At the 2008 Consumer Electronics Show in Las Vegas, a panel titled "Virtual Worlds and the Massively Multiplayer Gaming Explosion" reviewed one of the year's largest and most burgeoning trends, examining issues from competition with console gaming to socialization, in-game ads and monetization. Is the shrink-wrapped box dead? What's left after WoW? Where will future innovation come from?

Trion World Network CEO Dr. Lars Buttler; Bob Ferrari, executive director of business development and sales for Turbine; AMD senior product manager Ian McNaughton; Stormfront Studios president and CEO Don Daglow; Flagship Studios' business development director and general counsel Steve Goldstein; Akamai product line director Kris Alexander and business development and international operations VP David Christensen of Sony Online Entertainment all participated in the panel, which was moderated by Michael Rowe, manager of the 3D Internet and Intraverse Department at IBM's Research Group.

Evolving Industry, New Responsibilities

Rowe began the discussion by raising the distinction between "virtualization" and online gaming and traditional console gaming.

Said Christensen, "I think that distinction is going away, but the big difference is play balance and controller versus keyboard and mouse."

"It's not just a port," Ferrari agreed.

Added Buttler, "Also, the difference between virtual worlds and games. It's much easier to monetize a theme park than a park. The virtual worlds don't have a good way to monetize today."

Said Daglow, "Sometimes people are first drawn in by the game, and then they stay for the people they meet there. In Neverwinter Nights, we got a letter from a woman who was abused by her husband and was a virtual prisoner in her own home. Her player friends who she opened up to encouraged her to get out, and she made it to a shelter, and then sent us a letter about how the game and her friends hand changed her life. The social power is the real power beyond what we create as designers even though we might like to think differently."

Bernstein believes the evolving industry has new ramifications for a game company's commitment. "In a box product, your commitment ends at purchase. Don's story indicates the power and responsibility you have in an on-line title. I'm pretty sure at least three of us here have policies for suicide threats and our operators."

The Ad Question

Rowe asked the panelists about how in-game advertising is playing out in the online space.

Buttler doesn't think it's a big factor today. "It's more like product placement than advertising today," he clarified. "In the future, you can have brand advertising as part of two-way exchanges in a game."

"Look at Lord of the Rings Online," said Ferrari. "We can't put a Nike logo into it. But we could put advertising up before you get into the game."

Suggested Bernstein, "It's really more 'out-of-game advertising' in some ways. Hellgate London is set in 2038, and much of the interaction is in the tube station. Anyone whose been in one knows thats a natural placement. Myth is a free-to-play game, and we cant put ads into a sword-and-sorcery environment -- we'd get pilloried by our users. But because it's free to play, we can do advertising before they get into the game."

Going Global

Rowe asked the panelists about how to build an online game's global relevance. Said Christensen, "WoW has done a great job of localization, but in some ways they're almost thought of as an Asian company because of their long history of success in Korea. We're working Asian and Indian companies and developers to help us localize our development."

"We've had to learn that too," Ferrari agreed. "They're completely different business models, retail models, governmental regulations. Now you have to put technology in our games for the Asian markets to time players out after a certain amount of time."

Alexander says Akamai has also had the same challenge. "How are you going to implement the provision of the game and follow the rules and regulations in the local environment?" He posited.

"Europe is the next market," Buttler asserted. "There are 400 million people who are rich and at peace and looking to play."

Said Goldstein, "We have 6 publishers for our game. 2 for us and Europe, and 4 for Asia. It is'nt just about languages, but about unique content. We have 2 SKUs and 8 languages in Europe. We have 30 builds and 30 SKUs for Asia. It's an incredible amount of work, and you need to be extremely careful picking your partners."

Added Ferrari, "And all the different builds add more production time and affect your release schedules and planning."

Commented McNaughton, "One thing we have to consider at AMD is we always want to make sure we want to bring as much power as we can to the most affordable level. So for us, we need to look at each geography very differently, because the sales of PCs are very different in different markets. How do we bring the tech down affordably and raise the bar?"

Christiansen pointed out that there are moral and cultural issues, too. "If you want to be successful in a different country, you need to bring in a local partner."

Noted Ferrari, "Localization also means looking at the technology in the country."

"Not all media works in all markets," cautioned Buttler. "You can pick and choose, and decide that you want the biggest and best out there and build something else for the other markets."

Goldstein opined that there's no such thing as a "global launch. "Global to me means one product you release all at once all over the world. That would be Nirvana," he said.

Stated Ferrari, "We build our games for North American players first. For Lord of the Rings Online, we do as much business in Europe. Germany is huge for us."

Added Daglow, "Historically, you'll see that with things like Starcraft -- the Asian market just loved the game, and later the company built specialized versions for those markets. So sometimes it's serendipity versus planning."

