The discussion on governmental regulation of virtual worlds was particularly interesting. In essence, the problem is this: virtual words are more centralised than the internet, and so it is possible (at least in theory) to regulate them to a much greater extent. Linden Labs, for example, has banned gambling in Second Life, in a way that it would be impossible for Google, for example, to ban gambling on the internet. However, when governments start to get involved in regulation, things become much more complicated. Which jurisdiction does a virtual world fall in? Do the fairly strong intellectual property rights of the west prevail, or the weaker IP rights of countries such as China? Is jurisdiction to be determined by the country in which the world is hosted, or the country in which the user resides?

A mire of difficult questions relating to public policy and law enforcement quickly emerges, and the only obvious thing is that there will be no quick solution. As virtual worlds reach the mainstream, and as their economies develop to an even greater extent, the tensions in the way in which they are regulated will likely become more and more apparent until a sensible method of regulation is found. 

VizWoz, a UK virtual world targeted at kids, has announced content deals with Twentieth Century Fox, Paramount Pictures, Walt Disney and Universal to display trailers and secondary content such as interviews at their virtual world cinema. Up to this point, the ‘cinema’ has been showing fairly minor cartoons, so a deal which brings in commercial content, even if not the films themselves, will be a big boost. The studios, of course, are keen to find as many ways as possible to advertise their films, and are likely to seek as many deals with sites targeting children as possible.

VizWoz may have a considerable educational element going forward; its CEO and another executive are former teachers (with the latter described as ‘taking a lead on educational projects’). CEO Daniel Laurence also has past form in this area as the founder of School Stickers and subsequently online reward system MyStickers, both providing a means for schools to reward their students. The potential educational use cases for virtual worlds have been well rehearsed, but a further aspect which may work well is the ability to offer in-world currency as an educational reward – perhaps a feature to look out for in the future from VizWoz.

The site, launched earlier this year, reportedly has over 60,000 users. That’s not very many, particularly when compared to behemoths such as Club Penguin which are aimed at roughly the same age group of 7-14. However, it is not insignificant and if VizWoz can continue to provide valuable content in its world it stands a good chance of success.

[via NMA]

They have confirmed that the avatars will be a persistent identity for players using the Xbox Live service, optionally replacing the gamercard which currently carries a player’s information, of which Egbert said: “it doesn’t say much about me”.  The avatars, by contrast, are highly customisable, and Microsoft is clearly hoping to tap into users’ enthusiasm for using avatars as a means of personal expression. The avatar is tied to the Xbox Live account rather than to the console hardware, so it will follow a user round whichever console they are using.  Players have the option to use a picture of their avatar as their gaming picture, as well.

Developers will be able to integrate the avatars into games that they build for the platform. The framework will allow for the generation of avatars using metadata, avoiding the need for developers to handle the 3D rendering aspect. Avatars also do not have to be tied to a human player – random avatars can be generated as well as avatars which stay the same – the example given is as a game show host.

The fact that by the end of this year (unless deadlines slip, which is not beyond the realms of possibility) all three of the main console gaming platforms will have 3D avatars or virtual world implementations is highly significant, not least because it goes some way towards pushing the concept of avatars and virtual worlds into the mainstream, perhaps paving the way for widespread adoption of more non-gaming virtual worlds in the future. 

Zynga, a games network which operates a series of social casual games, has raised $29m in a Series B round, led by Kleiner Perkins Caufield & Byers, bringing its total funding to $39m. It has also announced the acquisition of YoVille, a virtual world Facebook application. Zynga is already making its games available as applications on Facebook and other social networks, with 2.9 million daily active users across their different offerings, including Texas Hold’em and Scramble (a word game). It had been believed that Kleiner Perkins were no longer investing in Web 2.0, according to a recent Fortune article, but Partner John Doerr made an exception for Zynga saying that they have ‘cracked the code’ in developing viral games.

