AI 163 HiPiHi continues to grown the Chinese virtual world market with 75,000 registered users

Chinese virtual world HiPiHi now claims 75,000 registered users on mainland China, said President Xu Hui in 21st Century Business Herald. While the total number of registrations is likely even higher, as HiPiHi has pursued an international strategy, though not particularly aggressively, its Mainland base contribute about 3,000 to 4,000 active users.

According to the report, HiPiHi is also working with the city government to build versions of historic Wuhan in the Hubei province.

AI 159 USA Army to use Olive for immersive learning

Just today, Forterra announced a contract to integrate with Army technology for simulations and collaboration.

The Army trains 500,000 Soldiers every year and there is a significant diversity of learning abilities among those 500,000 human beings. What we are after is to develop better ways of training them so they can all be trained up to certain skill levels," Dr. John Parmentola, director for Army research and laboratory management told Nanotechwire.com of neuroscience research into training.

The goal is also to use virtual environments that builds on that research. "That's about creating virtual worlds that are essentially indistinguishable from reality. One of the key challenges we have in that area is to create virtual humans. Of course the work of neuroscience plays a key role in trying to create virtual humans that, for all intents and purposes, act and interact just like humans."

For more information please refer to AI 78.

AI 157 Whyville introduces micro transactions and a new virtual pet service called WhyPets

Numedeon announced yesterday a change in the business model of its premiere property, Whyville.

"We've had a subscription system for two years. We've consolidated that into a new system we call Pearls," explained CEO Jim Bower.
"The obvious reason to do this is that we think that the economic viability of virtual worlds, you need to have multiple different ways to get income. We are and remain primarily sponsorship and advertising based. In addition, having income that derives from the site itself remains a more stable and predictable source of income. "

As with everything in Whyville, stresses Bower, there's also an educational component.

The system is built on micro transactions and virtual goods to replace the traditional subscription model, but it bears elements of subscriptions on its own.
That interest in supporting a favored product may be part of it, but Whyville is also making the Pearls attractive with new, exclusive features. The Pearls announcement dovetailed with the launch of WhyPets, which let users buy, care for, and train pets in the virtual world. Eventually users will be able to gift, win, and earn WhyPets in various ways, but for now they're limited to Pearl purchases.
The company says that while other kids worlds have offered pets before, WhyPets are unique in the way that they learn and react to the way they're treated and trained.


"There is a sort of AI base to it. They both sort of respond to kindness from their owners and others. They have a range of behavior from friendly to a little unfriendly. They don't bite, but they can be more or less cooperative based on the kindness they receive and whether they're fed regularly and things like that," said Bower. "We're about to launch tomorrow a feature for pets where they will be able to sniff out and dig hidden treasure on the site, Clams or projectiles or other sorts of items that you can send your pets out to root around and find. That's something the pet is more willing to do if you have a better relationship with your pet."

The focus on micro transactions, new items, and pets that acquire even more virtual goods seems like a strong emphasis on collecting and managing properties in the virtual world. Bower says that the acquisition of items and aggregation of resources is a motivator for anyone, especially kids, and that it's paying off in Whyville.
"Whyville has very high engagement numbers—the highest in kids virtual worlds according to Comscore.

The average login last month was 34 minutes," he said. "Anything that motivates them to be on the site is a fcator, and having them come on and spend time to train their pets builds stickiness. It's a factor for engagement, that's what we specialize in. It's anecdotal at this point, but I think it's having that effect."

AI 135 Lifetime Entertainment acquires Roiworld.com so woman can have fun dressing up in the Virtual World

Lifetime Entertainment Services is a joint venture of Hearst Corp. and Disney. It’s Lifetime Networks, the pioneer of TV for women on cable networks, has announced today that it has acquired South Korean casual gaming startup Roiworld.com for an undisclosed price.

New York-based Lifetime will open a game development studio in Seoul to create more online games.

By early next year, Lifetime plans to have a U.S. version of the site with more than 1,000 casual games targeting females beginning early next year.

The games will focus on members dressing up avatars, or characters, in virtual clothing and social networking.

Andrea Wong, Lifetime chief executive, said that the Lifetime audience wants to have an escape from real life, whether on TV with the Lifetime channel or in the digital realm with something like Roiworld.

Kris Soumas, head of Lifetime Games, will oversee the entire games effort.

The game studio in South Korea will be run by Kiseo Kim, founder of Roiworld.com.

The deal is the latest connection between traditional media and the video game industry.