Virtual Goods And Secondary Markets

Next, Rowe asked the panel about secondary markets and economy. "I love secondary markets," Goldstein enthused. "I think it's the coolest thing. We built it into the game. Sony's also doing it, providing a legitimate way to interact."

Christiansen had a different view. "I think this is the beginning of the end of the secondary market. I think you'll see more of this happening in game. The exchange will still occur."

He continued, "I worked for [virtual item sales service] IGE, and I saw the problems it created for publishers, especially in customer support. So Sony announced Exchange just before I joined them. Going forward, you have to build this in, or they're consumeable or purely fashion items."

Agreed Alexander, "As soon as you have something of value, there will be markets created around them, and it's better for everyone to have those be official and supported, to give the end users security in using them."

Cannibalizing Traditional Markets

Asked an audience member, "How do you handle cannibalization of products? Is there a threshold of two or three games that someone can play?"

Replied Daglow, "If WoW takes half the air out of the room, what other games can take the rest of the market?"

Agreed Buttler, "Even WoW is a media property, and media properties age, and WoW will someday look old. But to any video game, you can build it to add content and experiences all the time."

Said Ferrari, "If you look at it, it's about, 'how much time and money do they have?' If you've got a group that's been playing for a long time, individual members may go out and find new games, but keep the old one for the community. And in the long run, we want to cannibalize our markets, and bring players from the old game to the new one."

Noted Goldstein, "Runsescape is at 17 million players, so we shouldn't refer to shrink-wrapped as the bigger market against free-to-play. It's the smallest. I think you're going to see microtransactions that people will be adopting, especially from Asian developers coming into the market."

Added Christiansen, "We're seeing that with microtransactions, the revenue often far exceeds the subscription basis. We generally see that "free-to-play" players are spending north of $20 a month on items. They're also easy to play. You can download RuneScape or MapleStory and be playing in 10 minutes."

Said Alexander, "Cannibalization right now is the game industry cannibalizing the traditional entertainment markets, and this is why you see those markets moving to games."

In Conclusion

Mused Christiansen, "I think you might see a future ability to play more games as they might be getting smaller. One reason I don't play some of these games is I don't want to spend that hour in a tutorial."

Added Goldstein, "As we spend the next three or four days talking about margins and monetizing, we shouldn't lose sight of the miraculous industry we're in, where people are selling imaginary gold and building real relationships across the world."

Concluded Daglow, "The battleship game is saturated. The smaller games are where you'll see the innovation in the future."

[Stephen Jacobs contributed to this report.]

Entropia's Jon "Neverdie" Jacobs will announce a $5 million virtual world treasure hunt from MindArk's booth at this year's CES in Las Vegas, the company announced. The treasure hunt, titled "Space Pirates," will be accessible to all Entropia members, and open to new players interested in joining.

The Space Pirates treasure hunt will also mark an expansion for Entropia, adding exploration and colonization of new planets beyond the home world of Calypso, which Worlds in Motion once visited. As part of the expansion, Entropia will introduce new tools, equipment, treasures and artifacts designed to assist avatars participating in the quest.

MindArk says that this year's CES will also be the launch site for its second annual MMO World Championship finals, taking place at its booth on Thursday, January 9th. Jenna Star Mercury of the U.S. and South Africa's Linden Avery will compete to win a prize package of Entropia land the company values at $25,000 USD, which features hunting and mining taxation rights that MindArk says will provide a monthly real world cash income.

The $5 million prize will apparently be put up by MMOWC LLC, a Florida-based corporation which exists solely to manage, market and handle corporate sponsorship for the Massive Multiplayer Online World Championships.

Oddly, when the company announced the cash-laden tournament earlier this year in Entropia at Neverdie's club (often cited to be valued at $100,000), the prize package was revealed as a two-parter: first, an optional all-expenses paid trip to Florida, where the winner will be filmed for -- get this -- a reality TV show hosted by Club NEVERDIE owner Jon Jacobs (a reality show about a virtual entrepreneur? How's that for crossover?). Second, $20,000 (not $25,000) worth of Entropia land. No word on whether Ms. Star Mercury or Mr. Avery will be the next reality TV star after all.

Jacobs commented, "CES has it all - gadgets, games and glamour. It's like the electronics version of the Cannes Film Festival. I'm extremely excited to be riding the crest of the virtual worlds wave at CES this year."

Looks like Sandio chose CES as the venue to officially announce its "3D Internet Mouse," which first sneaked onto our radar earlier this year. It's geared to handle 3D navigation -- whether that's flying around Second Life or manipulating 3D models in Google SketchUp.

