Technology | Media | Telecommunications

Thursday, May 01, 2008

Virtual Worlds are Experiencing New Growth

Virtual Worlds Management announced findings from a comprehensive study of accountable transactions showing that venture capital and media firms have invested more than $184 million dollars in 23 virtual worlds related companies during the first quarter of 2008 with participation from many more VC firms and angel investors.

As they already noted in their recently released analysis, the youth market is heating up, and the investments show the same theme: 8 investments were made in youth-oriented virtual worlds for a total of over $16 million. Mirror Worlds and mixed realities also saw a significant, though more concentrated, interest with three investments totaling over $15 million.

"The total figure may seem anemic compared to Q4 of 2007's $425 million spread across 15 companies, but there are several things worth keeping in mind for any comparison," said Joey Seiler, Editor of VirtualWorldsNews.com.

"$300 million of that period went to Zenimax Media, which we acknowledged might be considered more part of the game industry than the virtual worlds industry. Q1's figures still includes some game-related investments, but by and large this figure represents money flowing into companies aimed at more social than game-based interaction, business use, and the creation of mixed realities."

Likewise, the recession is hitting investors. Q1 represents a 4-year low in confidence for Silicon Valley venture capitalists as well as a decrease in investment for 11 of 16 industries tracked by PricewaterhouseCoopers and the National Venture Capital Association.

At the beginning of the year, though, while JP Morgan was reluctant to advise any general investment in virtual worlds, it remained very bullish on kids worlds, predicting rapid growth for 2008.

"Regardless of a broad economic slowdown, virtual worlds are seeing more small investments across the board. With no acquisitions in Q1, that could be a sign of current development and future growth." said Christopher Sherman, Executive Director, Virtual Worlds Management.

"TheVirtual Worlds Expo, taking place September 3-4, 2008 in Los Angeles, should see some significant growth this year. As we look into the future we should see increased activity on the enterprise side as the Fortune 1000 recognizes the benefits of virtual worlds and Enterprise Virtual World technologies mature. And as these investment these numbers indicate, the growth in consumer virtual worlds is far from over."