Virtual world, real millions

By Michael Tuft
BBC Money Programme

Millions of people are opting out of real life and signing up to "live" in computer worlds instead - and there is a fortune to be made there by selling goods and expertise in the virtual world.

Are you ready for your second life?

Big businesses including Reebok, Nissan and Calvin Klein have spotted the potential for making real money in the virtual world.

It's estimated that the market is already worth more than £500m ($1bn) a year.

One of the most popular virtual worlds is Second Life, which started in 1991 from an office in San Francisco, to which more than two million people have signed up. Second Life is a realistic yet exaggerated world populated by "avatars", each one of which has a real world owner.

The virtual Wild West

Avatars can walk and fly around their world and visit fantastic cities, interact with other avatars and buy good and services using Second Life's virtual currency the Linden Dollar.

There are about 500 Linden Dollars to the pound.

Second Life creator Philip Rosedale says: "I think Second Life is a kind of a Wild West. I think the people coming there now are pioneers. Whether you're a person or a company, you need to be fearless and you need to be willing to try new things."

The Second Life environment is ideal for entrepreneurs. One, Debs Butler, owns a virtual Knightsbridge where she rents out apartments and retail places to other avatars. Just like the real world!

"There are lots of people giving up real life jobs - good quality jobs - to come & work in Second Life, and I'm one of them," she says.

Real money

Big business has also seen the potential. Avatars can visit a virtual Reebok shop, for example, and design "virtual" trainers.

And from next year people in the UK will be able to order real versions of their uniquely designed trainers. It's a good example of how trading in the virtual world can make companies real money.

Second Life is today's Wild West, says founder Philip Rosedale

The people behind the construction of Reebok's virtual shop work for design company Rivers Run Red, which has built a flourishing business helping companies who want a presence in Second Life.

Its clients include Calvin Klein and Vodafone.

Chief executive Justin Bovington predicts that the firm will "probably turn over about £3m a year".

"We have about 16 plus employees as well," he says. "In terms of growth we could go on and on, but it's still very much early days - and as much as the internet is going to be here, this will be here as well. It's not a hype it's here to stay."

It's massive and online

Another category of virtual worlds are known as Massively Multiplayer Online Role-Playing Games (MMORPG) in which players adopt amazing characters to explore fantasy worlds.

Participants pay for the software plus a monthly subscription to stay in the online world.

One, World of Warcraft, has more than eight million paying members who generated more than $470m last year.

British company Codemasters is hoping that its new game, based on the Lord of the Rings books, will become a big hit - and therefore a money-spinner.

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It costs almost £35 to buy the basic package, and then there is a monthly subscription to pay to keep your avatar active.

Codemasters' boss Anthony Williams points out that research and development costs are high.

"To develop an MMORPG costs anywhere in the region of $40m to $50m," he says. "If it's successful, you're going to continue to develop content for it all through its lifetime, so some of these games can live on for four, five, six years.

"That initial budget of $40m could end up over the life of a project approaching $80m, $90m - they're not cheap!"

It looks likely that virtual worlds will go from strength to strength as more and more of us sign up.

Philip Rosedale, who created Second Life, is optimistic about the future possibilities.

"I think in the more distant future a lot of human collaboration and creativity is very likely to move into cyberspace. And, it's going to be a change that will affect the whole world in ways that I know I can't understand - and I've certainly been thinking about this quite a bit.

"So it'll be fun to watch."

The Money Programme: Virtual World, Real Millions, Friday 1 June at 1900 on BBC Two.
It is also the first BBC programme that will be shown in full in a virtual world: Watch it in Second Life simulcast at 1900 UK time, and then again at 2000 and 2100.