Cashing in on a distributed 3D world

Vivaty to focus on the most banal, yet therapeutic of rituals - shopping

“Five years from now a social networking site without a 3D universe will look like a dinosaur."  This was a quote from Mark Kern, president of Red 5 Studio, in a BBC piece. I’m not sure I’d agree totally with him. It’s not as if we’re watching all our movies in 3D.

But certainly, elements of three-dimensional worlds whose residents are known as avatars with, often added perks, such as wizard-like abilities to transform, will invade social networks. It’s already happening.  Vivaty, a new platform that’s trying to distribute 3D worlds on top of existing platforms, recently launched Vivaty Scenes on Facebook and AIM. Vivaty Scenes is the first application released by Vivaty, a startup that raised $9.2 million from Kleiner Perkins and Mohr Davidow last fall.

Now, you’ll be able to dress up and personalize your chat rooms with furniture, videos (from YouTube) and photos from Flickr and Photobucket. Think - MySpace dorm room, but with the illusion of depth. “It’s kind of like a 3D MySpace page,” said Keith McCurdy, co-founder and CEO of Vivaty, in a recent interview with me. “In MySpace people create 2D pages and decorate them… We’ve given users a 3D version of that.” The demographic sweet spot for Vivaty Scenes is college and early 20s.

At this point, there are limited forms of self-expression on Vivaty, though that will change in time. Keith said that the company plans on launching a developer or creator community later this year where people will be able to create 3D objects or 3D scenes that larger groups of consumer will be able to use, and in the future consume.

This is obviously a key component to Vivaty’s model, which is to address the most banal, yet therapeutic of man’s abilities or rituals – shopping. Yes, Vivaty will be focusing a lot on the selling of virtual goods, which is a significant market opportunity. Many reports estimate that people spend $1.5 billion a year in the U.S.   

“The richer the experience, the more virtual goods is a stronger model,” said Keith. So, basically, if in the real world you drive a bomb, you can look really cool in your virtual world with a 3D BMW in your virtual driveway. The incremental bucks people will pay for a 3D BMW over a 2D BMW is unclear.

But we know people will pay a few bucks regardless. I’ve paid real bucks to have virtual acorns to buy stuff on Cyworld. My virtual penguin on Club Penguin bought virtual post cards with coins, just to meet a fellow penguin. Some people are paying “zealies” on Dogster to buy virtual Gold Bone Treats for dogs. People are paying real bucks to buy credits that ultimately pay for things, like “Coral Island,” on IMVU. People are buying “Bull Black Cowboy Chaps” for gold on Gaia Online. People paid “Linden” dollars on Second Life to buy property and make this person a real estate tycoon. So, clearly, people pay for this stuff. 

The other business model for Vivaty is advertising, such as billboards, pre-rolls on videos inside the Scenes, or product placements, and the one Keith is most excited about – branded environments. For example, imagine making your scene look like you’re in that movie “Journey To The Center Of The Earth.” The branded environment has “a lot of potential,” said Kevin, suggesting that advertising in the 2D, flash-pixilated environment is not compelling but advertising in 3D will be. What he means, and is betting on, is that 3D environments will help to accelerate the "multiple billions" in revenue already being generated on both mostly 2D worlds.

As for why Vivaty wouldn’t consider a subscription model, like Club Penguin, the virtual world of penguins, which was sold to Disney for $700 million, ($350 million in cash, and the other half in earnouts), Keith said he thinks the bigger opportunity for virtual worlds is in virtual goods and advertising.

Crowded field

Vivaty is certainly not alone in this trend to provide 3D visuals in a distributed fashion. Recently, Google launched Lively, which Keith says is “similar,” adding the very politically correct response that Lively is a “great validation” for the distributed 3D idea. “Google, as well as ourselves, represent a trend of bringing the rich experiences in an easier-to-use format.” There are differences in the products, he added, without detailing them.

But it’s early in the game, and there will be a lot of people winning on different strengths, Keith suggested. One other similarity he forgot to mention. Both sites don’t support Mac computers. In this interview, Keith also touched on other potential competitors, such as IMVU – a community with 20 million members, Gaia Online and Second Life. 

Clearly, many people see the opportunities in the 3D and virtual worlds playground. In the last six months, venture capitalists poured $345 million into 39 virtual world related companies, according to Virtual World Management.