Roiworld has plenty of traction. It had 2.8 million monthly unique visitors in September and 117 million page views.

AI 132 Sony to launch their virtual world service called Home in December 2008

Sony intends to use its Playstation 3 console to launch its Virtual World service and is yet another example, like Apple, that will be based on a Closed System (refer to AI 131)

Jack Buser, Sony's Director for PlayStation Home, says we'll soon see a rapid expansion after the launch.

"We'll launch within open beta. That means two things," Buser explained.

"It will be available to all PlayStation users at no cost. But there will obviously be a certain percentage of people who want to stand out from the crowd and customize their avatar with certain items or have a premium space and they will have that option within the PlayStation Mall, but it is not required.

Second, we are calling it an open beta for a specific reason. Home will always be evolving. You will be seeing new stuff, including new technology. The platform will always be evolving and living and breathing."


"It's important to realize the scope of PlayStation Home. When you look around, it's just the icing on the cake," Buser said.

"The cake is that it's a development platform for third parties to develop content on. We want Home to scale rapidly, and we figured the best way to do that is to get third parties involved. After launch, you're going to see Home grow rapidly with new media, new content, and new experiences, coming quite rapidly. That's absolutely been the demand from the users."

AI 131 Linden Lab to create a wonderful first one hour experience for those new to its Second Life virtual world

Linden Lab (refer to AI 116/115/77/20) announced today that it had hired the interactive design agency Big Spaceship "to dramatically simplify the sign-up stage, ease users’ introduction into Second Life, and quickly connect people to relevant content and experiences in Second Life."

AI 125 The $100m virtual goods market attracts intermediaries with expected growth to reach $1bn in a few years

Viximo provides a virtual goods network in the same way that online ad networks distribute and place ads. Its strategy is to create a community of virtual-goods developers providing a storefront, goods and payment processing.

Virtual goods are seen as having more impact than ads on “Millennials” - the 13-26 age group who largely populate social networking sites and will respond more to receiving Godiva chocolates or Nike Air shoes, even if they are not the real thing.

This is a fast growth market that could reach $1bn market within a few years. It is already believed that virtual goods is already worth between $80m to $100m already.

AI 120 In-Game Advertising from IGA Worldwide is now reaching 30m gamers

IGA Worldwide said its in-game advertising network now reaches 30 million gamers on four distinct gaming platforms: the PC, Mac, Flash, and the PlayStation 3. Its new released fourth version of its software development kit lets game developers take sections of their games and designate them as capable of displaying ads.

IGA’s financial backers include GE/NBCU, Intel Capital, Morgenthaler Ventures, Easton Capital, DN Capital, KTB Ventures, Translink Capital, Itochu Technology and Sumitomo/Presidio STX. Altogether, the company has raised nearly $30 million in two rounds. The company has 70 employees.

A118: MetaverseModSquad is an agency for staffing avatars within Virtual Worlds

MetaverseModSquad is a leading agency for staffing avatars within the Virtual World.

Their skills include managing online communities, customer services, facilitation, and moderation. Because they have attorneys and community specialists they are well equipped to advise on matters such as social and legal matters.

AI 117: v-learning takes e-learning into the virtual world as it drives new innovation for skills and education

ISN Virtual Worlds has launched a v-learning solution that links traditional 2d web e-learning and the Second Life Grid.

This new extended service covers

• course management tools

• tracking systems

• collaboration and media sharing tools

3d enables more

• collaboration

• customized environments

• simulation

"We're targeting mainly large companies who have large HR departments, for instance, who often need to train their employees," explained CEO Mattia Crespi. "Another good application of it is for big companies with large salesforces spread out over the territory. It would be useful to use the V-Learning tool for training. You can re-create products and also simulate processes and services. With the platform to do learning, you can make good use of it. You really need to give practical solutions to companies. If you go to them with the precise solution that solves the problem and cut costs, like virtualizing some activities, then you provide something interesting to them."

AI 116: Linden Lab with Rivers Run Red are launching a 3d solution for the corporate intranet

Linden Lab and Rivers Run Red's Immersive Workspaces 2.0 are being tested for corporate intranets and are expected to be available early next year (refer to AI 77).

This solution is based on the Virtual World Platform Second Life Grid (refer to AI 70).

AI 115 Linden Labs focus on extending 2d web with 3d web for intranets and internets

These are some of the key messages from yesterday’s keynote speech by Linden Lab CEO Mark Kingdon at the Virtual Worlds London conference.

The virtual world has seen 600 million user hours of activity and is projected to hit the billion-hour mark next year.

