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Despite predictions that 33 million users will register for virtual worlds by 2013, drawing a wide variety of providers and companies to the relatively new technology, the Internet’s search and ad leader this week announced that it’s pulling out of the business.

 

Officials at Google (News - Alert) Inc. say their virtual reality service, called “Lively,” will be shut down at the end of this year.

 

“It has been a tough decision, but we want to ensure that we prioritize our resources and focus more on our core search, ads and apps business,” the so-called “Lively Team” said on the company’s blog. “Lively.com will be discontinued at the end of December, and everyone who has worked on the project will then move on to other teams.”

 

According to The Associated Press, Google’s decision to kill Lively reflects the service’s inability to stand out in a virtual reality market dominated by Second Life.

 

Many IT insiders believe that virtual worlds have a strong future.

 

As TMCnet reported, a Dallas-based research firm that focuses on digital and home connectivity segments is reporting today that 3D virtual worlds have evolved into a sustainable industry.

 

Officials from Park Associates (News - Alert) say 33 million users will register for virtual worlds by 2013, drawing a wide variety of providers and companies to the relatively new technology.

 

Here’s how the firm diagrams the technology’s growth potential:

 

 

According to Yuanzhe Cai, the firm’s director of digital media and gaming, 3D virtual world platform companies, full-service agencies and operators form a viable base that provides services to businesses, media companies, advertisers and consumers.

 

“But content and application developers and service providers are becoming increasingly important,” Cai said.

 

Generally speaking, virtual worlds are computer-based environments that simulate reality so that users can move around and interact with avatars. One popular example of a virtual world is the Second Life. Launched in 2003, Second Life is an advanced social networking virtual world where users can explore, meet others, participate in activities and even create and swap services or items.

  

In business, virtual worlds now are being used as a cost-effective way to advertise. Apple (News - Alert), for example, created an online store within Second Life.

 

Business also can use virtual worlds as gathering places.

 

Earlier this year, TMC President Rich Tehrani visited communications and technology company Nortel (News - Alert) at its research and development headquarters in Ottawa, and was walked through a virtual world for the company that includes 3D stereo sound.

 

As Tehrani reported on his blog, Nortel officials told him they’re taking the Second Life model and turning it into a “a secure enterprise virtualization environment.”

 

“They truly believe that telephones will be replaced by virtual world communications which is richer and has visual cues allowing you to see if others are paying attention,” Tehrani writes. “This would mean you can communicate visually regardless of device. Avatars in fact are preferable to live video in many cases as there are times you are working at home and your attire does not lend itself to co-worker meetings via video.”

 

Yet Google’s Lively service, launched in July, appears to have fallen short.

 

Officials there said they’ve always supported experimentation.

 

“But we’ve also always accepted that when you take these kinds of risks not every bet is going to pay off,” Google officials say.