Twinity has announced that it has been awarded funding by the government of Singapore for its development of a virtual equivalent of the city. Twinity is a virtual world which aims to create virtual replicas of the leading cities of the world. They have already built Berlin, with Singapore and London next in the pipeline. For more background, check out my interview with Twinity's Chief Marketing Officer from our Unplugged gathering earlier this month. As part of the deal, Twinity will also be launching geo-tagging capabilities in the virtual world. Presumably this will involve media assets, such as pictures or videos, of real world places being connected to the virtual equivalent in Twinity.

The aspect of the announcement which most interests me is the fact that that they have attracted government funding for this. Metaversum are quite open about the fact that developing mirror worlds is an expensive operation – a potential disadvantage against competitors such as Second Life which can mostly rely upon users for content generation. If Metaversum could attract local government funding for development of more cities, that could go a long way to alleviate the problem. Whilst I'm sure many governments would not be easily persuaded to put money into a virtual world, some could embrace it, perhaps as a tourism marketing exercise or to help in a real world regeneration effort by improving the virtual environment first to create a buzz around an area.

"We're very excited about being awarded funding for launching virtual Singapore, geo-tagging and our other Co-space™ projects. We see it as recognition of the strategic importance of a real context for virtual cities for city authorities and local business alike," commented Jeremy Snyder, Managing Director of Metaversum Asia Pte Ltd. He continued, "We look forward to helping Singapore transform itself into the virtual information and communication hub for Asia."

Muxlim, a social network and community for Muslims, has announced that it is to launch a virtual world for its users in the next few weeks. Muxlim aims to provide a virtual world that is suitable to the cultural expectations of Muslim people and (in some cases) governments. It will not, for example, include sexual content and will provide opportunities to 'wear a hijab and go to prayer rooms'. This is in response to a ban on virtual worlds currently in place across the middle east, including in comparatively liberal countries such as the United Arab Emirates.

Does a separate virtual world for Muslims make sense? I think it probably does. The internet is often dominated by broadly American (and certainly western) culture, which of course takes its roots predominantly from Christianity rather than Islam. Assumptions which might be made perfectly reasonably by a US or British virtual world developer may significantly reduce that virtual world's value to users who do not consider themselves part of Western culture.

Second, the existence of flourishing Muslim communities outside the Middle East seems to demand a tool to join up all of these communities to facilitate the international Ummah – Muslim community. Whilst as a non-Muslim I have little feel for the extent to which this second factor would be a real driver of adoption, on an academic level at least the idea of using technology to enhance both cultural and religious connections between a worldwide community seems fascinating. And the size of the market is certainly not a problem, with over a billion adherents to the religion worldwide.

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Linden Lab and Rivers Run Red have announced that Immersive Workspaces is now on the Second Life Grid. Immersive Workspaces is an enterprise solution for a virtual business environment, in which users can have meetings or share content, for example. The fact that it is on the Second Life Grid enables businesses to take the decision regarding how much connectivity to the Second Life mainland they want – they can either have it fully integrated or keep it as a secure and separate facility.

At the Virtual Worlds Forum in London earlier this month, I lost count of the number of delegates from different enterprises who were bewailing the lack of business-friendly features on Second Life. Given Linden Lab's ambitions in what will clearly be a very important part of the virtual world market, this is something they need to address. It is a substantive problem as a perceived problem. It is not, at the moment, possible to have a Second Life instance behind a firewall – something many CIOs demand before they will consider adoption. Linden says that this is on the way in Q1 next year, in an important step.

Another problem is the lack of control. One delegate from an enterprise explained to me that it was not possible for them to use Second Life at present because of the inappropriate content elsewhere on Second Life; if they required an employee or client to download the software, and (for example) sexual content was encountered, that enterprise believed it could potentially be held liable for that content. The Second Life Grid will to some extent alleviate that, as a Second Life area, separate from the mainland and all other content, could be used.