The current wave are enterprises thinking about virtual worlds as a different way to do business as 3d starts to extend 2d web.

Driving the business innovation are

• global workforce needs

• economic pressures

• carbon pressures

• cash concerns

“When you put it all together, you can see for enterprise, not at the expense of the consumer side, which is still very vibrant, the virtual world offers exciting opportunities to prototype, to demo new products, to attend a global event without leaving your home, to simulate and practice disaster preparations, and to learn another language. The possibilities for the enterprise, really, are endless.”
Since Kingdon took the reins of Linden Lab five months ago, the company has been refining its strategy and extending its platform in new directions.

“First of all, we’ve listened to our customers. We’ve done a fair amount of consumer research. We’ve talked to enterprise, educators, government. Everyone wants a robust platform for development. In the consumer side, the want a speedier orientation, and they want to be able to find things more easily. We’re hard at work on all of those things. In enterprise and education, people are asking for easy sign-up to sign people up in bulk, a safe and secure hosted solution. Despite the many urban myths, it’s possible to hold a secure meeting in our hosted Second Life. But people want a solution behind the firewall. We’re working on the alpha now. We have alpha customers signed up. And we’ll have a beta in the first quarter.”

Likewise, customers are looking for out-of-the-box solutions. Linden doesn’t want to get into the content development business, which is why it’s partnering with providers like Rivers Run Red for products aimed at specific use cases, like RRR’s Immersive Workspaces, which announced version 2.0 today.

Down the road, Kingdon expects more integration between the 2D and 3D environments. While some early development around virtual worlds looked at them as substitutions or replacements for the Web and real-world practices, he sees them as complementary, with seamless movement across the environment and Web 1.0 and 2.0 tools and business apps.

Alongside that development, he expects more growth in the use of avatars for identity, a crucial component for interoperability.

AI 114 Muxlim is the latest social network to extend their 2d web with Virtual Worlds as the eastern countries lead the charge towards Web 4.0

Muxlim.com, a social network focused on the Muslim community, is launching a Virtual World.

This is following the trends set by various Chinese and Japanese social networks that have developed Virtual Worlds.

This Virtual World will make money from:

• VIP services

• Virtual and physical goods

• Value added widget applications

• Advertising

• Branded communities


Success will lead to a significant increase to the 1.5m unique visitors a month to its 2d web.

Virtual Worlds are establishing the foundation for Web 4.0 and Web 5.0 (refer to AI 1).

AI 113 Accelerate Medical Learning using Virtual Worlds

Paramedic students studying at the Faculty of Health and Social Care Sciences, a partnership between St George's, University of London and Kingston University, are using Second Life for learning.

By using interactive and sensory techniques the Virtual World can help people learn complex subject matter in shorter time scales.

AI 110 $493 million invested in Virtual Worlds so far during 2008

Virtual Worlds Management released a report today tracking the virtual worlds-related investments of Q3 2008. Over $148.5 million was invested in 12 companies, not including the undisclosed cost of one investment. That's down from Q2's $161 million invested across 15 companies and $184 million dollars in 23 virtual worlds-related companies in Q1 2008. This brings the total investment in virtual worlds-related companies so far in 2008 is over $493 million.

"Games and virtual worlds are a hit driven business. As such, you see a barbell approach to investing - lots of small early investments, and a few large investments behind established winners," commented Jeremy Liew, Managing Director at Lightspeed Venture Partners.

The bulk of investments are still being made in early-stage companies, either in stealth mode or developing.

Other venture references are AI 97, 84, 60 and 35.

AI 108: Virtual Worlds Continue to Grow despite Real World Problems

Source: Forbes.com

A 'Virtual' Escape from Economic Pain
Mary Jane Irwin

The Dow plummeted below 9,000 points to a five-year low Thursday. Worldwide, economies are slowing and consumers are worried sick about their future.

Despite all the doom and gloom, one tiny sector is offering a glimmer of hope: virtual worlds. Companies such as Gaia Interactive and Habbo are expecting a boost as consumers reduce spending on real-world goods and luxuries and console themselves with so-called virtual goods--digital copies of products that can cost just pennies, allowing users to indulge their materialistic fantasies without spending much.
"As the 'real world' gets worse, virtual worlds get better," Gaia Chief Executive Craig Sherman told Forbes.com in an e-mail.

"As things get worse, people spend more time at movies or spend more time on a site like Gaia Online, which provides a relatively inexpensive respite from the offline world."

