AR, the layering of digital information over the physical world, has all the whiz-bang you want (Look, floating icons for bars and restaurants superimposed on your smartphone camera view!), but the mainstream appeal has been elusive. While leaders in the field have tried to push the edge of the technology with limited success, they’re now making a concerted effort to empower developers to incorporate AR into their apps. They’re betting that, in the hands of programmers, AR can finally find a home in consumer’s lives.

Tonchidot Corporation, maker of the Sekai Camera AR app, announced $12 million in new funding last week to help it expand its new SoLAR platform, which will allow developers to integrate AR into their social and location-based apps and games. Osuke Honda, a Tonchidot investor and partner with DCM Partners, said the pieces are falling into place for AR, especially with the growth of location-based services and social gaming apps like Foursquare and Booyah.

Honda said AR helps create a natural intersection between online and the real world, something that is becoming more of a reality with the growth of smartphone use. “After social mobile and location-based services, AR can make it all more engaging and more powerful,” he said.

Earlier this week, Qualcomm released a software development kit for Android phones and announced a $200,000 prize for the best AR app. Toy maker Mattel, which got some attention with its Rock ’Em Sock ’Em Robots AR demonstration,has signed on as an early partner and plans to turn the demo into a game. Another AR leader, Layar, last month announced Layar Player, an embeddable piece of code that iPhone developers can drop into their apps to enable augmented reality.

Providing easy tools for developers makes sense, creating wider momentum for AR and potential mash-ups that can resonate with users. That was one of the suggestions in a report earlier this year (subscription required) by GigaOM Pro Analyst John du Pre Gauntt, who outlined some of the improvements that AR needs to undergo before it finds wider acceptance. He said AR services also need to become more precise, something location-based apps like Foursquare might be able to help with through user geo-tags.

Unfortunately, AR looks like it’s in for a long slog. Widespread adoption might be a long time coming since the technology requires a smartphone, which is still only in the hands of about a quarter of the population. But this is the kind of technology that brings a smile to people’s faces. When combined with visual search features found in apps like Google Goggles, it really opens the world to a new level of exploration and engagement.

Related research from GigaOM Pro (subscription req’d):

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Barbie’s new role was chosen through a contest Mattel created this year that let consumers pick what Barbie’s next job would be. Computer Engineer Barbie won the popular vote, while girls selected news anchor as Barbie doll’s next career (what’s wrong with blogger, girls?). Computer Engineer Barbie will go on sale sometime this winter. That’s a binary code patterned T-shirt she’s wearing, and a smartphone, Bluetooth headset and laptop bag she’s toting. But my question is, does Barbie use a Mac or a PC?

The Redwood City, Calif.-based company, which provides personal video- and photo-sharing tools similar to Slide.com as well as physical products like DVDs, declined comment on the investment round. Earlier this year, One True Media introduced a separate business, called SpotMixer, that offers self-serve online video ad creation for small businesses. It later scored a deal to be promoted within Google’s TV advertising setup process.

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I was hoping to at least play Scrabulous when I travel outside the States, but no longer, because Facebook has preemptively blocked it across the globe. (Except in India, where creators Rajat and Jayant Agarwalla hail from and where a court case is still pending.) Worse still, I’m not particularly enthused by my alternatives.

The Argwalla brothers’ Wordscraper is generally seen as an inferior (if lawsuit-proof) replacement. For that matter, however, so is Electronic Arts’ Hasbro-sanctioned SCRABBLE Facebook app, which is hacker-prone, and from this player’s perspective, markedly inferior to Scrabulous — it’s excessively flashy, the board layout is confusing, and moving tiles is a kludgy process at best. I invited Liz to a game earlier this afternoon, but it took her awhile to get started, because the invitation was counterintuitively sent not to her Invitations box, but her Notifications channel.

Ironically, the best features in SCRABBLE, like live chat and leaderboards, were originally innovated in Scrabulous. To make matters even more aggravating, non-North American Facebook users can’t even play EA’s SCRABBLE, but instead, have to play yet another licensed version. (So much for playing with the 30 percent or so non-Americans in my friends list.)

