• CNNMoney.com, Friday, June 15, 2007 11:03 AM

It seems that talk of a bubble necessarily follows the emergence of any new Internet phenomenon these days. The social networking bubble was followed by the online video bubble, which was followed by a general venture capital/private-equity-led Web 2.0 bubble. Now we may be heading into a virtual world bubble. Watch, a widget bubble will be next. Mind you, none of the other "bubbles" burst. There's been consolidation and shakeout, but nothing so massive as to affect an otherwise robust Internet media economy.

Talk of a bubble is almost always an offshoot of a category receiving tremendous growth with little revenue. That just seems to be the nature of many new Web businesses, but if you take a look at Second Life, World of Warcraft and Club Penguin, you see already-established business models, a good degree of liquidity and growth prospects for the future. All of which make them ripe for picking by a major media company.

While Second Life offers interesting opportunities for commerce, like branded content (recent partners include the NBA and Playboy) and the opportunity to make and convert virtual money into real world money, the virtual-world pioneer has been eclipsed by Club Penguin, Gaia Online, Habbo Hotel and IAC/InterActive Corp.'s Zwinky. Zwinky, whose growing user base is comprised of mostly 13-24 year-olds, lets users create avatars, or online personages, they can import to social networks and blogs.

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