Gaia, which targets U.S. teens and twenty-somethings, had more than 7 million unique visitors in September.

Teen-focused virtual world Habbo boasts a similar outlook. While there is some concern the down economy will reduce the site's ad sales, 85% of Habbo's revenue is derived from virtual goods transactions.

The site's 2.5 million U.S. users spend an average of $18 a month, and the average time spent on the site has doubled to 40 minutes per session in the past year, says Executive Vice President Teemu Huuhtanen. He expects the number of unique users--currently 10 million globally--to grow as the site introduces new services and activities.

Kid-focused virtual worlds like Club Penguin and Neopets have boomed over the past two years, becoming an attractive investment niche for large media companies. These sites provide a way for kids to interact with a media property--say, Nickelodeon's legion of characters--in an environment that is cheaper on a per hour basis than seeing the latest flick in the theaters.

EVE Online, a science fiction-themed massively multiplayer game, is going gangbusters. The subscription-based virtual world has gone from 220,000 users to nearly a quarter of a million since the beginning of the year. EVE's on-staff economist Eyjo Gudmundsson expects the game's growth to continue over the next six months--particularly as people look for more inexpensive forms of entertainment. The basic EVE subscription cost is $14.95 per month.

Gudmundsson cautions, though, that virtual worlds that are directly linked to the real world may fall victim to some real-world economic frustrations.

Indeed, the number of registered and active users of Second Life, a virtual world that simulates real-world experiences, have flattened out, says Parks Associates analyst Michael Cai. But this might not be a reaction to the economy; it could be due to consumers shifting to other virtual worlds.

Cai predicts that corporations will start using Second Life or custom 3D virtual worlds to hold meetings and cut travel costs.

AI 107 OECD Health Systems are broken – local and global health systems need to be redrawn by governments and markets

The McKinsey Quarterly has just published a report called Health Care Costs – A Market View.

Basically it shows the past and future trends.

For the past 50 years, health spending has grown by 2% in excess of GDP growth across all Organization for Economic Co-operation and Development (OECD) countries.

McKinsey takes the past 50 year growth patterns and shows what happens if the trend continues.

What better way to ascertain whether the OECD health systems are broken?

The projections show around 40 years from now, most OECD countries will have reached 20% GDP being spent on health.

The UK is already around 8% GDP and its health system is already under strain. The notion of this 8% becoming 20% GDP is unthinkable. It simply is not affordable. Therefore, the health system is broken. Something has to dramatically change before a tipping-point is reached, leading to a crises similar to today’s credit crunch, except it will be a lot bigger and a lot more serious.

But these projections are more worrying when one examines those countries that already have over double the UK health expenditure. The one country that stands out is the USA.

The USA health expenditure already is around a colossal 17% of GDP. No wonder health in the USA is political dynamite.

The McKinsey projections, based on past trends, indicate that by 2080, the USA will be spending more than 50% of its GDP on health. This will not happen. The USA would be bankrupt well before this number is reached.

In reality, this problem is even more serious for the USA today than these figures show.

In 2006, 15.8% of the USA population had no health insurance policy. That means in 2006, 47m USA citizens were relegated to ‘your are on your own’ and ‘go find a charity’, which is closer to many poorer regions across the planet. The number of USA citizens without insurance may already have reached or passed 20%, but we have to wait quite some time before the figures are known for 2008. Remember, 2006 was the ‘good’ times.

This situation is further compounded by the number of USA citizens that have inadequate health insurance.


The McKinsey study was unable to factor in the latest market conditions before this report was published. Therefore, what does the credit crisis mean to OECD GDP heath trends?

The illiquidity in the financial markets on a global scale is shrinking OECD GDP figures.

Yet, the health expenditure continues to rise.

This means the health GDP spend will already be a greater percentage and indeed could rise sharply for some OECD countries. The critical question is how much closer we are now to the tipping point, before health GDP expenditure has a negative impact upon OECD sustainability and a new global crisis emerges.

In reality, the OECD health systems are already broken in the same way as toxic securities broke the financial systems some time ago, but no one was bothered until the terminal sirens started late last year.

Urgent new innovative solutions are needed now.

Health needs to move from knowledge illiquidity to knowledge liquidity on a global scale so the world’s population en masse moves towards preventative and curative self-help systems.

This benefits richer and poorer countries alike as both are in the same health crises boat but for different reasons.

Health knowledge is likened to money. Illiquidity is bad. Liquidity is good. Today, health knowledge is illiquid. Everyone should have the right to interact with health and medical expertise when they need.