The reason that Zynga has attracted such enthusiasm from investors is the appeal of its model. It is able to create games on the cheap which nevertheless appeal to huge audiences. By creating a portfolio of games, and using social networking sites and cross-promotion to build up a user base, they start to be in a position to be very profitable. They are also freed from the tortuously long development cycles of large, traditional games companies such as EA (whose former Chief Creative Officer Bing Gordon is also joining Zynga’s board today).

However, this new model absolutely relies upon the social aspect to games, and it is likely that a desire to strengthen this is the motivation behind the purchase of YoVille. A virtual world built on top of Facebook is not a unique concept – Vivaty is another example – and there is a reason for that; the social network offers a boost to viral growth, and the combination of an appealing virtual world with the Facebook platform is a recipe for lots of users.

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The most immediately obvious feature of the graph is that the age axis does not go above 40. Virtual worlds are a new technical phenomenon, and it should be no surprise that their initial adoption will be by younger people. This is surely the biggest gap in the virtual world market, but the important question is whether there is a market in that gap. 2D web social networks for older people have started to emerge, such as Saga Zone which is aimed at over 50s, but it is too early to tell whether people of that age group will adopt new methods of communication en masse. On the face of it, virtual worlds for old people could be a big hit, enabling often lonely elderly people to have more social contact, and the 3D paradigm may even make more sense than the world of websites. I suspect that this is a very long term growth area, although the industry has to hope that the market emerges before current users of Club Penguin reach pension age!

I was joined on a podcast by Sibley Verbeck, CEO of Electric Sheep, to talk about the announcement as well as get his insight into the latest developments in the virtual worlds industry – particularly the impact which Google Lively will have.

Listen to the podcast to get the full story, but the big point that I took away from my discussion with Sibley was the importance of going mainstream. I think he’s right to see that as the absolutely key thing that the industry has to work towards. Part of the solution will be technology – which is where WebFlock comes in – but it is also going to require clear strategic thinking to find ways to make virtual worlds more valuable to mainstream users. Mainstream adoption for Verbeck is what will enable business models to start to work more effectively.

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Charities rely upon people rallying around a cause to raise money, and virtual worlds have shown themselves to be an ideal way to do that. It is likely the hyper-connected environment of virtual worlds, in which communication is incredibly easy, which allows people to work together so effectively. The trend is a wider consequence of the internet – websites such as JustGiving, where users publicly donate money to a particular cause, having been invited by a friend, are evidence of that.

David Miliband (UK Foreign Secretary) has spoken about the power of communication driving support for a cause in the context of its ability to rebalance the relationship between the state and the individual. He calls it the ‘civilian surge’: “There are 200 million Chinese learning English; there are more bloggers in Iran than any other country in the world per capita; Buddhist monks march for democracy in Burma. I got the idea of a civilian surge when I was talking to David Petraeus [the US military commander] in Iraq because, he says, ‘You can’t kill your way out of this problem - you need politics as well as security.”

There is, of course, a commercial lesson in this. Virtual worlds offer brands the potential to mobilise support in their favour. If a brand can find a way to be the ‘in thing’ in a virtual world such as Second Life, with users really engaging with the message behind that brand, that could be incredibly valuable. That potential is arguably at the route of advertising interest in virtual worlds, and is perhaps the holy grail. 

That’s the message from Kaz Hirai, president and group CEO of Sony Computer Entertainment, in an interview with GamesIndustry.biz. Home, a virtual world for PlayStation users, has been in development since 2005 and has been dogged with a series of delays. Initially intended to launch in late 2007, it was then postponed until spring 2008. The latest timescale is an open beta to be launched in the autumn of this year.

According to Hirai, the reason for the delay is the desire to get Home right first time: “had we launched it before we thought it was the right time and the right features and functionality to launch it - with the high anticipation, people would go there in droves the first time around, they would check it out and say, “This isn’t fun at all, so I’m not coming back again.” With virtual worlds so dependent on user numbers –an empty virtual world which is supposed to be all about socialising isn’t much use- this may well be a sensible position to take.

