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Virtual World Investment: $148M in the Third Quarter

The real-world economy may be teetering on the brink, but investment in virtual worlds is chugging along at a fairly strong clip. Austin-based Virtual Worlds Management calculates the total at $148.5 million this quarter invested in more than a dozen virtual worlds and massively multiplayer online games (MMOs), slightly down from the last two quarters but adding up to nearly a half billion dollars all told in this year alone.

Most of the money went to startups with worlds yet to launch, like the one featured here, a steampunk-themed MMO called The World of Gatheryn. In other words, look for a slew of new titles in the coming years– and, just as likely, a market glut. The bulk of the yet-to-launch sites are aimed at the teens and tweens market. (No surprise, as MMOs for the under-18 set remain the most popular.)

The largest single investment in the third quarter was $70 million in Series C for Trion World Network, which is developing a fantasy MMO and a project for the Sci-Fi Channel. That seems like a gutsy (or foolhardy) move, because both markets are risky: World of Warcraft continues to almost entirely dominate the swords-and-sorcery fantasy space, and science fiction-themed MMOs have historically performed poorly. On my initial read, I’d say the third quarter investment with the most promise is RobotGalaxy, a virtual world aimed at boys, who’ll be able to buy customized real robots in stores, then hook them up to their computers (and the world) via a USB cable.

Disclosure: My Second Life blog is frequently a media partner for Virtual Worlds Management conferences.

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8 Responses to “Virtual World Investment: $148M in the Third Quarter”

  1. There are so many MMO’s out there, it just needs to get the point where there is just one, big unifying (free) MMO that drags the majority of everyone in (sort of the Facebook of MMO’s). I’m betting that something is on the way…

  2. R_U_Confused

    RE: Curtis

    Former exec from gaming biz but you don’t seem to know how VC’s work at their core? The reason so many VC’s demand such a high price on their investments (i.e. taking the lion’s share % of a company for a smaller investment) is that they know the risk and demand the same return. It’s actually quite a similar analogy to your “hit driven business” comment. VC’s are more like shotguns than snipers – pick 10 horses at a 10-to-1 ratio and you hope 1 comes in.

    And if you think VC’s investing in movies is something new, or by your comment something that’s not already going on, you’re clearly uninformed.

  3. You can’t compare a traditional game publishing business with a MMO business. The traditional games publishing business is hit driven and I wouldn’t recommend anyone trying to get into that market and compete with the majors. MMO is also high risk, but the potential upsida is also high. And you have direct customer contact, online distribution and you don’t have to deal with shelf time of 3 months. I like the MMO market, its very flexible.

  4. Why are VC’s in the game publishing business? It is a hit driven business, I know as I’m a former executive from one of the major gaming companies, and the high risk investing model doesn’t fit the gaming model.

    What’s next, investing in movies? Trust me, it is the same risk profile.