Not even three months have passed since Virtual Worlds 2008 presented some 150 or so companies, eager to join the virtual world bandwagon, and showed off what these companies think the future will be: roughly speaking, web-embedded, isolated virtual worlds, almost all targeted for kids and teenagers.
And a few have indeed been popping up lately. It’s not only Lively, which grows by about 2-5,000 new rooms per day (the second most active room seems to be a Brazilian one). Apparently, this was just the tip of the iceberg, as a lot of “hidden” projects were suddenly revealed.
We will need a new name to describe “social 3D web-embedded virtual worlds” (S3WEVW simply doesn’t work as an acronym), and they’re not exactly new. The market is mostly dominated by Habbo Hotel, and Disney’s Club Penguin, for kids and teenagers. Some analysts believe that their users might “upgrade” to either IMVU (more content, runs from a browser too — Internet Explorer only — but it cannot be “embedded” in a web page) or Google’s Lively. The idea is that kids all have their own blogs and pages on MySpace, and will soon start to place links to those virtual worlds (or embed whole “rooms”) on these pages as well.
Now let’s forget for a moment “how will these new companies make money” and look at the established models. For instance, Habbo Hotel makes money from selling Habbo Coins, advertising, and licensing their platform to be used on big web portals; IMVU sells currency and digital content, directly and through partners and developers. Club Penguin focuses a lot on giving parents a lot of control, and their income source seems to be mostly from merchandising (notice that Disney’s Virtual Kingdom, another take at building a 2D virtual world, “officially” closed doors for lack of interest). However, Meez is my favourite example, since it picked up where Yahoo Avatars left: allowing content for the avatars to be bought as well. And obviously they sell virtual currency as well. But they have gone a bit further. Not only are you able to use your cute avatar inside your own room (which Yahoo Avatars never managed to implement) and join Meez’s “hangouts” on MeezNation, but I’m pretty sure that Meez’s major source of income is (was?) from agreements to allow users of other social websites (like PhotoBucket) to use a Meez avatar inside their sites. In a sense, this is an understandable business model: it doesn’t rely on the success of the platform in selling virtual currency, but on the agreements they forge with partners. WhyVille, a 2D virtual world for children, uses this model exclusively — partners design content and pay for that privilege — with the interesting aspect that they tend to favour educational and non-profit organisations as partners.
Raph Koster’s Metaplace also goes a similar route: Raph claims that everything in Metaplace will be free, except for virtual currency, which will be his company’s only source of income. Metaplace is also a web-embedded 2.5D virtual world (a 3D version is supposed to be going to be launched “soon”) and targets a slightly elder audience. But the format is similar (i.e., also a web-embedded virtual world), with the difference that it’s quite more open than others: anyone can become a Metaplace developer (contrast that to Google Lively’s “totally closed content” environment; or IMVU and There.com’s “controlled content”).
After Lively, we also got announcements from Vivaty (also a web-embebbed 3D social virtual world, with far better avatars), and Just Leap In. Both are totally competing with Google on the same audience — but with far better graphics, performance, and ease-of-use (the latter is even just Flash, so it works on any platform that supports Firefox). Either is an example of something well done. Alas, none have the Google brand behind them; and none give clues on what their business model is. For me, of course, that’s the crucial point.