March 28, 2006 12:00 AM PST

'Second Life' scores $11 million in funding

Linden Lab, the publisher of the popular virtual world "Second Life," announced Tuesday an $11 million round of funding led by Globespan Capital Partners.

The new funding, which comes on the heels of an $8 million round in October 2004, came from Globespan as well as Amazon.com founder Jeff Bezos, Lotus founder Mitch Kapor, the Omidyar Network and Catamount Ventures.

"Second Life" is one of today's most talked-about virtual worlds, and currently has more than 165,000 users. It is an open-ended "metaverse" that allows anyone to join and participate for free and to create and own any kind of clothing, vehicles, buildings or other objects at no cost. The company makes its money by charging players use fees for land they buy and build on.

For now, the company isn't profitable, and it's not clear when it will be, said Catherine Smith, Linden Lab's director of marketing. However, she told CNET News.com that Linden Lab plans to use its new funding for aggressive international expansion, as well as for hiring intended to boost its infrastructure.

And while "Second Life" is on many people's lips at any gathering of video game industry professionals, one thing is clear: It is not always an easy world for new users to get into, and its graphics are not up to the level of competitors like "World of Warcraft" and "There."

Still, virtual world experts are high on "Second Life" and have mostly been willing to look past its shortcomings because of its members' interesting social behavior.

And with its new funding, the company may now be able to address the look and feel of "Second Life" and quiet its critics in this area.

"My guess is they're looking to expand to the next level," said Ron Meiners, an expert in virtual worlds and online games. "They've done some very innovative development thus far, and this means they can both improve their infrastructure and prepare to scale to a higher level of membership."

Even though "Second Life" is now hovering around 165,000 users, it has been on a growth spurt. Still, its membership pales in comparison with games like Blizzard Entertainment's "World of Warcraft," which has around 6 million users, each of whom pays $15 a month to play.

In any case, Smith said Linden Lab's goal is to grow from its current 70 employees to at least 100, and to produce new, German- and Japanese-language versions.

But to Meiners, the real importance of the new funding round is the ability it gives Linden Lab to make "Second Life" more accessible to more people.

"The complexity of the interface has been confusing for many people coming to 'Second Life,'" he said, "so this gives them a chance to consider redesigning for a much larger customer base."

See more CNET content tagged:
Second Life, virtual worlds, infrastructure, World of Warcraft, Amazon.com Inc.

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