Is the Virtual World a place for more investment … and profit?

I recently read articles about Disney*’s Q109 earnings.  Like everyone else, they were being affected by the current economic conditions.  No surprise there. I found interesting that they are actually seeing positive financial benefits in virtual worlds (VWs).  Club Penguin* was noted as already or near profitable and Disney planning to expand and develop their virtual world business in the next few years.  A note to Disney, you got a winner, my 4 yr old son, nearly jumped out of his chair after watching the World of Cars* trailer and can’t wait to play it.

If you have any young children, then you are probably going through or have experienced the Webkinz* craze. Those plush pets you can buy with secret codes that allow kids to create the same pet in the virtual Webkinz world.  They can care for their pet, buy stuff for their pet and play games with other virtual pet owners.  My daughter, through various sources, has accumulated about 10, my son has 2 and their friends many more.

These are just two examples that often regarded as brilliant business models and how, on what we term inside Intel, Immersive Connected Experiences (ICE) are changing the virtual world as well as the actual world.  Initial examples of ICE include two main categories: Simulated Environments such as virtual worlds, online multiplayer games and 3-D movies, and Augmented Reality where images from the real world are combined with digital information to provide an enhanced view of the globe around us.

With this kind of success, it will surely create a flood of interest from entrepreneurs and venture capitalists in the space.  Does that next big hit already exist?  I don’t think so.  Is there room for more?  I believe so.  At Intel, we are investing in research, technologies, hardware and software products, and initiatives to spur innovation in this space so that it will move creators beyond today’s nascent virtual worlds and online games.  Our goal is to remove key technical barriers to adoption through hardware and software innovations that improve end user experiences as well as the development of standards that improve interoperability.  Some few examples of Intel’s efforts are in:

-Visual Computing technologies for client and server platforms including tools and developments services

-Immersive Connected Experiencesand Tera-scale research

-Collaboration with Super Computing’09 conference to create a new virtual world, ScienceSim, for immersive science 

-OpenSim open source and COLLADA  standards group participation

-Sponsoring the Virtual Worlds Roadmap SIG which seeks to increase the success rate of virtual world-based ventures

So, what would VWs like Webkinz or Disney look a few years from now?  Can somebody come up with something better than the seemingly and deceptively simple Webkinz or Club Penguin?  What opportunities would venture capitalists see in virtual worlds, for kids or adults, other users or uses?  Some things are certain, computing technology will evolve, broadband connectivity will become ubiquitous, users become more sophisticated, these are good news for the VW space and those hoping to invest and profit from it.

Jimmy Leon

*Other names and brands may be claimed as the property of others.