According to the company's announcement, the 3D mouse features an intimidating sixteen programmable keys, and while Sandio explicitly says it wants to enable Second Life users to move in various directions, fly and crouch all with one hand, leaving the other free for keyboarding, it also suggests that using the mouse can provide PC gamers with "some unfair advantages."

Reflexes are key in games, and I'll leave the profusion of snarky jokes about one-handed Second Life users to other sites. The Sandio 3D Internet Mouse is currently available in the U.S., Canada, Japan and China, and at eighty bucks, is a relatively pricey peripheral -- is virtual world dexterity becoming that important to users?

Watching the historically distinct spheres of online social worlds and traditional video games in 2007 was a bit like watching wild creatures on a nature show -- the two circled each other with distinct wariness, and then increasing curiosity. 2008 is set to be the year the two play together like frolicking puppies, and it'll begin to get tougher and tougher to make out which tail or ear belongs to which animal.

Certainly, the virtual worlds space distinguished itself with some unique trends that set it apart from gaming. For better or for worse, Second Life began as the industry's poster child -- a navigable, interactive 3D space that was clearly not a game, and as the largest target, it suffered much suspicion, if not outright derision, from traditional gaming spheres. "What is there to do there?" People wondered. Follow that up with a boom of ad-supported -- if not outright advertising-themed -- worlds targeted at the traditionally fad-obsessed teen and 'tween market, add a few great big dollar sign headlines, and the success of some stuffy-sounding business products, and the game world was prepared to be highly skeptical.

After all, game fans had enjoyed a historically isolated universe. The only time people bothered them was to periodically blame gaming for childhood obesity, lapses in literacy or heinous crimes, and gamers closed ranks and kept to themselves, pleased with their highly complex and misunderstood medium. But then, a few major things changed.

The explosive success of Blizzard's World of Warcraft showed that online gaming could go mainstream in a big way. Nintendo's Wii console sold like hotcakes, as a contented fringe audience began -- at first grudgingly, then inclusively -- making room for mothers, grandparents and the once-dreaded "casual gamer." As it turned out, the casual gamer proved to be as loyal and voracious a demographic as the core console market, and this tidal wave of "gaming for everyone" helped pave the way for a widespread redefinition of who plays with entertainment technology and why. In fact, D3P's Puzzle Quest -- a portable title based squarely on the traditional casual "match three" puzzle mechanic -- made 2007's "best-of" list for many gamers who turned up their noses at casual play just a short time ago.

Taking advantage of an increasingly malleable audience and hoping to capture some of the feverish loyalty and investment WoW users felt for their world, game developers of all stripes took a much-needed closer look at what people find most gratifying about play. No surprise that, given the "group gaming" mentality spearheaded by Wii and the online play offered by Sony's Playstation Network and Microsoft's Xbox Live, alongside massive user numbers garnered by social media sites like MySpace and Facebook, the key message was that people like to use play as a way to connect and socialize with one another. Kids aren't the only ones who like to show off fashion duds or fame points in places like Habbo Hotel and vSide, but an all-ages audience can be proud of their Xbox Live gamercards, leaderboard standings or special gift badges on Facebook.

Virtual goods that demonstrate rank, popularity, social relationships or personality proved to have real value for both gamers and users of social media. In games, these objects convey a competitive advantage -- but the prestige that goes along with it is equally important. And whether or not virtual goods are involved, personalization is key. We now live in an era where a core-market console title like Mass Effect now has a point of commonality with Habbo Hotel -- a fully customizable, self-determined lead character.

Gamers have begun to demand the same freedom that users of online worlds enjoy to personalize their experience, contribute the fruit of their own imagination. Turbine discovered emerging player behavior in their Lord of the Rings Online MMO that strongly indicates that users will create their own fun if given the right tools -- more than that, they want to -- and Raph Koster's Areae aims to take that concept to unprecedented levels by allowing users to create their own worlds entirely with Metaplace.

When Worlds in Motion began covering the rapidly-emerging virtual worlds space, we attempted to draw a clear line between developments in that sphere and news that must be relegated strictly to the gaming world. That line is no longer so easy to draw. Issues of microtransactions, alternate revenue streams and business models, in-game advertising, user-generated content, player behavior and social media now belong equally to games, virtual worlds and social networks, and now that traditional boundaries have become irrelevant, it's an exciting time for the evolution of entertainment.

The inaugural Worlds in Motion Summit was established to unite industry leaders from these previously disparate fields to at last share points of view, experience, observations and expertise. We aim to look past the virtual worlds hype and dispel the myths to mine the truly essential, inspiring and often surprising trends, facts and lessons from these rapidly-growing media forms, and find the clear paths forward for education, business and the evolution of the way we play.