The promise of Home is certainly great. Xbox 360 has enjoyed phenomenal success, and has turned into a real revenue generator for Microsoft. Home could potentially go beyond that, with advertising revenue on top of sales of commercial content and microtransactions between users. The graphics capabilities of PlayStation 3 may also enable the development of by far the most graphically impressive 3D world to date- developers will be able to rely upon content being processed the same way given the identical consoles.

Before that promise can be fulfilled, though, Home has to launch. Whilst it is still benefitting from good hype at the moment, too much delay could easily lead to a loss of interest, and the delay exacerbates any possible initial disappointment with the product. It’s a high stakes game; Sony could still get it right, and win big, or things could go very wrong.

MTV, the Viacom-owned music channel, has launched a virtual world: MTV House. It is a 2.5D world built in Flash, similar in that respect to Habbo Hotel. There are several different rooms: MTV One, MTV Two, MTV Hits, MTV Base, MTV Dance as well as MTV Bathroom and MTV Kitchen, all of which are accessed from a central lobby.

The main purpose at this stage seems to be to create another way for users to access MTV’s content. Heavy prominence is given to online videos, for example, which are discoverable in the different rooms. Each room also has a ‘character’ in it, an automatic avatar which, when clicked, gives a list of relevant content. In time, MTV is presumably hoping that a powerful social aspect to the world develops as well. Right clicking on the world reveals that it was built by Yomego, a virtual world development agency which offers a white label solution – it looks like this is what MTV has deployed.

The business model is to be based around advertising, in a potentially win-win situation for MTV; if House is successful, they increase user engagement with their own brand and content, as well as creating more inventory to sell.

This light weight approach to virtual worlds, with barriers to adoption as low as possible, may well be the most successful way for traditional media brands to take advantage of virtual worlds, at least initially. It stands a good chance of mainstream adoption, and is a low cost way for brands to ‘dip the toe in the water’ of virtual worlds.

House has initially been launched in the UK, and MTV intends to role the product out worldwide in the coming months. 

GigaOm has an interview with Mark Kingdon who replaced Philip Rosedale as Linden Labs CEO last April. Linden Labs and Second Life aren’t in great shape: growth, certainly in paid users, has stalled, and they are facing new competition every day which threatens to out-innovate them. The greater popularity of virtual worlds and MMOs such as World of Warcraft and Habbo Hotel, and the high-profile failure of many brand experiments in Second Life, might lead one to suggest that Second Life isn’t nearly as relevant as it once was.

Kingdom, though, is very bullish about Linden’s future. He’s disdainful towards Google’s Lively which was launched this month, comparing the vast number of consumer and enterprise use cases of his product to what he sees as Lively’s single use case: visual chat. He’s right at the moment – Lively doesn’t amount to much at launch – but Google has consistently demonstrated in the past that it can enter a space late and beat the incumbents through fast, enlightened iteration.

Refreshingly, he is aware that Second Life’s UI is far from ideal at present (potentially a key area on which Google could beat the incumbent virtual world, I would have thought). The ‘first hour’ experience of the product is irritating and counter-intuitive, and he states “We’re also working very hard to make Second Life intuitively, and maybe even delightfully, usable”.

Kingdon also confirms that an IPO isn’t in the short-term plan, which makes a lot of sense. Second Life, having been ridiculously over-hyped, is now suffering hangover from that, with many writing it off as irrelevant. They may be right, or they may be wrong, but with industry confidence in the archetypal 3D world at a low, Linden is absolutely right to postpone going public. If, in the short to medium term, they can restart growth of both user numbers and revenue (which whilst not public can be assumed not to be growing very fast, if at all, at the moment), and in the long term successfully establish themselves as the ‘glue’ between interoperable virtual worlds making money providing value added services, then they will be in a far better position than they are today. That’s a big if, though. 