This means one needs to shift from knowledge illiquidity to knowledge liquidity for solving this global health crises.

This can only be achieved with technology.

Artificial Intelligence is the ‘acquisition, application and measurement of knowledge’. AI is needed for knowledge liquidity because the costs and scarcity of human expertise prohibit more conventional solutions.

Indeed, ai agents combined with other technologies, such as Cloud Computing, Mobile and Virtual Worlds for immersive engagement and executed through controlled open-sourced manufacturing, provide the means to deliver health knowledge liquidity on a global scale.

This is no longer a technology or social networking challenge as all the pieces are there today.

This is a challenge for global leadership.

Local and global health systems need to be re-drawn by governments and markets.

Who will step forward or do we just wait for an even bigger crisis to emerge?

AI 98: Microsoft strategy becomes clearer - protect their core business investment in PCs via Services

Craig Mundie, the Microsoft chief research and strategy officer of Microsoft Corp sees their direction as 1st Life and not 2nd Life. However, his vision does include avatars that have conversations with people.

He showed a video demo (see picture) of a "robot receptionist," presumably an example of what Mundie said were more personalized, humanistic applications enabled by developments in computing architectures.

Mundie noted that Microsoft is counting on the creation of a 3D "parallel universe" modeled with tools like Photosynth. However, he dismissed the potential of social virtual worlds that include user-modeled objects. The Photosynth approach may well be as a rearguard action to protect Microsoft’s investments in PCs.

"Many people are familiar with Second Life, which is a synthetic virtual world that people came quite enamored with," Mundie said.

"Our view was that there was a fairly limited audience who was willing to deal with the construction of avatars and operating in that virtual space."

Another location-based visual technology demonstrated by Mundie had a lot in common with the "augmented reality" vision that Ray Kurzweil and other futurists have described.

He showed how a Sony hand-held computer could display live video overlaid with information about shops and other addresses in the field of view.

Mundie predicted that the required processing power for such an application would be available in mobile phones within two years.

AI 95: Revolution in Interactions for the Virtual World

The success of Virtual Worlds for business services will be dependent upon the strength of interactions. The reality today, is that most services virtual buildings are empty except for events. This is not conducive for visitors who want to interact.

Why is this happening?

The cost of staffing just one avatar is expensive for a 24*365 service.

Each Avatar costs US$300,000+ per annum to be powered by people for a 24*365 service involving simple knowledge. But a service with just one staffed avatar would not work. So even a small team of avatars is going to cost over a US$1m a year in staffing costs!

These costs are significantly higher when complex knowledge is needed. In this case, each Avatar can cost in excess of US$1,000,000 per annum when powered by people that are subject matter experts. If a team of avatars are needed, each representing different areas of connected expertise then over US$10m could be needed without consideration the availability and retention of subject matter experts.

The economics and indeed logistics for complex knowledge are a high entry price for a 24*365 service.

The cost of powering an avatar through ai agents instead of people ranges from US$ 0 to US$3,000+. These ai agents can be accessed also from mobile and other digital touch points.

These are profound shifts in the cost of interaction economics.

Interactions are fundamental to Real World (refer to McKinsey paper ‘The Next Revolution in Interactions’ or the Economist paper ‘The Future of Marketing: from Monologue to Dialogue’) and the Virtual World.

The Virtual World has four primary types of interactions to power Avatars:

1. humans (the norm today) - natural language or scripted language

2. artificial intelligence broad and shallow - natural language

3. artificial intelligence broad and deep - scripted language (my specialization)

4. artificial intelligence narrow and deep - specialized ai application

Interactions are supported by powerful socioeconomic formulae and apply to the Virtual World in the same way as for the Real World.

Virtual Worlds inevitably will be an ecosystem of avatars powered by humans and artificial intelligence.

AI 89: Forrester believe Virtual Worlds are Moving Fast to Consumer Mainstream

The latest report from Forrester states:

“The two years since virtual worlds went "mainstream" have been a roller-coaster ride for all involved; for every success like World of Warcraft, there have been negative developments such as the media backlash against Second Life. Now, as a number of new worlds are appearing, the technology is improving, and interest levels are growing, virtual worlds are ready to enter their second phase. Forrester recommends that consumer product strategy professionals watch the space carefully — if they are not involved already — as we expect the next 12 months to be momentous for consumer virtual worlds. Much-heralded new worlds will arrive, marketers will return to the medium after initially being burned, and Web3D elements will start to creep into consumers' lives.”