Speakers for the event include Club Penguin CEO Lane Merrifield, Disney Online senior vice president of premium content Steve Parkis, Nick.com senior vice president Jason Root, Neopets senior vice president Kyra Reppen, Dr. Eyjólfur Guðmundsson, Ph.D, in-world economist for EVE Online, Gaia Online CEO Craig Sherman, John Bates, director of business development for Entropia Universe, Multiverse's Corey Bridges and Rafhael Cedeno, MindCandy's Michael Smith, Turbine's Jeffrey Steefel, Areae's Raph Koster, Relic Labs studio head Adrian Crook, Nexon's Min Kim, Millions of Us' Reuben Steiger, among others.

The deadline for early registration for the Summit is January 16th, so register today! The Summit is available to attend via several different Game Developers Conference 2008 passes, and more information on the event plus the speakers announced so far is available on the Worlds In Motion Summit webpage.

At the 2008 CES, Intel CEO Paul Otellini's keynote presentation featured a live jam session with the band Smash Mouth -- but only lead singer Steve Hartwell was physically present. The other band members participated virtually, using technology by Organic Motion, eJamming and Big Stage. The virtual jam session was presented in a 3D virtual garage built by serious gaming and learning technologies company Virtual Heroes, to demonstrate how virtual world technology and online connectivity are evolving social interaction and group experiences.

Big Stage created the 3D avatars of the Smash Mouth band members with their instruments, playing in Virtual Heroes' garage. Big Stage says that, through its 3-D capture technology, users can create a 3D avatar of themselves just by uploading three simple digital camera photos of themselves. The company explains that from there, its technology is capable of mapping a user's face structure to create an animation-ready avatar with lifelike movements and gestures in less than a minute, and users can add accessories like hair and eyeglasses to personalize the look. Avatars also end up in Big Stage's library of user and professionally-generated content, which consists of still pictures, games, animation data, virtual worlds and social networking and community content.

Jerry Bautista, co-director of Intel's tera-scale computing program, said, "In our research at Intel we are looking for new applications that will take advantage of the advancements in multi-core computing, bringing new capabilities to consumers on mainstream PCs. The combination of serious games animation with virtual world technology by Virtual Heroes combined with multi-core processing power, is a great example of what could by done in this new computing era."

Virtual Heroes worked with the architecture of the America's Army training platform, as well as the 3DiTeams Duke Medical Center's Human Patient Simulation Center app. Said CEO Jerry Heneghan, "We are thrilled with the opportunity to help Intel present exciting new technologies with collaborative virtual worlds. There is no better venue than CES, to showcase the future of interwoven technologies for work and play, and we were honored to play a key role in making that happen."

This collaborative presentation at the CES sends a clearer message than ever that virtualization is an important part of developing tech trends, and Intel has always demonstrated an interest in exploring its various uses for business and entertainment. Following this event, it's likely that other tech giants and entertainment bigs will take notice, too.

Many game developers are in the throes of creating a product based on a license. But how do game developers co-ordinate their IP with other media?

Worlds in Motion's sister site, Gamasutra, is presenting an in-depth look at the creative process that went into producing World of Warcraft tabletop RPG books, courtesy of Luke Johnson, the co-ordinator of the book series at White Wolf's end. What works and what doesn't when you want third-parties to extend your game world?

Firstly, Johnson explains of the necessity to add detail to the books to make them sufficiently detailed:

"When you're writing these books, you need to make up things. How orc culture feels about mages, for example, or what the streets of Stormwind would be like for a poverty-stricken child. We extrapolated from existing material, coming up with a clearer and more detailed picture of what Azeroth would be like for someone who truly lived in it.

However, Blizzard didn't feel comfortable allowing a third party, like us, to invent stuff about the Warcraft world. That's understandable, certainly, but definitely a problem if you're a roleplaying game line."

Thus, it was necessary to work out a sensible solution, and according to Johnson, "We ended up with the following procedure":

"1) We would write the books (using the above strategies), making stuff up when necessary. Then:

This process -- while it eventually resulted in a great product that made everyone happy -- was long and arduous."

The full article on the subject is now available on Gamasutra, including much more information on the process gone through to arrive at the books, and some suggestions on alternate processes to arrive at similar or more refined results. Given that many online world products today are increasingly incorporating real-world item tie-ins, or aiming to offer users a selection of ways to engage with a persistent world, this feature is also of interest to the virtual world set!

The National Academy of Television Arts and Sciences honored virtual worlds among the winners of the 59th Annual Technology & Engineering Emmy Awards at the International Consumer Electronics Show in Las Vegas. In addition to recognizing virtual worlds and gaming -- sometimes side-by-side -- the 2008 Emmy Awards honored science, engineering and technology achievements for broadcast, broadband and personal Television.