So in this tangle of competing IP claims and threatened lawsuits, no one really wins — not consumers like me, but not even the companies most directly involved. Scrabulous was easily among Facebook’s very best third-party apps, and the Argawallas are none too happy with how they were still thrown under the bus: “[It's] astonishing that Facebook, which claims to be a fair and neutral party, took this step,” Jayant told The San Jose Mercury News. If I was a Facebook developer, I’d be worried about that too.

Image credit: EA.com. Fail embellishment by WJA.

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At $5.99 a month, the new “Barbie Girls V.I.P” account gives girls a wealth of additional perks for their avatars, like a virtual pet, exclusive access to a “Extreme DreamPark,” and, of course, “a special virtual tiara.” Which that means starting this week, millions of parents will face a uniquely 21st century dilemma: Should they pay $72 a year so their little girls can enjoy playing with Barbies that don’t, in the strictest sense, exist?

That’s also a challenge for the virtual world industry, which often depends on low-cost virtual item sales (ala Gaia Online and Habbo Hotel) or pre-paid physical toys (ala Webkinz) for its revenue.

Mattel’s subscription plan is an aggressively priced alternative, and many will be watching to see if this name-brand toy company can attract a decent number of upgrades. That’s far from certain, for while millions of teens and adults happily pay $15 a month to play World of Warcraft, $5.99/month seems like a high price point for pre-teens. Then again, a Barbie 3-Story Dream House Playset will set parents back $275, so maybe they won’t mind paying a lot less for the virtual version.

Image credit: barbiegirls.com.

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RealNetworks had pledged to step up to negotiate a settlement between the two parties. Om speculated Real was trying to buy Scrabulous, but with the launch of Scrabble by Mattel, that’s clearly not happening. Was Real being disingenuous? Scrabulous was making about $25,000 a month in advertising, which could mean the price tag for Scrabulous was too high for Real, or Hasbro and Mattel just weren’t interested in playing.

Real certainly tries to foist the blame on the gaming giants in its statement to the New York Times:

RealNetworks said that “it is important to remember that even if we reach an arrangement with the Scrabulous owners, both Hasbro and Mattel must approve” any Scrabble-related game.

As sad as it might be for the 600,000 users of Scrabulous, this is a clear-cut case of infringement. Mattel and Hasbro could have done the easy thing and bought Scrabulous and its user base, but they’re well within their rights to launch Scrabble online. I’m not sure this proves that it’s hard to make money selling an application on Facebook, or if it just proves that it’s hard to make money off of someone else’s intellectual property on Facebook. For now, however, the Scrabulous founders are still in the game.

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The legal troubles of the game cooked up by Rajat and Jayant Agarwalla, two brothers living in Calcutta, have been well chronicled, most recently by The New York Times. The game which has about 700,000 daily players brings in about $25,000 in monthly advertising revenues from online advertising.

All this attention has made Scrabble cool again. Electronics Arts is going to put out an online game. RealNetworks which has licenses from Hasbro and Mattel, want to make a Scrabble move, which spells S-C-R-A-B-U-L-O-U-S.

Harold Zeitz, senior vice president for games at RealNetworks, said Friday that he was working closely with the Agarwalla brothers to bring the official Scrabble game to Facebook users.

Following the release of the article, Bill Hankes, VP of Corporate Communications at RealNetworks sent a curious email, which makes me wonder if Real is planning to acquire Scrabulous.

Hankes in his email said that Real is not part of any legal action against Scrabulous, and since they have licenses from both Hasbro and Mattel, “we are in a unique position to bring all the parties together in an effort to preserve the Scrabble experience for millions of Scrabulous fans.” I contacted Hankes and asked him if Real was looking to buy Scrabulous.

We aren’t saying anything that specific, except that we’re big fans of Scrabulous and think because of our licenses from both Hasbro and Mattel that we’re in a good position to work with them keep the Scrabble experience on Facebook.

While he doesn’t necessarily say anything specific, the act of reaching out and talking about their ability to keep Scrabulous going tells me Real is hoping to make a play for Scrabulous.And if they did, it would be a pretty smart move on their part.

Real has been getting very serious about casual gaming, especially ad-supported casual gaming. It would get them a hit game for their casual gaming business and more over it would give them an entry into the Facebook/Social Gaming space, where they are facing competition from a whole slew of new comers.

Related Link:The GigaOM Show interview with Rob Glaser, CEO & Founder of RealNetworks.

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