Posted by: Matt Vella on October 22
By Manuel Baigorri
Boot up. Log in. And, hop into a virtual world. Sound familiar? The proliferation of virtual worlds and massively multiplayer online games from Second Life to World of Warcraft hasn’t stopped eager entrepreneurs from putting a new spin on the now well-known concept.
Enter Derrick Morton. Morton’s Seattle-based FlowPlay started up in January 2007. Morton’s company created ourWorld, a virtual world that can be accessed through a browser. “We saw there were about 100 million people each month playing games but by themselves, a very isolated experience,” says the 50-year-old Morton. His first thought, “what the market really needs is a place where people can play games together in a community.”
Launched in April, the browser-based ourWorld lets users create their own avatars and play games, go to restaurants, shopping, or to a movie theater to watch YouTube videos with other virtual friends. And, even over the din of the crowded virtual worlds space, ourWorld has garnered attention. Late last year, TechCrunch selected it among the 40 hottest startups in the world. FlowPlay has also been backed by a group of angel investors that put $3.7 million into it in December 2007 with Skype’s creators and Intel Capital among them.
Intel may be interested in tapping into ourWorld’s target audience: teenage girls. About 60 percent of ourWorld users are girls between 13 and 17 years old. “They are targeting a unique, under tapped audience older than Club Penguin and younger than Second Life,” Intel spokeswoman Amy Kircos wrote in an email.
David Cole, a chief analyst with market researcher DFC Intelligence, says targeting a specific demographic and offering multiple business models could prove a strategic advantage. “It’s probably an underserved target. I don’t think there is going to be as much competition there,” says Cole. “There is some potential to carve out a leadership position.”
Morton said he wants FlowPlay to swing to a profit by the third quarter of 2009 and hit $9 million in sales by the end of next year. To reach that figure, 50 percent of ourWorld’s revenues come from subscription and the other 50 percent from micro transactions. Even though users can play for free, they still need to pay $5.99 a month to enjoy certain features, such as having their own virtual apartment where they can meet up with their friends.
Ian Bogost, founding partner of Persuasive Games and Associate Professor at the Georgia Institute of Technology, says it is possible that virtual worlds with a business model like ourWorld can succeed “if they offer something people want to spend a few dollars on a regular basis. [But] there is going to be some kind of saturation point. The number of virtual world companies is increasing. It is very risky.”
Of course, the current financial crisis has put the future of some startups in question. “The prospects for lots of these emerging technologies have taken a significant dent over the last two or three weeks,” notes Paul Jackson, a principal analyst at London-based Forrester Research. “A lot of these [startups] are still in a second round of funding and still rely on available money to keep going,” he adds.
Still, FlowPlay’s Morton is optimistic. Agreeing that the environment to find capital is getting tougher, he says Intel’s support provides a buffer. “There is a lot of nervousness in the investment community today. Luckily we have Intel Capital as an investment partner,” Morton said.
No longer child's play, the booming global games market is worth billions of dollars. In Games, Inc., BusinessWeek Innovation writer Matt Vella and Tokyo correspondent Kenji Hall analyze emerging business trends in video games and interactive entertainment. They’ll examine everything from button-mashing, chart-topping, console games to serious games commissioned by big corporations to train staff. They’ll also map the evolution of expansive virtual worlds and go behind the strategies at companies that are turning play into big business.