brothers-in-arms in epic Public Quests™."

The game is significant because it is in very direct competition with the behemoth World of Warcraft. The two MMOs appear to share a broadly similar target demographic; the young men who dominate WoW's user base are the same group who are fans of Warhammer in its original incarnation, and may be tempted by the MMO. The price point serves to underline the competition: Warhammer Online subscriptions are identical in cost to WoW, at €12.99 monthly (although discounts are available for pre-ordering).

WoW has reason to be worried. The existing strength of the Warhammer brand allows the game to tap into a ready-made fan base (also the case with Star Trek Online, also in development). The backing of EA means that the game is well resourced and – one can assume – good quality. WoW has thus far suffered little challenge to its position of leadership in the MMO market, and even if Warhammer Online doesn't beat WoW, real competition is surely a good thing.

After five months of no growth in the number of concurrent users of Second Life, a record has been broken. The virtual world's number of concurrent users is the logged-in population of Second Life at any one time, and is a vital statistic for the virtual world, along with the number of paid users (which had also been failing to rise). The plateau suggested that Second Life's community was stable, even thriving, but that it was too hard for new users to get involved – something that new CEO Mark Kingdon hopes to address with an improved UI and first-hour experience.

It's not clear exactly why the number has grown, but today's number of concurrent users stands at 67,335, an increase of nearly 1000 over March's record. The numbers seem to be too small to argue that this is certainly a statistically significant leap, but it is interesting nonetheless. Much of Kingdon's ambitions to improve Second Life's user experience have yet to be realised. A vital metric to watch as they are, however, will be the activity levels of new users. Many currently join and then fail to become active in the world, and if the community is to begin to grow again, the activity of new users will have to increase.

Additionally, the virtual world probably needs to attract a new demographic. There has been much discussion in recent days over the predominance of generation Y users in Second Life. The reasons that Linden Lab are failing to attract younger users are not obvious, and it may even be as simple as the community naturally attracting those of a similar age. However, if there are structural reasons that Second Life is failing to attract younger users then they must be addressed. A whole new generation of users familiar with virtual worlds from Club Penguin and Habbo Hotel will emerge, and provide an excellent new demographic for the archetypal virtual world to attract if it is to grow strongly.

[via]

If an MMO is a hit, and gamers are prepared to pay a subscription for it, then the publisher stands to make a fortune. Whether that is an achievable goal, however, is far from clear. World of Warcraft is firmly in pole position in the MMO market, and doing well financially. Yet this success is hardly widespread across other titles, leading some to question whether the big-budget, subscription model is the best way to enter the space.

In an interview with GigaOm, Scott Jennings argues that this business model is broken. Jennings recently left game publishing giant NCSoft to join John Galt Games, a small casual gaming startup. It is clear that he expects power in the industry to move in the same direction, from the big-budget giants to the casual gaming minnows. He argues that the amount of money being spent to develop the likes of WoW is unsustainable: "The current game development model is an arms race that few can even hope to compete in, much less win. Especially in the online/MMO space (which thanks to World of Warcraft is now almost synonymous with PC gaming), development budgets are spiraling out of control."

The answer is complex, and isn't as simple as not bothering with large-scale development projects any more: "To fix this, some out of the box thinking is required. Embracing open source development, crowd-sourcing content, targeting different platforms such as the Web or mobile phones, all of these are valid. But it entails leaving our comfort zones, both as developers… and as consumers. We need to be willing to see movies other than Titanic, and support games that don't have Blizzard- or Rockstar-sized budgets." He is arguing for the development of a healthy long tail of social games, which will hopefully add up to something more profitable than the few successful hits.

Casual games – most likely to be the result of decreased budgets and development schedules - present inherent difficulties, in that they aren't as sticky individually as MMOs like WoW. Products like Moondo, however, are trying to change that, and there is already activity (for example, from GoFish) in trying to make the long tail of social games work.

[Full interview here]

Forterra has announced several new features, with an emphasis on improved support for collaboration, for its enterprise virtual world. Among the features announced are the ability to stream video and the ability to host small ad-hoc meetings. OLIVE is a technology solution for corporate IT departments wishing to take advantage of virtual worlds primarily for internal communications purposes.

The full list of features:

• Streaming video (Windows Media Player® based), Microsoft PowerPoint files, white boards, and any software application running on a Windows desktop can be displayed on 3D screens and viewed by all participants
• A hand-held laser pointer for highlighting items on screens or in the 3D environment
• Avatar lists of who is already in-world, with a one-click teleport to meet other avatars at their locations
• Customizable avatar name tags
• Presence settings for users to indicate availability status
• A Meetings content pack featuring professionally developed 3D meeting environments including an auditorium, board and conference rooms, training facilities, a hotel, and a mansion for corporate offsites

They are also announcing support for SCORM, which is a series of standards and protocols for distributed e-learning information, published by the US Department of Defense. Forterra will be hoping that this addition brings more companies towards virtual worlds, by going some way in overcoming a significant disadvantage to adoption of virtual worlds – the set up cost, since some companies will already be using SCORM.

