VC funding is flowing into the backbone of online games. Last week, Hummer Winblad put $4 million into game billing service Aria Systems; this week, Benchmark is investing $7.8 million into Vivox, the official VoIP solution provider for Linden Lab’s Second Life and CCP’s sci-fi Eve Online, among many others. (Benchmark was also an early funder of Linden Lab,* and has a large portfolio of other online game/virtual world investments.)
What’s the play here? In my opinion, Benchmark sees Vivox as an online game alternative to Skype, and hopes the service’s many gamers and online world users will choose it as their universal VoIP-based calling solution. If you’re already using Vivox to organize group raids in Eve Online or build skyscrapers in Second Life, why switch to Skype for other uses?
And since this user base tends to be the most tech-savvy early adopters online, their VoIP choice could eventually drive more customers to Vivox — and away from Skype. On the other side of the ledger, it’ll be a challenge for Vivox to become a market leader purely on its existing client base: right now, Eve and SL have a combined monthly active user base of just under one million — not insignificant, but also not enough to challenge Skype’s mighty install base. (Or for that matter, Teamspeak or Ventrillo, two of the most popular VoIP services for World of Warcraft players.)
A smart move would be for Vivox to partner with other online world companies in the Benchmark portfolio— for instance, Gaia Online, Sulake (creators of Habbo Hotel), and Red 5 Studios, a new startup from several creators of World of Warcraft.
Hat tip: Virtual Worlds News. Image credit: Vivox.com. *Disclosure: I’m a former contractor with Linden Lab, and while I have no holdings in it or Benchmark, much of my professional work is still centered around Second Life.