Wednesday, April 8, 2009

Virtually fine

One of the most visible companies in the 'virtual life' market is Linden Labs, maker of Second Life. Over the last year, for various reasons, the Company has experienced a stream of executive departures, including founders, the re-asigning of it's founding CEO, and other turbulence.

What many casual observers perceive as the game market seems to be undergoing a seismic shift. The granddaddy of the industry, EA is struggling chart here, in a world where the growth seems to now be in casual games and virtual worlds. Both have strong on-line presence, with radically different business models that are anathema to EA's price points, upfront oriented revenue streams, and retail distribution. Another, more subtle thought is an open source comparison you can make with virtual worlds and 'state sponsored' games. It's a bit like the contrast open source vendors make with proprietary software and the Cathedral and the Bazaar where tens of thousands of virtual players create an experience that's superior to a top down design approach. Critically, the value is also delivered in a permacheap format.

Interestingly, and perhaps inevitably, the virtual market also has an open source flavor. One open source site, started in 2007, which at last count has been viewed more than 1mm times, is Opensimulator . For a perspective on the 'business model' of this, and other communities check this out. It's founder, Darren Guard, is leading a for profit venture Tribal Media that's a sponsor of OpenSim and is creating content for virtual worlds

The virtual world marketplace has now reached 300mm users (2008) and is growing 10-15%/quarter. Gartner (who would have thought Gartner would cover this segment, let alone thinking that IBM have a major presence in Second Life) predicts revenue for this segment will exceed $3B by 2012. A true sign of an industry that's hit the relevance bar is its own magazine Virtual Worlds Weekly.

Revolutionaries, doing what they want....and millions follow:

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