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Media Firms and VCs Invest in Virtual Worlds

Venture capital and media firms have invested more than $161 million dollars in 16 virtual worlds related companies during the second quarter of 2008, not including two companies that were acquired for unknown amounts.

This compares with $184 million dollars in 23 virtual worlds related companies during the first quarter of 2008. That puts the total amount invested in the first 6 months of 2008 at $345 million.

"Interestingly, neither of the companies that were acquired, GirlSense.com by IAC and PixVerse by hi5, have actually produced virtual worlds. The former is a virtual fashion site and social network and the latter produces apps for social networks," notes Joey Seiler, Virtual Worlds Management author.

Both, however, have been discussed, or self-described, as having potential for virtual worlds, showing an eye toward the future. Those, combined with four investments in pre-launch companies, highlight the still emerging nature of the industry.

With two more investments going towards peripheral interfaces and a major investment going to virtual world solutions provider and platform developer ngi group from NTT for future integration, Virtual Worlds Management sees excitement picking up for the potential of virtual worlds even if the current cycle of investment is down from the $184 million in Q1 across 23 companies.

Investments are no longer simply being made in the consumer-focused, entertainment worlds, but in the surrounding products as well. Notedly, though, the cycle was still bolstered by, respectively, $40 million and $50 million investments in MMOG developers Turbine and Realtime Worlds.

The most money is still being given to high-end, entertainment-focused gaming virtual worlds, but many more investments point to a future for the industry with broader implications, ranging from social applications to education to enterprise-level services.

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