Collapse of virtual world creates business opportunities for Vancouver company

Every week Techvibes republishes an article from Business in Vancouver.

This article was originally published in issue #1065 – March 23-29, 2010.

Sixteen-thousand online worlds and counting for Utherverse Digital Inc., whose most popular 3-D Internet properties include virtual versions of Vancouver and an adults-only red light district.

Members of the recently defunct virtual world need not fret: Vancouver’s Utherverse Digital Inc. has a new home for you.

Makena Technologies, which operated for 12 years, imploded the virtual world on March 9, citing decreasing revenue related to the recession.

With thousands of members and millions of dollars in virtual assets suddenly orphaned, Utherverse, whose software is the foundation of more than 16,000 virtual online worlds, saw an opportunity.

In less than 48 hours, it created, a virtual world that has a similar look and feel to the former

In less than a week, Utherverse signed up more than 800 former users, or Thereians, and converted roughly 50 million Therebucks into Rays (Utherverse’s virtual currency) and other virtual goods and services.

Virtual currencies like Therebucks and Rays can’t be traded for real cash, although members of the virtual world can buy virtual money from operators with real cash.

Virtual assets have value because it can take years and many late nights in front of a computer for someone to build up a virtual asset portfolio.

“That’s really the shame in all of this,” said Brian Shuster, Utherverse’s CEO. “If you spent years as a Thereian acquiring virtual goods and assets … all that just disappears.”

Utherverse competes for users with other virtual worlds such as Second Life and IMVU.

Online virtual worlds such as Utherverse are essentially three-dimensional social networks populated by avatars, which are online representations of users – although avatars often have no resemblance to the humans that create them.

While had raised roughly US$35 million in venture capital since 1998, Utherverse, which was founded in 2003, has thus far chosen to grow organically.

Shuster said Utherverse has 600,000 active users, has registered more than five million people and registers roughly 200 new users daily.

He said the company generates more than $10 million in revenue annually and is experiencing 25% annual growth.

Utherverse’s main intellectual property is a software platform that can be freely used by anyone to create new worlds within the company’s Virtual World Web network.

Its main revenue stream is VIP subscriptions that allow virtual world builders to obtain better tools and accessories for designing and developing worlds.

The company also generates revenue from licensing its technology to businesses, online advertising, leasing out virtual real estate and commission on transactions made in its virtual economy.

All of the virtual worlds within Utherverse’s network are compatible, which allows members to hop from one world to another.

Utherverse’s worlds are generally created around themes such as dining, fashion, tattoos or a geographical location.

Directories and search engines allow users to seek out, among other things, people, worlds and stores within the network. and the adults-only are among Utherverse’s most popular worlds.

Shuster compares Utherverse’s virtual web to a three-dimensional version of the Internet in its early days.

He predicts that in five years there will be a singular virtual world or singular network of virtual worlds.

“It will replace the web as we know it,” he said. “The 2-D web is going to become a library within the 3-D space.”