Windows Live ID is the identity system which lies behind login to Microsoft’s online services, such as Windows Live Messenger and Hotmail. It has also made it available to third party developers to use it in their services. For example, Facebook (if it wanted) could enable users to login using their Windows Live username and password. The advantage of this is clear: the user only has to remember one user name and password and can easily control which online service providers have access to their information, and Microsoft gets to be in the powerful position of an identity broker.

However, Microsoft is not the only identity provider seeking to be the answer to a widespread problem on the web. Google has a similar service, but a more high profile option is the open source, distributed OpenID system. This is arguably better than proprietary systems as anyone is able to install the OpenID software and become an identity broker. It would perhaps be a better ideological and technical fit with OpenSim. Another potential obstacle in Microsoft’s way is Linden Labs, whom we reported recently are interested in becoming the guarantor of the infrastructure of interoperability, a central part of which would presumably be managing avatar identity between different worlds.

This is a fascinating problem which has many different potential solutions, not all of them ideal for the user. Ultimately it seems unlikely that any one provider will be able to wrestle control of the coveted position of identity broker, but what is certain is that many will try.

The game’s art style is anime, a cartoon style which is increasingly popular outside Asia, from where it originates. According to the press release “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 a large, immersive world promise hours of entertainment.”

From the language of the website, it would appear that La Tale is targeting a relatively young demographic, emphasising ‘cute characters’ and easy controls. If that is the case, it is certainly entering into a crowded, but large market for casual MMORPGs aimed at youngsters, most notably Disney-owned Club Penguin.

Applications for the closed beta are only open today. OGPlanet members can apply through the La Tale website.

In the past year, the BBC suddenly appears to have woken up to the wider changes of new media; the launches or revamps of initiatives including the iPlayer, podcasts and blogs indicate a wider realisation that they must create as many routes to their content as possible. Most recently, the redesign of BBC Three’s website which places user generated content at the core of the channel and makes a simulcast available, suggests that BBC Vision is seeking to drive real innovation at the intersection between traditional television media and new digital media.

Virtual worlds may seem like a logical next step. The BBC has a chance to be ahead of the curve on this one; virtual worlds have not yet reached the mainstream, allowing them to experiment and innovate in good time. Perhaps more exciting, however, is the power that the BBC has to bring virtual worlds to the fore in Britain’s media landscape. They are required by their charter to be mainstream. In order to operate in virtual worlds, therefore, virtual worlds must be mainstream – if they have not already reached it, the BBC will have to take them there.

This breathless speculation must come with the caveat that it is entirely possible that Reynolds will not be working on virtual worlds; it isn’t in his job title, and it is unlikely that the BBC would be able to be involved in virtual worlds with just one (known) expert employee. Nevertheless, any move into the space would be undeniably significant. 

According to an interview in Portfolio, EA is moving aggressively into the MMO space with the Knights of the Old Republic as well as an MMO based on the popular Warhammer war strategy game played with models. The two games appear to be part of a plan B, in contrast to the plan A option: acquiring World of Warcraft off Vivendi. Riccitiello confirmed that discussions took place, but a deal was not possible ‘because [Vivendi] couldn’t afford control of EA, and I wasn’t giving it up.” Basing their two upcoming MMOs on brands established and popular with gamers of different sorts already is the next best thing, as it allows EA to use its financial clout to gain a head start against the multitude of MMO competition.

The rush to MMOs on the part of ‘traditional’ gaming firms is partly because of the highly appealing subscription model. Where users can be persuaded to pay, popular MMOs are highly lucrative with the ability to sell both the game (or expansion packs) and the right to play the game. According to Riccitiello, MMOs are also part of the gaming industry’s strategy to shift off consoles and mobile devices: currently 2/3 of the game industry is based upon consoles, which is EA expects to fall to 1/2 in three years time.