By the middle of last year, it was attracting half a million unique visitors monthly; fast forward to last month, and that number is two million. It’s not a traditional MMO like World of Warcraft; it’s not a social game like There; it doesn’t originate from Europe like Habbo Hotel or from Asia like Cyworld. You haven’t heard of it partly because the San Jose company has kept a low profile.

Another reason you’re still likely in the dark: it’s primarily designed for teens. But with online worlds all sizes and styles poised for an explosion, you’ll almost certainly hear a lot more about it soon.

It’s called Gaia Online, and as a guy on a giant crane behind us tore down the giant Web 2.0 conference banner in Moscone West, I had a chance to sit down with CEO Craig Sherman— formerly COO with Myfamily.com, and an Entrepreneur-in-Residence with Benchmark Capital, a main funder of Gaia— for a furious round of questioning. How did Gaia grow so large so quickly so stealthily?

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As a gamer, Roger Ehrenberg is a fan of the Xbox 360; unfortunately for Peter Moore, however, his day job is President of a Wall Street analysis firm. And the investor’s perspective is decidedly at odds with the gamer’s. To wit, as he writes on his blog:

“Gaming has been a disastrous endeavor for Microsoft, particularly from an investment perspective…” [Emph. mine]

His argument for a statement of such face-punching boldness is threefold: basically, 1) after blowing $21 billion over five years on their Home & Entertainment division, all Microsoft really has for its efforts is $5.4 billion in total operating losses, 2) the Xbox line has simply failed to take off in Japan, heart of the console industry, and 3) despite their stated intentions, the 360 has failed to diversify its audience much beyond hardcore gamers who own HDTVs.

It’s a solid analysis– read it all here. But is it correct? Short term, maybe. To take Microsoft’s side (and if I won’t, who will?), I can suggest three big picture rejoinders:

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In the future, everyone will be in the virtual world business for fifteen minutes. UK game industry pub MCV reports that Atari, the venerable company that launched the videogame industry, is now developing a user-created online social world of its own. With Atari’s announcement, there are now at least eleven upcoming virtual worlds which emphasize user-developed content, or at least cite Second Life as a role model.

For those keeping track: Atari is joining an already overflowing roster that includes Sony’s Home, Viacom’s as-yet-unnamed world, along with start-ups Areae, Croquet, HiPiHi, Kaneva, Multiverse, Ogoglio, Outback Online, and Whirled. (SL blogger Onder Skall just posted a marvelously helpful guide to most of these worlds and more.)

With the market so crowded, nearly all of these projects are almost certainly doomed to fail, or just as likely, modestly succeed as niche metaverses. And why are three major multinational media corporations trying their hand in this upstart genre at all?

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As part of some restructuring within the Giga network, this blog is going on indefinite hiatus. Fear not, however, because the GigaGamez team will continue covering the business of games in the broadband era. In the next week or two, look to GigaOM for that coverage, along with the usual wealth of tech industry insights and reportage from Om and crew.

Meantime, here’s a selected hit list of favorite features and popular posts from GigaGamez’s first four months of operation. In subsequent months, we’ll hopefully return the site to live operation. For now, however, look for us on GigaOM.

