Virtual Worlds Invested $594 Million in 2008

63 virtual world companies benefitted, but spending is down drastically from the $1.4 billion invested in 2007. Where did the money go?
A report released earlier this week from Virtual Worlds Management estimates that roughly $594 Million was invested in various virtual world companies throughout 2008. That's an impressive sum given the oppressive economic climate in the latter half of the year, but the numbers are way down from 2007's spending binge, where investors poured $1.4 billion into this space.
Where is this money going? Interestingly, only a fraction is going toward funding for large, triple-A worlds aimed at mature gamers. If you look at the complete breakdown at the bottom of the report, the majority of investments are aimed at smaller companies producing web-based games for kids and tweens. Investors are obviously hoping to see a lot of upside from a small company, as we've seen in the past with Club Penguin or Webkinz.
That's not to say that some of this money isn't going toward companies aimed at the core gamer. In Q2, Realtime worlds (creator of GameSpy favorite Crackdown) brought in $50 million to help fund its upcoming online game. That same quarter, Turbine (the developer behind The Lord of the Rings Online) finished up a round of financing with $40 million in order to fuel company growth.If you enjoy fan-made game movies, you'd be pleased to see that Machinima.com got a $3.85 million investment in Q4 of 2008, even as the economy was going haywire. Another interesting company to get financing in the turbulent Q4 was Metaplace, Raph Koster's experimental MMO platform where anyone can create their own virtual world.Digging down into where the money went, some unusual projects are uncovered. For instance, Trion Worlds received a $70 million investment in the third quarter. The company is working on a fantasy MMO as well as an unannounced project with the Sci-Fi Channel to simultaneously launch a new TV series and an associated virtual world. Could this be a game based off of the Battlestar Galactica prequel, Caprica, coming out in early 2010? We can only guess.Looking at the numbers, it's interesting to note that in 2007, a single property (Club Penguin) was purchased by Disney for $350 million, with another $350 million promised if the game hit projected growth targets. That single $700 million investment was more than the total of every virtual world investment in 2008!Times may be difficult for virtual world developers (employees of Cheyenne Mountain, developers of the Stargate Worlds game, haven't been paid for 69 days), but some investors still see potential in the marketplace even as the economic climate makes it harder and harder to fund new development.

Standard Life material about its Pension Sterling Fund was "misleading."

Standard Life facts 'misleading'

A financial services lawyer says Standard Life material about its Pension Sterling Fund was "misleading."
He says the city regulator should be examining the fact sheets to consider if compensation should be paid.
Standard Life has already said it will compensate people who invested after it revalued the fund on 23 December.
But it insists "customer literature [showed] the fund was invested... in a range of short dated money market instruments."
Subprime involvement
However, documents seen by BBC Radio 4's Money Box programme show that in March 2008 a fact sheet issued by Standard Life showed 100% of the fund - sold as a safe harbour for pension money shortly before retirement - was in cash

And Standard Life has admitted that up to 40% of the fund is still held in what are called "mortgage backed securities" - the products which have been involved in the subprime banking crisis which has swept around the world.
Adam Samuel, a lawyer who advises companies on whether their product information conforms to regulations, which say it must be "clear, fair and not misleading" told Money Box the documents failed that test.
"There's a description of the asset type as being 100% in cash, which in the small print says could indicate some short term money market instruments.
"Mortgage backed securities tend to be over quite a long term so that's wrong.
"The documents are not clear, not fair and definitely misleading."
Due compensation?
His comments were made a week after Standard Life told Money Box there were no grounds to compensate its customers.

Three days later it said it would compensate those who invested after it revalued the fund downwards on 23 December, but before it made that information public on 14 January.
Adam Samuel says the documents show there is a case for taking the compensation back much further.
"The Financial Services Authority should be sitting down with Standard Life and going through documentation for each year and deciding whether their descriptions of the fund pass the clear, fair and not misleading test.
"In reality that may mean compensating everybody."
Standard Life response
Standard Life told the programme that the information provided to customers was not misleading and in a statement said:
"It has been detailed in our customer literature that the fund was invested not only in deposits but also in a range of short-dated money market instruments.
"As soon as sufficiently reliable information was available, the securities held in the fund were revalued.
"That led to a reduction in the unit price."
The company would not comment in writing on the suggestion that compensation should be extended.

Obama wants access to remaining bailout money

Barack Obama's economic team is talking with the Bush administration about having Treasury Secretary Henry Paulson ask Congress within the next week for access to the $350 billion remaining in the financial bailout fund, officials on both sides said Friday.

A request by Paulson would allow Obama to begin tapping the fund — the last half of a $700 billion rescue package authorized by Congress in October — promptly after his Jan. 20 inauguration.

Obama's transition team also has asked Neel Kashkari, the head of the rescue program at the Treasury Department, to stay on for "a couple of weeks" under the new Obama administration to ensure a smooth transition, an Obama official said.

Paulson has said for a number of weeks that he has been having talks with the Obama team on when a request should be presented to Congress seeking the second $350 billion. He has said that the decision on timing has been left up to the incoming administration.

Eager to shift the course of the government's financial sector bailout fund, Obama and congressional Democrats want a more defined mission for the beleaguered $700 billion rescue program.

The House could act as early as next week on a new tack for the Troubled Asset Relief Program that would set tougher conditions on recipients of the money, including limits on executive pay, and require the Treasury Department to use some of the money to reduce mortgage foreclosures.

At the same time, Obama's selection for treasury secretary, Timothy Geithner, is broadening the program's goals, aiming to unfreeze credit for homeowners, consumers, small businesses and local governments.

Geithner and Obama's economic team are developing a "comprehensive set of investment principles" that would also embrace restrictions on how the money is spent, limits on executive compensation for fund recipients and a plan to address rising foreclosures, an Obama transition official said.

The changes come amid bipartisan criticism that the Bush administration's handling of the first $350 billion of the program has been unfocused, confusing and inconsistent. But the new approach also signals a significantly greater government intrusion into the workings of financial institutions than the Bush administration was willing to undertake.

The money so far has been used to support ailing companies such as insurance giant American International Group Inc. and automakers General Motors Corp. and Chrysler LLC. It also has pumped billions of dollars into banks in hopes of freeing up credit for loans. But critics have complained that the money has had few strings attached and has not been used effectively to address the nation's housing cris