Once pegged as an up-and-coming competitor to Second Life, Blue Marks is a CryEngine 2-powered virtual world from developer Avatar Reality. On Friday, the company said it will no longer add new content to the PC version of Blue Mars, switching its efforts to develop a version of the virtual world on iPhone, iPod Touch, and iPad devices. The servers will remain online, but there will no longer be any technical support. Current city developers will no longer be charged monthly hosting fees.

The move from a desktop client to a mobile platform makes sense in terms of general trends towards mobile gaming. And if Blue Mars is successful with its release, it will be the first 3D virtual world on the iPad. But some question whether mobile devices will be able to provide the same sort of experiences - resource-intensive in terms of graphics, data, and processing power - that a PC can.

The Future of Virtual Worlds

The change in the focus of Blue Mars development - along with a larger company shake-up echoes some of the problems that Linden Labs Second Life has faced in the past year - layoffs, management changes, and a struggle to woo new "residents" and maintain interest in 3D virtual worlds. For its part, Linden Labs has recently hired Rod Humble, a former EA Games exec, as CEO.

It remains to be seen if making virtual worlds more like games or more like mobile apps will be what saves these companies from more bad news in 2011.

In a post on the Second Life blog, Tom Hale, Chief Product Officer for SL owner Linden Lab, said user-to-user transactions in the immersive world spiked 30% over last year to $160 million, breaking all previous company records.

The company itself makes money in part by assessing a transaction fee on in-game commerce.

Additional high-points for the company included included the fact total sales on Xstreet, the Second Life marketplace, reaching $2.3 million, an 82% increase year-to-year and a 24% increase over the previous quarter. Total Linden Dollars exchanged on LindeX, the in-game currency exchange, totaled $31 million, a 9% increase over the previous year, and monthly unique users with repeat logins peaked in March at 826,214, a 13% increase year-to-year and an all-time high.

Hall said the money the company invested in customer acquisition was the hinge his economy turned on. Infrastructure improvements included a new viewer and data center. He also noted that Valentine's Day was the single largest day on their virtual currency exchange, Xstreet and theorized that the success of the movie Avatar, which was heavy on immersion, might have inspired a new wave of people to try it.

Update: Linden Lab's PR rep, Rena Grant from Edelman, contacted me to dispute the notion they charge in-game transaction fees. I have a couple of questions back to her and will clarify as necessary.

Update: Ms. Grand told me Linden charges an "exchange rate" on the virtual currency that is used for in-game commerce and they do not charge a commission on in-game commerce.

While unaffiliated parties have created versions of this process before, Linden says theirs is the first effort to achieve trans-world teleportation without logging out of one world and logging in to the other. No virtual goods were transported across the barrier, a major concern for Second Lifers concerned with virtual property theft and rapid depreciation of their assets' value.

All concerns aside for the moment, the possibilities are very exciting. Below is a corny but appropriate video produced about the event. (Removed until autoplay issue resolved, but available in the original announcement.)

Linden faces widespread user dissatisfaction about its platform's stability, intellectual property protection and other concerns. A lively discussion in comments on the announcement is a good place to get a look at the public mood.

Interoperability across virtual worlds could be an important step in maintaining the viability of Second Life. As an increasing number of virtual worlds proliferate, user and digital asset data portability is as likely to be essential for Second Life as it will be for other platforms online. Walled gardens will face increasing competition from the open world at large, so taking a leadership role in enabling that openness is a good way to thrive in the coming era of openness and portability.

You can laugh at Second Life and you can complain about it if you want, but we are excited about this news. Cynicism may have its place, but we'd argue that today isn't the time for it.

We congratulate Linden and IBM for their achievement and are excited to see what will come of this big step. Watch for news about the general availability of this functionality - once policy concerns are dealt with or once outside parties figure out how to achieve the same thing.