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Quarterly virtual-world funding tops $148 million

Venture capital and media investments in 12 virtual worlds have reached $493 million this year, according to a market specialist. Maybe funding isn't as low as we think.

Virtual Worlds Management, a company specializing in the virtual-world market, released figures showing that venture capital and media firms have invested more than $148.5 million in 12 virtual worlds during the third quarter of 2008. So far for the year, total capital investment is more than $493 million.

According to the company, most of the funding is going to developers who create environments that have "strong gameplay elements or ties to media brands." Investors are also targeting the youth market and have been looking for more youth-centered virtual worlds than ever before.

The bulk of the past quarter's funding went to MMO (massively multiplayer online) game publisher Trion, which raised $70 million recently in a round that was led by Act II Capital, as well as Time Warner and Peacock Equity.

But most of the attention is shifting away from conventional MMO environments and moving to the youth sector. Of the 12 virtual-world developers that secured funding during the third quarter, six specifically target children or young adults. In fact, Gaia Online, a virtual world for teens, secured $11 million in July, and Knowledge Adventure, which provides an interactive educational environment for children, was able to land $5 million in funding in August.

The idea that venture capitalists will be more frugal over the coming months than they've been in the past few years has been discussed quite a bit amid the current economic crisis. But considering the sheer value of money spent on in the third quarter alone, virtual worlds may be one place that start-ups can buck that trend.

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