Said NATAS in a statement, "The Technology & Engineering Awards honor excellence in advances in the use, creativity and adaptation of technology that enhances or improves the consumer experience with media across multiple platforms."

The long-titled Emmy for Outstanding Achievement in Advanced Media Technology for Best Use of Commercial Advertising on Stand-Alone Broadband Devices (Personal Computers) went to Showtime Networks and Electric Sheep's collaboration on the The L Word in Second Life. Linden Lab was also honored in the User-Generated Content category, alongside Electronic Arts, for Pinball Construction, and Id Software for 1996's Quake.

MTV's Virtual Laguna Beach took home the Emmy for Outstanding Achievement in Advanced Media Technology for Creation of Non-Traditional Programs or Platforms. In the category of Development of Massively Multiplayer Online Graphical Role Playing Games, AOL-Time Warner, Stormfront and TSR-Wizards of the Coast earned an Emmy for the original AOL MMO Neverwinter Nights, Sony Online Entertainment was honored for Everquest, and Blizzard received an Emmy for World of Warcraft.

Among the presenters at the evening ceremony were Gary Shapiro, president and CEO of the Consumer Electronics Association (CEA), astronaut Buzz Aldrin, and Peter Price, president and CEO of the National Academy of Television Arts & Sciences.

Said Peter Price, NATAS President and CEO, "For the first time in our 59 year history, not all winners will be presented with an Emmy statuette at this year’s ceremony due to litigation with the Hollywood-based Academy of Television Arts & Sciences. We are in court aggressively fighting for the right to recognize the talents and achievements of these companies and individuals without whom our industry would not be the world leader it is today. Once victorious, we plan to present each winner from tonight’s event with their own Emmy.”

Toward the end of 2007, toy company Playhut debuted its GoLive2 line, which encompasses its two kid-focused, gender-themed online worlds: Zynia, home to the doll-like Mystikat Kutties, and Onimech, home to the Wowbots. Now, Playhut has announced it will add toy tie-ins to the mix, debuting four Wowbots and four Kuttie toys that come with accessory packs at the Hong Kong Toy Fair.

The toys each come with passcodes to enhance the online experiments by adding new areas within the toy's corresponding virtual world. Playhut says they'll begin to hit retail in Spring 2008.

Second Life's Ars Virtua Gallery and New Media Center has an artist-in-residence program, and they're now seeking submissions from both established and emerging artists to work within the World of Warcraft environment. The selected artist receives a $400 stipend, training and mentorship from the Center, and his or her work will receive an exhibition in Second Life and on the web.

According to the program, "Ars Virtua Artist-in-Residence (AVAIR) is an extended performance that examines what it means to reside in a place that has no physical location. The purpose of the residency is to reflect on the nature of the game environment and terrestrial world in the context of contemporary art."

The AVAIR program is aimed at examining "space, place and metaphor," and encourages new artists to challenge traditional ideas about art using new technology and social media. Artists applying for the residency are encouraged to check out the WoW world and "be prepared to evolve in response to the synthetic world."

Applications and letters of interest are due January 15th, and following an interview process, the official announcement of the winning entrant will take place on January 21st.

[Via Networked Performance]

Demonstrating that immersive realism -- as supported by high-powered graphics tech -- is becoming as important to the online experience as it has traditionally been for console gamers, Turbine recently announced that its Lord of the Rings Online: Shadows of Angmar MMO now supports Microsoft's DirectX 10 API, along with NVIDIA GeForce graphics processors.

Turbine director of game technology Fernando Paiz explained, “Turbine has a history of pushing the graphics envelope so we can deliver state-of-the art immersive virtual worlds. We began working with NVIDIA very early in the development cycle so that we could fully leverage DirectX 10 technology to achieve our goal of creating the most complete and authentic recreation of Middle Earth. The results speak for themselves, as The Lord of the Rings Online has set the bar for what persistent online worlds can be.”

Lord of the Rings Online attempts to deliver as authentic a recreation as possible of Tolkein's Middle Earth for players to visit, and it's interesting to hear Paiz refer to it expressly as a virtual world and not just an MMO. Worlds in Motion recently discussed how it's getting tougher to determine what traits separate virtual worlds from games, and it would seem this goal of creating a persistent world for users and aiming to make it as immersive and lifelike as possible is becoming primary for many online worlds -- beyond creating a game, it seems to be a broader objective of creating a sense of place and experience.

Gaia Online has announced it's received an investment in an undisclosed sum from Time Warner, as part of a $12 million financing round completed last year. According to the Hollywood Reporter, Time Warner doesn't score any managerial influence over Gaia from the investment.

The investment seems similar to one Gaia recently picked up from Sony, at the time that Sony and Warner Brothers agreed to bring films into the Gaia world. It's recently begun featuring those movies, and Gaia CEO Craig Sherman told the reporter those features have been "extremely successful."

