News Analysis October 17, 2006, 12:0AM EST

Big Media Gets a Second Life

Wired magazine is just the latest in a string of media outlets staking their online claims in the popular virtual-world game

by Olga Kharif

On Oct. 17, a new edifice will rise up in the midst of the sprawling online virtual world Second Life. On a 1-acre lot, you'll find the digitized headquarters of Wired magazine. Garish neon-pink sliding doors lead to a conference room shaped like a Shuttle PC where as many as 50 people can sit on chairs that resemble circuit breakers and watch a screen that looks like a graphics card.

Still can't find it? Just look near the offices of CNET Networks (CNET), which on Sept. 26 unveiled its own five-story, glass-and-brick office structure in Second Life. The building is an exact replica of the company's headquarters in San Francisco, and it's set amid vast lawns overlooking Second Life's blue ocean. Look closely at that ocean and you'll see the island purchased by British news giant Reuters (RTRSY), which made its Second Life debut on Oct. 16.

Big media's land grab is well under way in Second Life, the online realm where real people, under the guise of avatars, mill and mingle and, in some cases, make a living. The game's audience, swiftly approaching 1 million, is growing at about 38% month over month, according to its creator, Linden Lab. The outfit expects to add 200,000 to 250,000 new players—many of them the coveted younger early adopters—in October alone. "Second Life is almost a phenomenon like [video site] YouTube, it's reached critical mass," says Chris Baker, senior associate editor at Wired magazine.

A VIRTUAL BUREAU.

And like so many other companies already setting up shop in Second Life, news organizations and other media outlets don't want to be left behind. As the virtual world grows up in the coming 12 months, it's only going to get more attractive to companies that want to send a multimedia message. "Everyone's been searching for the killer broadband offering, and this is it," says Justin Bovington, CEO of Rivers Run Red, which helps companies like BBC Radio One create events and design buildings inside Second Life.

Simply put, companies as varied as Adidas, Sun Microsystems (SUNW), and Toyota (TM) want to promote their products and ensure their brands are getting exposure amid the consumers, many of them young, who are spending increasingly long stretches not just on the Internet, but immersed in virtual worlds. In-game advertising revenue in the U.S. is expected to rise from $186 million in 2005 to $875 million in 2009, according to Yankee Group.

Media companies even face competition from virtual upstarts inside Second Life, including New World Notes and SL Herald. Reuters commissioned its longtime tech reporter, Adam Pasick, to cover Second Life full-time and act as Reuters' Second Life bureau chief. Pasick's avatar sports a green shirt, a grim business-like expression, and a press badge. One of his first stories reported on a U.S. congressional committee's investigation of online virtual economies like Second Life and Vivendi Universal's World of Warcraft and how virtual assets and income received in the games should be taxed.

ONLINE PROMOTION.

Another Reuters story is an interview with the virtual president of Second Life's most popular bank, Ginko Financial.

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