The new features, taken for granted by users of worlds such as Second Life, take OLIVE much closer towards the consumer virtual worlds model. This is interesting given that that whilst hype in consumer virtual worlds has largely subsided, hype for enterprise virtual worlds has not. It is likely that more enterprises will continue to adopt virtual worlds given the economic downturn, high fuel prices (raising transport costs sharply) and the pressure to reduce carbon footprints.

Webkinz, the US virtual world for kids, has announced that it is to expand internationally. For Webkinz, this means rather more than simply translating the site and hiring foreign moderators and customer service teams, however. The Webkinz concept is built on children purchasing a real world soft toy pet, which comes with a code to adopt a virtual version of that pet online.

Webkinz isn't just limited to making money off the initial signup, however; it is also possible to purchase virtual accessories for the pet in-world.

They now have distribution partners for the physical toy in 16 international markets, including the UK, Australia, France, Italy, Spain and Japan. They have also launched an online store selling the codes, which sells to over 20 countries, helping to remove the potential barrier to adoption of having to find a physical toy.

A report from the development informatics group at Manchester University, led by Prof Richard Heeks, offers some insight into the shady practice of gold farming, endemic in MMOs. The desire to progress in an MMO, whether by earning more of the in-game currency with which to purchase extras, or moving up levels, has fuelled the industry. A user pays real money to a firm which uses workers in third world countries, an estimated 80-85% in China, to generate progress in the game on the user's behalf.

The paper reveals some fascinating facts about an industry which remains secretive, mostly because its work is usually in breach of the terms of service of the games. Most surprising of all is the scale: "In basic terms, gold-farming is a sizeable phenomenon. The rather wobbly-legged best guesses for 2008 are that 400,000 gold farmers earning an average US$145 per month produced a global market worth US$500m; but we could easily more than double the latter to over US$1bn. There are probably 5-10m consumers of gold farming services."

Previous coverage of gold farming has focussed on poor conditions which the workers face: paid an average of $145/month and expected to work 12 hour shifts, these standards fall far below what is considered acceptable of the west. Nevertheless, Heeks points to the sad reality that these are often better conditions than might be found in alternate employment: "Pay and conditions are poor by Western standards but as good or better than the alternatives that gold farmers face: in wage, in work content, and in other ways. We may not know how gold farmers' careers progress but we can say that most enjoy their work and that the oft-applied "virtual sweatshop" label is at best partial and at worst inappropriate."

I thoroughly recommend reading some of the report, available online. Realistically, gold farming is here to stay; MMOs create an artificial scarcity of virtual goods, which must be earned, and build in the need for 'grind' to progress to the higher levels. All that is good because it makes the games addictive, but for many, money spent on advancing online will be money well spent.

[via]

In today's podcast, I'm joined by the CEO and founder of K Zero, Nic Mitham. K Zero is a virtual worlds consultancy firm, dealing with the metrics of virtual worlds every day. In the interview, we discussed the best way for brands to engage in virtual worlds now that the initial hype has died down. There's no longer a reliable quick PR gain to be had from announcing a presence in Second Life, leading brands to finally think about virtual worlds with the long term in mind. We talked about how brands can measure return on investment, and whether that's even possible to do at this stage. We also discussed the situation which brands in virtual worlds are enthusiastically working towards: where their virtual presence becomes a lucrative additional revenue stream, as well as giving them advertising benefits.

Finally, we talked a little about what virtual worlds need to do to reach the mainstream, and particularly why virtual worlds aimed and younger people (the kids, tweens and teens market) have been so much more successful than their adult counterparts. If virtual worlds and brands alike can understand something about what might be causing that difference, they are surely in a good position to address it.

Nic will be leading a workshop at the VWF08 conference entitled "Establishing metrics – key performance measurement for virtual worlds and online games".

Podcast [mp3]

Podcast feed

German mirror world Twinity has announced a deal in which the cinema in their replica of Berlin, the Cinestar CUBIX on Alexanderplatz, is to open early and will be branded with the latest Batman film, The Dark Knight. TThe announcement of the launch party this evening read as follows: "The virtual CUBIX is celebrating the premiere of The Dark Knight with a host of special events and features. Catch the movie trailer, scenes from the red carpet in London, and interviews with the cast and crew. Die-hard Batman fans can snap up stylish merchandising for their avatar, admire the virtual Bat Pod, or take a snapshot of their avatar in a Batman or Joker mask."