Sports brand Reebok has announced that it is to advertise in forthcoming MMO Football Superstars. Football Superstars is a free-to-play MMO created by British firm CyberSports and developed by Nottingham-based Monumental Games. Players enter a persistent virtual world, in which they must achieve football greatness. The game encompasses both football matches themselves, and the rest of the life of a virtual football superstar. It certainly seems like a premise which could gain significant traction: wildly popular football games such as Pro Evolution already include some aspects of strategy beyond simple football game play, and the persistent virtual world aspect to Football Superstars is likely to make that dimension far more meaningful. The fact that it is free-to-play also puts it at a significant advantage versus the expensive titles currently dominating the space.

The off-the-pitch aspect to Football Superstars opens up two key business models – advertising and microtransactions. Players can visit shops and purchase virtual kit and equipment. This is where the Reebok deal announced today fits in. It appears that Reebok-branded virtual goods will be available for sale. On top of that, Reebok will be running a competition, as part of their 'Ambassadors Programme', to find an amateur to form a professional-style sponsorship deal with. This would include real and virtual Reebok gear, among other perks. Reebok are also going to be on virtual advertising hoardings, although that seems to be such an unimaginative way to advertise in virtual worlds given the breadth of innovative and more successful opportunities available.

Andy Law, Head of Business Development at CyberSports, said: "This is a great deal for us and Football Superstars. Reebok are a high profile and firm favourite football brand and they will bring an even more realistic dimension to the game play, blurring the reality between the virtual and the real worlds which is what Football Superstars is all about."

The argument that microtransactions could see a real boost seems strong to me. It is obvious that not everyone loses out in an economic slowdown; in the real world I would expect Aldi (a discount supermarket) to do very well, and Waitrose (a relatively expensive, high quality supermarket) to perform more weakly at the moment, for example. The same could apply as a user decides not to buy that Nike outfit on the high street, but to buy its virtual equivalent in-world. Microtransactions are very cheap, and still provide a feel-good-factor. Similarly, if virtual worlds can position them as a cheaper alternative to going out in the real world, they could see some benefit from tightening of belts.

The risk, though, is surely that other sources of revenue dry up. Surely it is possible (and perhaps even likely) that significant numbers of users decide to abandon their subscriptions to MMOs. It also seems probable that new purchases will fall. We may see an increase in free casual games as users want to spend their time on the computer more cheaply.

The credit crunch and the consequent meltdown in the financial system over the past month seems sure to have consequences in virtual worlds. No country has been hit harder in this financial crisis than Iceland, with many key banks in dire straits. It's no surprise, then, that speculation has been building up about whether Eve Online, an Icelandic MMO (see my interview with Arend Stuhrmann from last week), can survive the tough times. Today, Hilmar V. Pétursson, CEO of CCP (Eve Online's creators) has addressed concerns on his blog.

In a nutshell, Pétursson argues: "CCP is fortunate enough to be well isolated from the current banking crisis we see around us on both sides of the Atlantic (and here in the middle of it, of course). Not only do we enjoy the privilege of a global customer base bringing a diverse array of cultural influences into our single shard world of EVE Online, but that same diverse nature inoculates us from short-term fluctuations in sentiment or economic turbulence."

The whole of the Icelandic economy is sure to suffer the aftermath of this crisis, and it seems inevitable that Eve will be totally immune from the impact. But Pétursson is probably right; Eve has a global user base (so global consumer spending, for example, will be more relevant than Icelandic consumer spending). I would argue that virtual worlds are, structurally, a strong prospect for growth, even if that is slowed by the economic cycle somewhat. Where the impact of economic troubles might be felt more acutely, though, is in-world economies. It will be fascinating to see whether a measurable slow-down occurs in conjunction with the real-world slow-down.

Dubit Research has produced an exclusive report for the Virtual Worlds Forum giving key statistics for how tweens use virtual worlds and their attitude towards advertising. Dubit Research, a youth marketing agency, runs a standing panel of 600 7-12 year olds in the UK, and has asked them a series of questions relating to which virtual worlds they use and how they feel about advertising in virtual worlds.

