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Web Gaming 2.0 Revolution

$1 Billion Invested in 35 Virtual World Companies in the Past 12 months

I subscribe to Virtual World Weekly. For those involved in virtual worlds, social networking, massively multiplayer games or the web industry, I recommend that you do too. I pasted this week’s industry disclosure (yes thats right, every month there’s something fact-driven that you can show to potential investors) here:

$1 BILLION INVESTED IN 35 VIRTUAL WORLDS COMPANIES IN THE PAST 12 MONTHS

33 Companies Raise $196.8 Million, Two Companies Acquired for $810 Million

We have just released the data from a comprehensive study of accountable transactions that venture capital, technology and media firms have invested more than $1 billion dollars in 35 virtual worlds companies in the past 12 months, from October 2006 to October 2007.

Of the $1 billion, $196.8 Million was invested in 33 companies. Significant investors in the space include Redpoint Ventures, Charles River Ventures, Intel, and Rustic Canyon Partners. Media companies are also making sizable investments, including Disney, CBS, Time Warner, and GE/NBC Universal’s Peacock Equity Fund. The remaining $810 million went to two acquisitions: Walt Disney’s $700 million acquisition of Club Penguin and Intel’s $110 million acquisition of 3D virtual worlds graphics technology company Havok.

“Investors are not just venture capital firms, but also include major technology, media and entertainment companies,” said Christopher Sherman, Executive Director of Virtual Worlds Management. “The amount of money invested in this period of time is staggering. We don’t see any slowing in the market adoption of virtual worlds technologies and expect investment in the space to continue. In fact the market is growing significantly, with the rate of adoption of virtual worlds increasing as the technology matures and has more to offer both consumers and enterprise customers.”

Investment spanned the entire virtual worlds value chain, including technology platform companies, virtual worlds developers, service providers and tools providers. Business models of the companies raising capital vary, ranging from advertising and subscriptions to virtual item sales, to enterprise software licensing, hosting and services. The investment numbers and the future of the industry will be discussed in depth at the Virtual Worlds Conference and Expo.

Virtual Worlds Companies Funded from October 2006 to October 2007
Each company links to a full article about their funding

Source: Virtual Worlds Management

Granted, 70% of the 1 billion comes from Disney’s acquisition of Club Penguin. Those other $300 million private equity investments will one day grow into $300 billion. I am sure there are at least ten times more deals that are stealth or smaller. Will our own Quasr get investment? We are looking for a suitable investor, if you know any, please drop a comment or e-mail and we will give you a commission or maybe even recruit you into the team.

Areae’s Raph Koster blogged about the term virtual world again. This time provoked by Christian Renaud of Cisco. Personally, I/we have something to say about virtual world categories too.

The web itself is the best example of one. Among all internet protocols formed, the web (www & http) is by far the most popular and useful. The web itself is a virtual world. I think with MetaPlace, Raph and Areae hits it right on. I won’t be surprise if they eventually captures the biggest market.

I am curious whether they have a business model that can lock their MetaPlaces’ (virtual worlds built on MetaPlace) intellectual property. Let’s say someone makes WoW with MetaPlace and 9 million subscribers pay $15 bucks per month, will MetaPlace earn a cent? How do they ensure that? Are they going to “lock” virtual world makers to their payment system?

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October 5, 2007 Posted by | Virtual Worlds, Web 2.0 | , , , | 2 Comments