It's possible that Time Warner will also begin bringing some of its properties into the Gaia world; none of the terms of the investment were revealed.

[Via Hollywood Reporter]

Though the long-term usefulness of Second Life for academic purposes remains a hot debate topic, researchers and educators maintain interest. An interesting Campus Technology interview talks to Drexel University professor Jean-Claude Bradley, e-learning coordinator for the College of Arts and Sciences, about Drexel's Second Life presence. Bradley was one of the skeptics at first, but found himself using Second Life to support his Introduction to Organic Chemistry course, and he offers some very grounded and pragmatic feedback on his experience, discussing what has worked for him -- as well has what hasn't.

From the interview:

"JCB: ...The really important part about it is, it's a social site. So my students get to meet other students ... and teachers from around the world. And the content attracts a consistent [caliber] of person, people of like mind. That's very powerful.

CT: What's an example of something that doesn't work?

JCB: Video doesn't work that well, in my opinion. You're better off just using iTunes.... It's hard to tell if everything is working properly for everyone. I just don't like to use it. And with the viewer [software] I've used, you can't fast-forward. I've put a few of my lectures in Second Life, but [the rest] are on my wiki.

If I really wanted to, I could make sure everything is working, but it's just not worth that extra effort."

Bradley explains the success he's had using Second Life with his 175 students, and some of the drawbacks he's faced, in the complete interview.

The Magazine of Online Media, Marketing and Advertising has just rounded up its "10 Things You Need To Know About Social Networking," and, anticipating $1.38 billion to be spent on ads on social networking sites in 2008, it provides a run-down of the factors that will affect the space.

Interestingly, it cites a Datamonitor report that predicts the online population explosion to peak in 2009 and to hit a plateau by 2012. Mobile is expected to take off, connectivity is expected to continue in importance, and OMMA also predicts that there will be a backlash against complex profiles, resulting in a simplification trend. If true, this could have ramifications on the avatar trend and the complex personalization options users are currently demanding -- and receiving.

The list specifically mentions virtual worlds, too:

"Virtual communities will remain problematic for advertisers.
Brands made a huge, exciting dash into Second Life, but so far, it's been lonely for them there. 'There is potential for user engagement, but simply opening up a shop in Second Life or other virtual worlds and hoping for the best is far from enough,' says Datamonitor's Ri Pierce-Grove."

It's a little short sighted, however, to only cite those ill-prepared Second Life brand rushes; the particular issue that OMMA mentioned was actually one of the bigger lessons to emerge from the second half of 2007, not a prediction for 2008, as Second Life itself seems to already be plateauing well ahead of Datamonitor's 2010 deadline. A better prediction might encompass the ways that advertisers are rethinking how best to use the virtual space, and creating actual branded events and interactive experiences and items in worlds appropriate to their targeted audience, as opposed to just opening a virtual store in Second Life. The latter, while it may be 3D and virtual, is the online world equivalent of a static billboard, while themed events, branded avatar clothing, and representative personality appearances are finding success and opportunity in worlds like There, Habbo and vSide.

[Via MediaPost Publications]

Online game publisher Outspark has announced it has raised $11 million in Series B financing in a round led by Chinese internet portal and instant messaging company Tencent. Existing investors DCM and Altos Ventures also participated in the round, which Outspark says it will use for growth, expansion, and enhancing its current offering, which includes Fiesta and Secret of the Solstice.

The company's primary goal is to help PC-based online games find the same market in North America as they currently enjoy in Asia. Outspark says it's attracted over 1 million registered users in less than five months to its "virtual playground" community, where it aims to support the work of Asian independent developers and continue the growth of those properties. The company also plans to cooperate further with Tencent and seek partnerships with other online game developers globally.

Outspark founder and CEO Susan Choe, previously COO of NHN USA and international director of Yahoo! Games is joined at the helm by chief studio officer Nick Foster, former CTO of Starz Media and head of global FX for DreamWorks Animation. Other Outspark team members come from Blizzard, Nexon, Electronic Arts, Webzen and Yahoo!.

We recently spoke to Susan Choe and Nick Foster about the unique ways in which they're pulling together experience, trends and proven lessons from these diverse media spheres, hoping to create a new kind of online experience for gamers, social media users, and development communities alike. Hit the jump for the full interview!

When we talked to Empire of Sports' Christian Müller recently about Empire of Sports, he told us the company of the same name was seeking Asian distribution for the casual, sports-themed multiplayer online world. Now, it looks like they've found it, as Chinese developer-operator Giant Interactive Group has announced it's snagged an exclusive license to operate the game in the Greater China region until 2011.