Twinity is taking the concept of a mirror world very seriously, with the aim to have Berlin replicated soon, followed by other major cities. There are several reasons to be optimistic about mirror worlds. Firstly, they may be easier to explain to mainstream users than other worlds such as Second Life, which are more outlandish and further away from the real world. Secondly, the commercial case for brands engagement may be stronger. There is a clear incentive for a real world shop to open up a virtual world counterpart in the same location, because of the added relevancy.

There.com has announced a partnership with a further five brands. Under the agreement, K-SWISS, bebe and Eberjey, London-based music merchandiser Bravado and the Country Music Hall of Fame and Museum will all be selling virtual goods to avatars through virtual storefronts. These campaigns are just the latest for There.com which, behind Second Life, enjoyed the greatest number of campaigns from brands (9), according to K Zero's figures released earlier this month.

The partnership follows the tried and tested model of brand engagement which has started to emerge. Users will be able to customise their avatars by purchasing virtual goods from the brands. They will also then be able to click through to purchase real-world goods from the brands online. According to There.com CEO Michael Wilson, that link between the virtual and real world purchasing is set to strengthen: "the quality of virtual goods has become so realistic that consumers can now begin to make real-life purchasing decisions based on an item's virtual counterpart".

In an interview today with K Zero's CEO Nic Mitham (to be published tomorrow), he pointed out that if done right, brands faced the tantalising prospect of virtual worlds providing a new revenue stream to brands, as well as advertising. If users are prepared to purchase virtual goods in large numbers – which they certainly seem to be – then the most successful brand campaigns in virtual worlds will become strongly revenue positive. Of course, that model strongly favours a few sectors, particularly clothing and accessories, but for those who can make it work, engagement with virtual worlds will be a no-brainer.

Telecoms technology company Nortel has announced that it is developing a 3D virtual world communication tool for enterprise. Named web.alive (and codenamed Project Chainsaw), the tool is squarely aimed at the business market, and is being pitched as a way to fix the current staple of business communication, the conference call.

On the face of it, the announcement isn't that exciting; Nortel's aim for web.alive is to " help facilitate internal collaboration as well as customer and partner interactions over the web. For example, businesses can hold virtual web-based meetings and allow employee avatars to interact in real-time." The idea of using virtual worlds for business communications is not a new one, and there are plenty of solutions already out there. However, I think the announcement is significant for a couple of reasons.

First, Nortel has a more established track record as a communications technology provider than some of the incumbents in the space. CIOs are more likely to feel happy that Nortel's solution is a genuine business tool which will generate ROI than with a rival such as Second Life, which is coming from the consumer market to the enterprise market. Secondly, the way in which Nortel is pitching the service will probably be subtly more appealing to enterprise than others. In their promotional video, they reiterate throughout that web.alive is a tool, and therefore implicitly not a destination. At any rate, it is further vindication of enterprise virtual worlds that a 'traditional' company such as Nortel has joined the space. Nortel is clearly engaging with strong intent; they also announced today the acquisition of DiamondWave, a technology which allows spatial perception of the location of voices in virtual worlds.

"People are no longer satisfied with existing collaboration tools or with static web sites supported only by a telephone contact center as the main point of interaction. They want to discuss potential purchases with others, exchange ideas, make business proposals, and fluidly interact with others in real-time," said Arn Hyndman, web.alive chief architect. "Additionally, web.alive will offer security not available with other virtual environments today because it is integrated with corporate enterprise systems and software."

Cyworld, a social networking site with a virtual world element, has announced that it is to partner with Mochi Media to create a new arcade of flash games, containing MochiAds. The idea is that the casual games arcade will be augmented by the ability for Cyworld users to play games with and compete against their friends on the service. For Cyworld, the deal provides greater engagement with the site and an additional revenue stream, and for Mochi Media it provides greater exposure for their games, and therefore their MochiAds.

Advertising in games is tricky, since when a user opens a casual game they typically want to play that game rather than follow an advert elsewhere. MochiAds approaches the problem by capitalising on the wait while the game loads, effectively showing a pre-roll ad. These adverts will be worth a tiny CPM, but the immense popularity of casual flash games means that the total might be worth something. Ultimately advertising in casual games is likely to take the form of branded minigames which a user can optionally play during a break in the main game, perhaps to earn bonus points. In the mean time, however, MochiAds' approach is the best on offer.

"Mochi Media provides a deep level of gaming integration, enabling our members to compete and engage with one another. We're constantly looking to increase the quality of our members' experience and providing a social way to interact with Web games is a perfect fit. Mochi Media helps solve a revenue problem that many social networks are facing. Since we don't allow banner advertising on the site and are the only major social network without it, we are very selective about our revenue generation partners", said Darian Patchin, Cyworld VP of product marketing.