GIGAGAMEZ HIGHLIGHTS
Nintendo Denies GameStop CEO’s Managed Scarcity Claim
PS3 Outsells Wii in the UK While Breaking Sales Record
John Carmack Offers to Advise on NASA’s Proposed MMO
NPD: PS3 Selling “Slightly Faster” Than 360 Did at the Same Stage in Its Release
New Site Aims (Sorta) to be “the YouTube of Gaming”
Sony Marketing the PS3… in Second Life!
Report: Video Games’ Audience Reach More Than Originally Thought
New PC Gaming Standard Based on Open Source
Heyday for Indy Developers? GigaGamez Checks With Two Top Devs
How Xbox Hackers Make Microsoft Seem Cool
MySpace’s Tila Tequila To Become Second Life Avatar
Five GigaGamez Questions for Epic’s Mark Rein
VonGuard’s Top 10 Overhyped Games
Game Mags Gone Because of MySpace Spam?
Avatars: Web 2.0’s Most Undervalued Asset?
Three Rings Estimates $7 Mill+ Revenue in ‘07
Sony Adds Social Software, Second Life-ish World to PS3
Indy Dev Debate: Online, or Check-out Line?
First Looks at a “Chinese Second Life”
Smart Thoughts on Shawn Fanning’s MMO Social Network Start-up
Crackdown in Review
EA CEO Steps Down After Stock Dips and Criticism of Sequel-itis
CBS Plows $7 Million Into 3rd Party Metaverse Developer
XBox 360: Exceptionally Defective?
MMOs on Your Cellphone
Rated M becoming the NC-17 of Games?
Wii: What to Do When the Magic’s Gone
Gaming for China Gold: Expert Advice on the World’s Biggest Market
Nintendo’s Back… But Can They Hang On?
WoW 2.0: Lord of the Rings, Everquest Creator Challenge Warcraft
eBay on RMT: World of Warcraft, No… Second Life, Yes
Second Life: Ponzi Scheme, or Mayberry Gold Rush?
Pyramid of Confusion: The Latest Second Life Backlash
Windows Vista: Indy Game Killer?
Can the PS3 Be Saved?
Second Life Backlash: A Story Too Good To Check
Boosting TV Ratings– With Gaming
XBox Domination: 360 Double PS3 Sales
Second Life Goes Open Source– First Thoughts, With Linden Lab’s Replies
Mii So Horny
Second Life: People Light, Cash Heavy?
PS3s Being Traded For Wiis
Study Shows In-Game Ads Not Effective
Q&A With Raph Koster
Second Life: Hype vs. Anti-Hype vs. Anti-Anti-Hype

This week, the Wii’s Internet Channel became fully operational, boasting improved features like manual zoom and collapsible toolbars, powered by Opera; judging by gamer site commentary, the reception from Wii owners is largely positive, with the only major gripe being it doesn’t (yet) support all the standard Web plug-ins. From one angle, this is just a nice online feature for Nintendo fans. But I think it’s a lot more than that — this could be the day when the PC begins losing its centrality to the Internet. (So goes the Wii, so goes the Web.)

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The Chinese government will begin regulating the number of hours that minors spend playing online games starting April 15. The new law requires national game providers to install anti-addiction software that warns under-18 gamers when they have played longer than three hours a day, what the government considers a “healthy” level.

Gamers that continue to play above the three-hour mark will only receive half the normal points up to five hours. After the five-hour mark, players receive zero points in addition to an annoying message every 15 minutes that reads: “You have entered unhealthy game time, please go offline immediately to rest. If you do not, your health will be damaged and your points will be cut to zero.”

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Microsoft’s Windows Live Messenger for Xbox 360, announced earlier today, might sound cool to some, but to us it seems like a ploy to sell more high-margin peripherals, like keyboards, thereby boosting company’s game division revenues. After all, that tactic has worked well for Apple and its iPod line-up.

It is a wily move by Microsoft - after all, to instant message someone you would need a QWERTY keyboard-based device, which no surprise, Microsoft will start selling later this summer at an undisclosed price as an attachment to existing controllers.

Unless the first 10 million 360 adopters upgrade their controllers, don’t expect ubiquitous IM use from them. Even then, it’s unlikely what is being sold as a game machine will transform into a secondary messaging box over night – if ever.

In the interim, gamers will need to rely on the cumbersome on-screen virtual keyboard to communicate with friends. Yeah right – trigger happy gamers are going to do that.

Last week, the Hamburg-based research firm Komjuniti published the first extensive survey of Resident attitudes toward real world marketing in Second Life. It’s been a long time in coming: a British branding agency established a forward operating base in SL back in early 2004 (and for their efforts, were greeted by throngs of sign-waving protesters threatening to boycott their island.)

In succeeding years, a miniature dot com boom has attracted a slew of big name companies and established brands, from MTV and Coke, to Dell, American Apparel, Coldwell Banker, among many more. Up until now, few have asked hard questions about what these companies were gaining for all that effort and cash (other than any publicity hit from the announcement.)

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This week, New York City was the white hot center for discussing the business of marketing in online worlds. I wasn’t able to attend, but I’ve been following the copious notes of Mark Wallace, who live blogged many of the sessions at 3pointD. Personal highlights after the break.
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One of the newer companies that’s making a splash in the mobile gaming scene is Cellufun. Founded in 2005 by three men, Arthur Goikhman, Stave Dacek and Cary Torkelson, Cellufun has managed to up their download from 300 a day to 20,000. So, with their current funding and a world of possibilities, where are they going now? I sat down with Arthur Goikhman to talk about their current operations and current plans. More