Empire of Sports Ltd. was jointly founded by sports marketing company Infront Sports & Media and F4, a European computer game development company. The titular MMO is their first venture, and they've said that multiplayer basketball, tennis, skiing, and a series of fitness and training games will be available when the title launches. They've also consulted professional sporting referees throughout the development process to incorporate real-world game rules.

Wei Liu, president of Giant, commented, ''We are very excited to announce this new licensing agreement. The sports game genre remains a largely untapped market in the Greater China region, and we believe Empire of Sports represents an ideal entry point and growth opportunity for Giant. With the 2008 Beijing Olympic Games nearing, we believe interest in sports-related games is poised to increase. Given the high quality, professional design and input from respected sports authorities on the development of Empire of Sports, coupled with our leading nationwide sales and marketing network, we believe Giant will be well positioned to capture share in the growing sports game market.''

Forrester Research is bullish on business virtual worlds, predicting a time when 3D virtual environments will become essential workplace tools. Although the analysts note that it might take some time, and cultivation of appropriate resources, the lead set by early adopters like IBM and Intel means that other organizations will be looking at ways they can follow suit.

"Information and knowledge management professionals should begin to investigate and experiment with virtual worlds," says the report. "Use them to try to replicate the experience of working physically alongside others; allow people to work with and share digital 3-D models of physical or theoretical objects; and make remote training and counseling more realistic by incorporating nonverbal communication into same-time, different-place interactions."

CIO got hold of the complete report, and gleaned a few key reasons why business virtual worlds can be expected to advance: Travel is expensive -- both for finances and the environment, and carbon footprint-conscious execs may find it easier to meet in a collaborative virtual place than to make frequent plane trips.

Another factor is the cost of equipment in real-world training environments -- if that material can be made available persistently and virtually, costs can be reduced. CIO cites Virtual Heroes' military training simulations as one example of how virtual worlds can provide an alternate way to do certain types of training and education more safely and for less cost.

The report also points out that a virtual experience of working alongside others can help colleagues brainstorm more naturally, whereas they might feel more intimidated or face other conversational challenges speaking up in person. Finally, virtual world environments help create planning exercises -- like letting participants role-play to experiment with various scenarios.

[Via CIO]

[At Worlds in Motion sister site Gamasutra, eCitySky director of strategy Frank Yu has penned the latest China Angle column, looking back at the major developments in China's industry in 2007 and what to expect in 2008, including an expose on the "innovative and perhaps insidious" business model of Zhengtu Online, and the legal implications of a real-world divorce on a couple's virtual items. Yu was formerly Microsoft's Asia-region Xbox business manager, and led the first China game team for Microsoft Casual Games.]

So what can we expect in 2008 for the Chinese game industry according to the Chinese Zodiac?

“The Rat year is a year of plenty, bringing opportunity and good prospects. It will be marked by speculation and fluctuations in the prices of commodities and the stock market; the world economy in general will boom. Business will be on the upswing, fortunes can be made and it will be an easy time to accumulate wealth.”

Sounds good, but this actually sounds like the prediction for 2007 -- the year of the Pig -- which was a pretty good year as well.

As we get ready for the coming Year of the Rat in 2008, let us look back at what 2007 and what it gave us. In the 2nd half of 2007 alone we saw the IPOs of Perfect World, Beijing Kingsoft Co., Ltd. (SEHK: 3888), Alibaba.com Ltd. (SEHK: 1688), NetDragon Websoft, Giant Interactive Group Inc. (Nasdaq: GA), and Pacific Online Ltd. (SEHK: 0543).

Almost all the major game portals launched a new game, and we have begun to see companies like Perfect World and Giant starting to license games and technology outside of China. Although 50 percent of the game revenues are still concentrated in the top three game companies in the market, some research houses see a further 30 percent growth in the industry in the next few years.

If we look at the market cap of China’s internet companies -- and the game companies comprise the bulk of the revenue from the Chinese internet -- we see a market value of almost $70 billion, according to NBD.com.cn.

For Google China’s Zeitgeist rankings for the Chinese web in 2007, we see the top four being QQ (Tencent’s IM system), China Merchant and ICBC Banks (for IPO and online banking reasons) and casual games like Audition, Kart Rider and World of Warcraft.

However, we are starting to see some criticism of this remarkable growth in gaming in the domestic media of China.

Chinese Crack

Giant Interactive, makers of China’s #1 online game Zhengtu Online, has been the target of a recent expose on what the writer calls “the System.” In the article, the writer tracks the many innovative and addictive mechanisms that the game uses to suck in users and lighten their wallets through various mechanisms and appeals to vanity, status and social commitments.

