Second Life makes money while Twiter makes the noise

The article below was wrote by Victor Keegan and published at The Guardian .

Virtual worlds are getting a second life

We haven't heard much recently about so-called virtual worlds such as Second Life, in which you move around with your own avatar. Critics must be hoping they have disappeared up their own ether. Actually, they are booming. The consultancy kzero.co.uk reports that membership of virtual worlds grew by 39% in the second quarter of 2009 to an estimated 579 million. Not all these members are active but I can't think of anything, anywhere, that has grown so fast in the recession this side of Goldman Sachs bonuses.

There's another curious thing: Facebook and Twitter are lauded to the skies, but neither has found a way to make money – whereas virtual worlds such as World of Warcraft, Entropia Universe, Habbo Hotel, Club Penguin and Second Life are all profitable because their business models are based on the digital elixir of subscriptions and micropayments, a formula that other websites, including newspapers, would die for. Twitter makes the noise, Second Life makes the money.

If you think virtual worlds are a passing fad, look at the figures. Almost all of the 39% growth came from children. Girls used to grow up with their dolls; now they are growing up with their avatars. This goes largely unreported because the users don't read newspapers, but as Kzero reports, poptropica.com – aimed at five- to 10-year-olds – has 76 million registered users. If you move up to 10- to 15-year-olds, users rival the populations of countries – led by Habbo (135 million), Neopets (54 million), Star Dolls (34 million) and Club Penguin (28 million). It starts tailing off among 15- to 25-year-olds – apart from Poptropica (35 million) – but it underlines the likelihood that as youngsters get older they will be looking for more sophisticated outlets and for ways to link existing social networks such as Facebook or MySpace to more immersive virtual worlds. The telephone was a one-to-one experience; email linked friends and colleagues; Facebook extended this to friends of friends but virtual worlds offer – as Twitter does in a more constrained context – the opportunity to link with anyone on the planet sharing similar interests.

Second Life, once the posterboy of virtual worlds, is consolidating as it tries to make the experience easier and less crash-prone while moving adult content to a separate zone. Only a small fraction of its 19 million registered users are active, but it is still the creative laboratory of the genre. Corporations find it useful for holding international meetings or to recruit staff and educationalists are doing lots of interesting things including language teaching. But Second Life may not end up as the preferred platform as new business models take advantage of the rapidly improving technological developments elsewhere.

In order to get a more streamlined experience, most of the new virtual worlds don't allow users to make their own content. Twinity, which has just raised €4.5m in new funding, has a virtual version of Berlin and Singapore (with London still in the pipeline): you buy existing apartments or rent shops but can't build yourself. Bluemarsonline.com – still in testing mode – promises much better graphics and more realistic avatars at the expense of not allowing members (as opposed to developers) to create their own content.

One problem of virtual worlds is that you can't go from one to another. But evolver.com enables users to move creations across worlds and OpenSimulator lets you create a virtual world on the hard drive of your own computer, linking to other compatible ones, such as Second Life, if you choose. With technology moving so fast and a whole generation growing up for whom having an avatar is second nature, virtual worlds have nowhere to go but up. Only they won't be virtual worlds – just a part of normal life.