For the last couple of weeks, I've been researching the fact that a lot of venture capital has been flowing into companies building virtual worlds or the technologies behind them.
On just a quick survey of things I'd seen recently, I found several examples of significant investments by either VCs or angels: CBS and Gladwyne Partners putting $7 million into The Electric Sheep Company; Charles River Ventures putting $2 million into Areae and $5.5 million in Conduit; Gladwyne's investment into Anshe Chung Studios; Sterling Stamos Capital Management's $4 million into Multiverse; and others.
Well, just as I was about to get serious about this story, I got a press release today from Virtual Worlds Management, the folks putting on the Virtual Worlds conference in San Jose, Calif., next week, touting the fact that its research shows that, in total, there has been $1 billion invested in virtual worlds in the last year.
Wow, I thought. I knew there was something serious going on here, but $1 billion?
In the end, though, I'm not surprised. Virtual worlds are everywhere these days. From those getting huge amounts of media attention, like Second Life and World of Warcraft, to those aimed at children and teens, like Club Penguin, Gaia Online, to those that are just quietly building huge user bases like Habbo Hotel.
All told, virtual worlds are becoming big business. And that's funny to me because when I first started writing about them and thinking about them four years ago, most people didn't really even know what they are. Now, they're on everyone's lips, and there's new ones popping up every day.
Still, a billion dollars is a whole lot of money. And, hopefully, all that investment is going to buy some really good, strong, lasting virtual worlds.
One of the reasons the genre still feels like a niche is that there is no single virtual world that everyone is using, like there is with social networks like MySpace or Facebook. World of Warcraft is huge, with more than 9 million paying subscribers, but that pales with what MySpace has.
On the other hand, before WoW launched in the fall of 2004, the virtual worlds and online games community thought it would be amazing if any American massively multiplayer online game--a much more game-oriented than social virtual world--could surpass a million paying subscribers. Now, no one talks about that anymore. And I think that if anyone had said back then that a billion dollars would be invested in the space in a single year, they would have been quietly directed to a room with padded walls and a very good lock.
But here we are.
Next week, the Virtual Worlds conference kicks off, and it's shaping up to be a very interesting show. And it better be, what with all that money in the room.