The results show that 73% of British 7-12 year olds are using some sort of virtual world. Club Penguin leads the pack with 43%, Habbo following with 27%. There is remarkably little fragmentation in the market: only 8% use a virtual world other than the top 10. What surprised me most about the statistics is how even the gender split is on many virtual worlds – entirely even on Club Penguin, and similar on most other games, although Runescape is, as one would expect, far more popular with boys.

In my interview with Richard Bartle last week, he argued that the reason children play virtual worlds to a far greater extent than adults is because they are simply more comfortable with a new form of media, rather than because virtual worlds are inherently more attractive to children. His thesis was that 'the mainstream will come to virtual worlds' as the children literally grow up. Yet that isn't an argument that seems to be supported by these statistics. There is a clear drop off in the percentage who visit virtual world usage after the age of ten, rather than a sustained level. This is far from conclusive, however, since it is entirely possible that not as many current 11 and 12 year olds are playing virtual worlds for precisely the same reasons that adults don't – because they were older when they first appeared. Only after a few years of this kind of data will we be able to come up with some conclusive results.

There are also some statistics on advertising. On the downside, only 45% of kids definitely remember noticing advertising, suggesting that it is often missed. The good news, though, is that about 70% of those asked rate brand presence in virtual worlds as 4 or 5 out of 5, indicating at least a lack of antipathy.

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The report's author, Yuanzhe (Michael) Cai, argues that in order to achieve this substantial increase, 3D virtual worlds need to abandon user-generated content: "Without appealing content and applications, virtual worlds are nothing but empty shopping malls. The industry needs to move beyond its obsession with user-generated content and make 3D virtual worlds more interesting to average consumers." That's all well and good – it's easy to see why 3D design and user generated content don't necessarily go together at the moment, given how hard it is to create a 3D object relative to shooting a video or posting a twitter. But would 3D worlds really amount to much without UGC at the moment? Professional content at its most successful in 3D virtual worlds needs to be monetised – usually through microtransactions for virtual goods. Yet there's no evidence to suggest that 3D virtual goods are any more lucrative than 2D virtual goods: Stardoll does just fine without full 3D works. So if users don't like UGC in 3D worlds, and they're not bothered by whether their professional content is 2D or 3D, why bother with 3D at all?

Of course, the answer to that question is that 3D promises to provide far more immersive experiences. Clearly 3D worlds have a very strong future, but not unless they offer something beyond the possibilities of 2D worlds. Providing more exciting possibilities for user-generated content is one way in which 3D worlds could differentiate themselves.

Why is that? One suggestion was that the reason that virtual worlds don't yet have a place in the workplace is because they rarely have a place in the home (at least anywhere other than the child's bedroom). Social networking, starting to make its way into the enterprise, certainly started as a consumer phenomenon, and virtual worlds is closely related to this. If businesspeople aren't entirely comfortable with virtual worlds as a consumer, how could they be expected to embrace 3D worlds and avatars and even flying in the enterprise? IBM's Kevin Aires pointed out how alien virtual worlds often are, even to IBM salespeople: 'With converting sales people [to virtual world users], you spend the first ten minutes explaining that there's more to virtual worlds than Second Life.'

I don't think that the lack of consumer adoption is really what is holding back enterprise virtual worlds, though. Email, for example, was a business tool before it was a personal tool. Blackberries overcame the technophobic tendencies of millions of middle-aged men and women of the 'I just want my phone to talk and text' school of thought to become the instantly recognisable badge of a commuter. History shows us that businesspeople can 'get' new technology very quickly indeed, whether or not they have experienced it as a consumer. What determines adoption is not something fuzzy like how comfortable people feel with the concept, but about the business benefits.

And the truth is, the business benefits just aren't clear enough yet. There's the issues of security, of user interface, of development costs, of old business client hardware to name but a few. These can and will be solved in the near future, and enterprise virtual world providers certainly don't need to wait for consumer virtual worlds to get their act together to experience huge rewards.