It's a worthy read for any western game designer to see how the virtual items model in China has become more than a game but a lifestyle. Zhengtu Online in many ways, both in game design and business model, is truly an innovative and perhaps insidious product of the hyper competitive Chinese game industry and the mind of Shi Yuzhu (史玉柱), the CEO of Giant Interactive. If you are going to read one article on the China gaming industry this year, this is the one to read.

“Like ZT Online creator Shi Yuzhu says, this is a game well-suited to the rich. In this world, the authority to bully others and the legal right to harm them are both for sale.

Although everything is virtual, Lu Yang once believed that she could find a golden road to glory and dreams. But like so many others, Lu Yang discovered that what was crafted from the endless inflow of RMB was actually a road to bondage.”

The original article in Chinese has mysteriously disappeared from various portals and news sites due to what some Chinese bloggers have expressed as pressure not from the government, but from Giant Interactive themselves and their potential massive advertising muscle. An English language translation can be found here from the Danwei Chinese Media site (while it lasts).

Divorce China Style

In what harks to be an interesting year in the converging of China’s virtual worlds with the real world comes this news from China’s western city of Chongqing.

A divorce in Chongqing turned ugly when both parties wanted a bigger portion of their joint online game accounts. Chongqing Business Post reports that a divorce between Mr. Wang from Chongqing and Ms. Ye from Huibei turned downright ugly when it came time to split their virtual assets. Wang saved Ye's character from being killed by another player in Shanda’s game of Legend of Mir 2 last September.

By October they were married, and by June they were getting a divorce all in real life. When it came time to divide their 10 Mir 2 accounts containing high level characters with a combined value of about $8,000, Wang wanted to keep the virtual stuff and give Ye their real life apartment to keep.

Ye, on the other hand, wanted to split everything equally, including the virtual assets. This case, although being one of the first public ones, hints that even larger legal and social implications for online games and assets looms in China’s future.

Good Luck Shang

I would like to wish a hearty good luck and thank you to Shang Koo, the founder of the China Angle column, on the new project that he will embark on in 2008. I have been a fan and reader of Shang’s work and his passion for games since we met at Chinajoy and I feel honored to continue his column.

[Frank Yu is a director of strategy at eCitySky Beijing. Prior to his current position, Frank started and led the first China game team for Microsoft Casual Games. He has also served as the first Regional Business Manager in Asia for the Xbox and Home Entertainment Division. He can be reached by email at capital@gmail.com].

At a pre-summit event for Media Grid's upcoming Boston Digital Media Summit, 54 Second Life residents proposed a three to five-year plan to create a dedicated "education grid" for Second Life, comprised of computers for non-profit learning-focused content.

Second Life News Network, which reported from the pre-summit event, says the idea would be to create a large, meta-tagged database of content specifically for educators so they can implement virtual learning environments quickly in their classrooms.

Sun Microsystems' Wonderland and Duke's Croquet were also mentioned as "immersive education platforms" that could be plugged into the proposed grid, as all three meet open source code requirements, and can be plugged into the proposed grid. Ideally, it would create a consistent cross-platform education experience with standard interfaces and modalities, explains Second Life News Network.

Said initiative director and Media Grid director Aaron Walsh during his pre-summit talk, "The future is not a single platform. Multiple platforms can provide similar experiences, consistent from platform to platform.”

[Via Second Life News Network]

Media In Canada recently consulted some local marketing experts to weigh in and reflect on 2007, and Twist Image president Mitch Joel picked out virtual worlds backlash as one of his biggest disappointments of the year.

He also predicted the online community concept will continue to gain in importance. From the article:

"'The second negative for me was the quick reverse on virtual worlds. A lot of brands left Second Life in 2007. I don't think virtual worlds are dying - I think we have yet to really get started. Let's give it time for the technology to get easier and for more and more people to be interested. We're almost there (just not quite), and I think it's way too early for marketers to be writing this channel off.'

MiC: What trends or issues are you spying for 2008?

'Real community. Marketers threw around the word 'community' like crazy in 2007, but I think it's going to take on real meaning in 2008. We're going to really learn (and see) what it means to be a peer to our consumers, and not the master-slave scenario we've become accustomed to through our control on mass media. (In case you were wondering, marketers were the masters).

"This is going to happen through the idea of providing help marketing - really helping our consumers connect, not just to our brands but to one another. It's not a trend or issue - it's what's on the horizon for marketers. Are you up for it?'"

Joel is clearly correct, as there's still a lot of interest and critical thinking surrounding the space. Second Life is still proving to be attractive for educators, non-profit organizations and outreach groups, while retail brands are reaching new audiences -- and engaging in new and deeper ways with their targets -- through more specific and focused virtual world branding efforts.

[Media In Canada - Way too early to write off virtual worlds: Joel]