Thursday, October 11, 2007

Serious Games Sizeable Market, Virtual Worlds Sizeable Investment

Sizing the market on both sides of the equation



Via: Virtual Worlds News - $1 Billion Invested in Virtual Worlds in the Last Year

The Numerator – Gross Revenues
In my prior posts 
Serious Games, Serious Money: A Sizeable Market and Serious Games: A Sizeable Market - Update, I addressed how the video game industry was finding more business outside the entertainment sector.


At that point, my best estimate for the Serious Games segment was based on three major market drivers: 1) the emergent supply chain for professional training, with a number of corporations taking the first steps and commissioning Serious Games development 2) more and more Healthcare providers embracing software simulations 3) the fact that Serious Games are gaining solid traction in Europe 

In my view, these three combined market drivers could bring the overall figure for the Serious Games market close to $ 2 billion in 2008.
Note: With regards to the running costs of development I would strongly recommend further reading Julian Lombardi’s recent article Cost of Simulations.

The Other Side of the Equation – Investment/Capital Employed

A research by Virtual Worlds Management reveals $1 billion invested in 35 Virtual World companies from October 2006 to October 2007.

Virtual Worlds Management, the leading media company tracking the virtual worlds industry, has announced findings from a comprehensive study of accountable transactions that venture capital, technology and media firms have invested more than $1 billion dollars in 35 virtual worlds companies in the past 12 months, from October 2006 to October 2007.

The announcement comes just prior to the
Virtual Worlds Conference and Expo taking place October 10-11, 2007, at the San Jose Convention Center in San Jose, California. The investment numbers and the future of the industry will be discussed in depth at the conference.

Of the $1 billion, $196.8 Million were invested in 33 companies. Significant investors in the space include Redpoint Ventures, Charles River Ventures, Intel, and Rustic Canyon Partners. Media companies are also making sizable investments, including Disney, CBS, Time Warner, and GE/NBC Universal's Peacock Equity Fund.



The remaining $810 million went to two acquisitions: Walt Disney's $700 million acquisition of Club Penguin and Intel's $110 million acquisition of 3D virtual worlds graphics technology company Havok, that provides the physics inside of Second Life.

"Investors are not just venture capital firms, but also include major technology, media and entertainment companies," said Christopher Sherman, Executive Director of Virtual Worlds Management. "The amount of money invested in this period of time is staggering. We don't see any slowing in the market adoption of virtual worlds technologies and expect investment in the space to continue. In fact the market is growing significantly, with the rate of adoption of virtual worlds increasing as the technology matures and has more to offer both consumers and enterprise customers."

Investment spanned the entire virtual worlds value chain, including technology platform companies, virtual worlds developers, service providers and tools providers. Business models of the companies raising capital vary, ranging from advertising and subscriptions to virtual item sales, to enterprise software licensing, hosting and services.

About Virtual Worlds Management

Virtual Worlds Management is the leading provider of trade events and media for the emerging virtual worlds industry. Virtual Worlds Management services include, Virtual Worlds Conference and Expo, Virtual Worlds 2008 Conference,
Virtual Worlds Weekly - email newsletter, the Virtual Worlds News - trade industry Blog and Virtual Worlds Connect - the online community for professionals in the virtual worlds industry.

Virtual Worlds Management maintains a strong, experienced management team, allowing it to achieve its mission to be a leading provider of high quality, high profile events to targeted business and professional markets. Virtual Worlds Management is a division of Show Initiative, LLC.