Avatar chat application Visitoons has announced that it is to officially launch worldwide on 15^th October, although the site is available now. Visitoons has been available to the Spanish-speaking market since July of this year, and has now launched a global service, in addition to a development platform for third parties. Visitoons is an application which is designed to be embedded by a site owner. It will then allow users either to chat in a 2.5D environment, or in a Rocketon-style overlay, on top of the website.

The case for a site owner installing some sort of avatar chat application is clear. It could foster a stronger community around the site, hopefully making it more sticky and certainly creating greater engagement with the brand. If done with a more heavy-weight solution, then a company could leverage a tightly integrated virtual world to sell virtual goods, for example, perhaps even making decent money. There is a whole spectrum of providers catering to this space, however, so Visitoons will have a tough time gaining decent traction. On the expensive end, Webflock is a 2.5D platform developed by Electric Sheep which can build a virtual world for a 'six figure sum' – this requires no plugin other than Flash. Another option might soon be Lively; it's already possible to embed a Lively room into a 2D website, and with an enhanced platform on the way, that could become an even more attractive option (although with the need to download an extra plugin – a potential barrier to adoption). Rocketon is slightly different, in that it is a web-wide virtual world, which allows users to control avatars on top of web pages, chatting to others and operating the site.

Visitoons' plans for its API aren't totally clear, but it appears that the flexibility is mainly in the ability to alter the 2.5D environments. From the press release: The Visitoons Platform has been specially developed to allow the creation of highly customized virtual environments using a variety of forms of art, including illustrations, photography and 3D renders, and not just only 3D models resembling online games. This will enable businesses to present their brands in the most appropriate ways, allowing for traditional creative professionals and existing marketing teams to tackle the quest for developing branded Virtual Worlds, as no special 3D design or programming skill is required.

In the interview we cover a broad range of subjects. We discussed, for example, how virtual worlds might eventually reach the mainstream, and Richard argued that this will only happen once the kids currently using virtual worlds on a massive scale literally grow up – something which those developing adult virtual worlds with the need to turn a profit sooner than 10 years will not be pleased to hear!

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At VWF Unplugged I had a chat with Jim Bower, founder of kids virtual world Whyville, for a chat about the role which virtual worlds will play in education. Jim argues that traditional education is going to have to come to terms with the fact that its methods may no longer be the most effective way for learning to happen. Whilst there will always be some place for didactic learning, Jim sees great potential in virtual worlds (such as Whyville) which teach kids things without them even noticing it.

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We've got some more podcasts on the way in the coming days, so stay tuned!

In this podcast I'm joined by Norbert Meinike, Chief Marketing Officer of Twinity. Twinity is a mirror virtual world, which has initially created a virtual replica of Berlin and is soon expanding to London and Singapore. We've covered Twinity extensively here on the Virtual Worlds Forum blog, partly because of the fascinating potential I believe a mirror world has to really shake up the virtual worlds space, bringing both new users and advertisers to the market. Twinity on Friday announced a partnership with UK media company Twofour as part of their move into the UK with the creation of the virtual London.

A few of the topics covered in the interview:

• The potential of mirror worlds to make the virtual world concept more easily comprehensive to users
• Twinity's business model, and how they are going about attracting new brands to virtual world advertising
• The major disadvantage – the need to develop a 3D replica of a city rather than simply let users create the content themselves

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IBM's has been exploring and experimenting with the application of virtual world business models and technologies in areas such as commerce, collaboration, education, training & events and process management and rehearsal. We see incredible potential for the 3D Internet to transform customer experiences, improve business processes, enrich commerce and transactions, and to use virtual worlds and simulation to educate both customers, as well as to train and educate your employees.

Right now IBM is applying 3D Internet thinking across the entire human capital management "life cycle", where people are the center of our focus. There are essentially four parts to the HCM lifecycle – Attract and Retain(new employees), Motivate and Develop, Connect and Enable and Deploy and Manage employees. At each step in this process we are applying 3D Internet thinking and finding ways to bridge gaps across our global community.

Our CIO office has a wide range of initiatives to enable training and education, team building and collaboration across our global community of employees. Trying to 'make the world smaller' as it were.

