Virtual Worlds Take Over the Web

We seem to be in the era of virtual worlds.

$345 million was invested in 39 virtual world-related companies in the first half of 2008. And last year, Gartner Research predicted that 80% of all active Internet users will have a virtual-world presence by 2011.

With these figures in mind, MTV UK has gone digital with the launch of a social networking site MTV House, which allows members to create avatars who “live” in prefab buildings and participate in competitions and channel-related promotions. The “house” will offer brands the chance to reach MTV’s audience via advertising, product placement opportunities, themed “rooms” and sponsorships.

This is the second virtual world social networking site to be launched in the past two weeks with Google’s 3D world, Lively, announced earlier, which lets members create avatars and place them in a personal room that can be decorated to reflect their real world tastes. And unlike Second Life – perhaps its biggest competitor – Lively can be accessed across the sites you already regularly visit. So instead of adding the site to the list of websites people trawl through each day, members can embed Lively features onto existing properties, like a blog or a social network, using – of course – Google widgets.

Both brands are pretty late to enter the virtual world market. Second Life is clearly the leader in membership and in product placement with ZwinkyMeez, and Poptripica not far behind. (Second Life reports that over the last two months, 1.2 million accounts were logged in for over 65 million total hours.) Many major brands, including CNN, MTV, Playboy, CBS, Cisco, Toyota, L’Oréal and the American Cancer Society have significant virtual-world presences. IBM has made a particularly strong commitment to virtual worlds, and regularly holds meetings on the Second Life campus.

My question is how many sites can one really belong to? We’ve got social platforms, MOGs and MMORPGs. There are 2.5D and 3D chats, avatar environments and branded universes, plus full-on virtual communities. Not to mention adult games, virtual marketplaces and city guides. It seems the explosion of alternate reality options is never-ending.

I gave up Friendster when I joined MySpace and basically quit MySpace for Facebook, largely because that’s where my friends are. And, reports indicate I’m not the only one as MySpace continues to see drops in membership activity. I imagine virtual worlds will see the same trend. People will go where their friends are and/or where they will find the largest or most-like-minded membership.

So, clearly the success of these worlds will depend on niche and marketing. Other virtual worlds, like the PG-13 rated “There,” youth-oriented “Barbie Girls” and teen-oriented “Habbo Hotel” have already attracted millions of members because of their specific target. And, Sony will soon launch a virtual world around Playstation 3 called “Home” which will connect PS lovers.

Right now, it feels like we’re seeing a repeat of the early days of e-commerce where everyone burst on the scene to great fanfare and initial activity, only to be gobbled up by each other – at best – or to disappear into obscurity – at worst. So, as the virtual community market continues to grow, it’s up to us to invest our brands in the ones that will truly deliver reach. We should pay special attention to target audience activity and know what our clients’ competitors are doing as there may be opportunity to make moves before they do.

In the meantime, it will be interesting to see how many more virtual worlds enter the fray and which ones thrive, which ones merely survive, and which ones will become cautionary tales of market saturation.

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