Image: Second Life
RatePoint Inc. via AP
This is an undated screen grab provided by RatePoint Inc., a software startup that created a five-star rating system for characters in the online virtual world "Second Life." The software will be available as a free download starting next week.
updated 3/28/2007 7:20:45 PM ET 2007-03-28T23:20:45

Companies are flocking to market themselves in virtual worlds, game-like and usually three-dimensional online universes, but the long-term shape of this fledgling industry is far from clear.

"We're pretty much where the Internet was in the mid-90s," said Steve Prentice, a vice president at technology research group Gartner Inc., echoing a view held by other participants Wednesday at the Virtual Worlds conference in Manhattan.

Joe Laszlo, analyst at JupiterKagan Inc., said the virtual worlds are "like the early days of the Victoria's Secret Webcast, where it was crappy, but hot, so everybody went."

MTV executives touted their TV-show spinoffs "Virtual Laguna Beach" and "Virtual Hills," which have attracted 600,000 registered users since they were launched six months ago. Almost like the real Southern California, these 3-D online spaces have perfect weather, but in an improvement on real life, its users are all represented by attractive, slim and young online embodiments known as avatars.

These avatars can interact with each other via text chats and commerce, providing a social element that virtual-world pioneers see as more realistic and engaging than chat rooms and MySpace pages.

"When you get people deep and passionate in a community, money just comes out of it in so many ways," said Matt Bostwick, senior vice president of franchise development at MTV Music Group, which is part of New York-based Viacom Inc.

As an example of the branding opportunities, Bostwick said MTV has sold more than 11,402 virtual cans of Pepsi. The buyers can't drink them, since they exist only on the screen, but they act as a form of decoration for their avatars.

MTV's "Nicktropolis" is growing even faster, with 2.4 million registered users who have logged 7.5 million visits since its launch two months ago, according to Nickelodeon's executive vice president of digital media, Steve Youngwood.

MTV's endeavors are "closed" virtual worlds, entirely controlled by the company. Every tree, building and piece of clothing is approved by MTV, though the underlying technology for "Virtual Hills/Laguna Beach" comes from another virtual world, "There," which was created by San Mateo, Calif.-based Makena Technologies Inc.

The virtual world "Second Life" represents a dramatically different approach. There, users can create, out of thin virtual air, almost any object they can imagine, if they're skilled enough with 3-D modeling and programming tools.

The freewheeling and in many places sex-oriented spirit of "Second Life" is reminiscent of the early days of the Web. The company behind it, San Francisco-based Linden Research Inc., says its goal is nothing less than a 3-D Internet.

But given the wide range of uses for online worlds — games, communication within companies, flirting, self-expression — it's not clear that a single world is going to dominate.

"There is not going to be one metaverse, there's going to be a multitude of them out there," said Corey Bridges, a Netscape veteran and co-founder of The Multiverse Network Inc., based in Mountain View, Calif.

His company is creating a program that will give access to multiple online worlds built using its technology, much like Netscape's browser gave access to multiple Web sites, kickstarting the Internet boom of the 1990s.

The technology will include the option to make avatars portable between different worlds, providing a middle road between MTV-style walled gardens and a wide-ranging "metaverse" like "Second Life."

"Once you can move from one virtual world to another, the growth we have today is going to look pretty stagnant," said Gartner's Prentice.

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