In the area of training, IBM Research in Almaden is working on something we call "rehearsal services". Within IBM, we do a lot of complex client engagements and it turns out that some our employees in field go to quite a length to find ways to rehearse the activities in advance of the actual engagement - but it always typically done as one-off exercise, with no support from anywhere to make their preparation more efficient or replicable. So we wondered if we could create an environment where people could practice complex sales or project management interactions ahead of time. For one group, we built a rehearsal environment for practicing "extreme project management" for complex project management, like what is needed for ERP implementation. It is a totally immersive experience where we use a combination of a virtual company we created that include manufacturing, corporate headquarter and a view of production and sales data which changes throughout the scenario) and in-world facilitators – actors who play parts through use of avatars in the virtual world-- to take the team through a project management exercise. If the team asks the right questions and uncovers the true business drivers (and what needs to be done to improve the company's bottom line), the company thrives. If not, the company's revenues go down. We are building similar "rehearsal studios" for some of our sales teams.

There's been talk at the conference about IBM finding a way to merge instant messaging – a communications medium already widely understood – with virtual worlds, which are perhaps not so well understood. Perhaps you could talk a little more about this?

In September, IBM Research announced a project we called "Sametime 3-D," This is a great example of how we are looking at ways to enhance business value of virtual environments through unified communications. Our vision is to foster innovation and business agility by making it easier for people to find, connect to and collaborate with one another through a unified communications experience -- right from their familiar devices, applications, and processes.

So what does this mean- well in the prototype, a user can instant message a colleague and instead of only chatting with one another, they can launch into an immersive 3-D environment directly from within the SameTime chat session. "Sametime 3-D" creates a virtual meeting space 'on demand' – in the prototype the user is launched into an OpenSim environment, but we are working with other partners to provide similar capabilities. Forterra, for example has already enabled this capability for its Olive platform. As the 3-D meeting space is launched, people have the option to attach files, select a meeting space type and sign in using their existing enterprise authentication tools. We are developing some in world tools to help facilitate the meeting activity, and will be working with a few clients to pilot this capability.

Another project IBM's been working on in virtual worlds is the virtual data centre – what's the motivation behind that?

Oh yes, this is really great project, which Kevin Aires (AKA Boris) will be demoing in the "virtual camp" IBM created yesterday. Within our virtual business center, we have a Virtual Green Data Center. It provides visitors with the ability to easily access the "inside workings" of a data center, understand complex concepts and processes related to green technology, and gives us the opportunity to do customer briefings and sales team education with no travel expenses (how green is that!?). The exhibit allows visitors to learn how to manage and improve their data center energy efficiency and is available any time from anywhere, with a computer and an internet connection. Visitors are able to explore the Virtual Green Data Center by taking a self-guided, individual, or group tour. The business center itself is staffed by live sales avatars twenty-four hours a day, five days a week, making it easier for visitors to get the information and answers they need.

What are some of the other interesting business applications you are seeing?

Another area of great promise where we are already working with a number of clients on is complex systems management. In particular in the area of 3-D Data Centers. In these projects we use advanced visualization technology to recreate an entire data center or centers in-world.

The 3D datacenter application places users in an immersive environment with familiar 3D datacenter equipment- servers, power equipment and displays. The 3D datacenter provides a mirror image of an IT environment, but it is more that that. The models receive data from live enterprise management tools residing on the equipment, By aggregating information from these management systems and presenting it in a familiar 3D space, managers are able to respond quickly to alerts and events on demand. Also, since the 3D datacenter is a multi-user virtual world, users can effectively collaborate on elements of the datacenter together. While the 3D datacenter application can be used to manage real datacenters, it can also be used as a modeling and simulation tool. One interesting outcome of this is that clients realized that the virtual data center does not have to have the exact same layout as their real data centers- for example similar equipment located in different physical locations can be put together virtually, if that makes sense to them, so they visualize the collective set of enterprise resources and their individual states, for multiple physically distributed datacenters.