If it seems like everybody is starting their own virtual world, it is because they are. A report put out today by Virtual Worlds Management tracks $161 million put into 14 virtual-world investments during the second quarter of 2008. In the first quarter there was even more activity, with $184 million put into 23 virtual worlds and supporting technology companies. That brings the total this year alone to $345 million across 37 deals. Some notable deals (you can see the full lists by clicking on the last two links above):

Second Quarter 2008

Grockit——————-MMO Learning Game——-$8 million——-Integral Capital and Benchmark

Nurien Software——–3D social networking——-$15 million——-Northern Light, Globespan, NEA

PrimeSense————-Gestural Interface———-$20.4 million—–Led by Canaan Partners

Realtime Worlds———-MMOG Developer———$50 million——–Maverick Capital, NEA

Stanford Parallel —-Parallel Processing————–$6 million——-Sun Microsystems, AMD, Nvidia, IBM,
Processing Lab for Virtual Worlds HP, and Intel

Turbine———————-MMOG——————-$40 million————–Time Warner and GGV Capital

First Quarter 2008

9You———–Virtual World/Casual Games——$100 million——–Temasek Holdings

Dizzywood —————Youth World————— $1 million——-Shelby Bonnie, Charles River Ventures

EveryScape————— Mirror World————–$7 million——–Dace, Draper Fisher Jurvetson

Fix8 ———————- Avatar Content————$2 million ——–SK Telecom

Gizmoz ——————- Avatar Creation ———- $6.5 million——-DoCoMo Capital, ngi group

iOpener ——————–Mixed Reality ————-$6 million———Triangle Venture Capital

Sparkplay Media——Casual MMO with Games—–$4.25 million—–Redpoint, Prism Ventureworks

Unisfair ——————–Virtual Events Platform—–$10 million——-Norwest, Sequoia Capital

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Just days after competitor Gizmoz announced more funding and AIM integration, Oddcast is previewing a new service called 3D Videostar that will let users import their faces into movie clips to replace those of movie stars.

There’s no word yet on when this service will be available, but Oddcast has provided us with a few sample videos to get a sense of what it’ll be like (they lose points in my book, though, for not even let us embed them – you’ll have to go here).

From looking at these samples alone, the results appear mixed. Some face swaps look quite good while others leave something to be desired. I assume Oddcast will license this technology to movie studios who want to use it as a viral marketing gimmick.

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GizMoz, provider of fun technology that can turn your 2D image and recorded voice into a talking 3D character, is growing up and moving into the Asian market. The Israeli company, which we first covered in December 2006, has raised $6.5M in Series B financing from a round led by DoCoMo Capital, a subsidiary of the largest cell phone operator in Japan.

The money and its budding relationship with DoCoMo should help the company provide mobile offerings for consumers in Japan, a country that CEO Eyal Gever calls “a world-leader in mobile adoption.” Gever says that the company plans to provide mobile offerings for both businesses and end users. These will include web-to-mobile messaging, mobile-to-mobile messaging, and a variety of consumer applications like animated talking greetings, video tones, wallpapers, and screensavers. The company will not yet discuss the details of its expansion plans, but we can expect Gizmoz to partner with media companies and mobile content aggregators in addition to mobile operators.

Apart from its Asian strategy, Gizmoz has also integrated its 3D avatars into AIM with something called Gizmoz Expressions. AIM users can now upload their photos, create a 3D avatar with them, and assign different animations and behaviors for when certain things are said in chat. The avatars will then sit inside IM windows and add a bit of amusement to conversations. Characters can also be picked from a large collection of celebrities, political figures, etc. for those who don’t want to use their own portraits.

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JibJab has obviously figured out that pasting our pictures onto a video is a sure fire way to get a link from us. Here’s the latest, although I still like Gizmoz’s effort a lot more.

Nice to see Om Malik doing the moves so soon after his hospital visit.

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Unlike JibJab, which takes a still 2D image and moves only the mouth up and down, Gizmoz has developed proprietary technology to create a 3D facial image and includes various expression changes as well as lip syncing.

Their basic product, which allows users to create talking avatars, launched in May 2006.

Users can now take their avatar image and insert it into a number of video clips. More clips will be added over time, and Gizmoz is also in the process of licensing video from Hollywood movies and other professional content. Founder Eyal Gever actually showed me a clip over a year ago that had my face on a James Bond clip from Casino Royale. I felt pretty cool that day.

Gizmoz, which raised $6.3 million from Benchmark, is headquartered in Israel.

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Three TechCrunch40 demo pit startups got local bay area television coverage last week – Dancejam (note: I’m an investor), Realius and Gizmoz. It looks like the reporter did the easy thing – a swing by the demo pit to film the best looking startups. Congrats to all three.

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The ad above, featuring people who applied to be in it via a special Taco Bell/Gizmoz contest that ran last month, was played at the MTV Music Awards this evening.

The ad is sort of standard mainstream media stuff complete with carefully diversified (sexually and ethnically) winners, but it’s a great showcase for Gizmoz’s technology (see our launch post for an overview of their 3D avatar product). And congrats to Hunter, Mallory and Obinna, who just had their fifteen minutes (in this case fifteen seconds) of fame. Click on their names to see what kind of audition was needed to win the contest.

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On Monday, MTV, Taco Bell and Gizmoz will jointly announce a new website and promotion: users will go to tacobell.gizmoz.com and create a fifteen second audition of themselves doing anything they like. Taco Bell will select three winners and create a new thirty second spot with Gizmoz technology that will be played at the MTV music awards in September. The site is live now, but all content will be cleared or the Monday announcement (so wait until then to create an audition).

All auditions will be publicly available and viewers can rate them. The three winners will be paid and given a years worth of Taco Bell food (hopefully not all at once).

Gizmoz is an impressive and fun widget platform – and it’s something MySpacers in particular are likely to crowd to over time. This kind of exposure is great for the company…and we hear that Taco Bell is actually paying them for this, not the other way around.

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These are animated, talking, 3D images that can be embedded on any website. When compared to what Sitepal and others are doing on the avatar side of things, or Snapvine in the voice recording space, it really shines (see, however, Sitepal’s comment in our previous post for a different viewpoint).

Creating a Gizmoz takes about a minute and requires a single photo of the subject. Gizmoz renders a 3D image of the photo. Users then customize it by adding hair, body, accessories, clothes, etc., and can also distort the face in a number of ways. When you add your voice, via a microphone or by typing in text that is converted to audio. the avatar adds facial expressions, eye blinks, breathing and lip syncs to the voice. Here’s an example using my photo:

The key uses for the product will be to create a welcome clip like the one above, or to create a welcome “voicemail” service where people visiting your site can leave audio messages (like Snapvine).

Gizmoz is built on the Flash platform; however, like Flektor, which was recently acquired by MySpace, all of the code was developed in-house by CEO Eyal Gever and his team over the last four years. That will make it an even more attractive acquisition target for MySpace and others.

The company has also created a cool personalized demo showcasing the announcement:

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Here’s why they were intrigued. Gizmoz has a Flash-based 3D avatar product that is made from a single picture of a person plus their recorded voice. See Eyal’s MySpace page which has an embedded Gizmoz and you’ll understand why this blows away what SitePal and others are doing in this space.

Users start by uploading a picture of themselves or their pet. Gizmoz turns the picture into a 3D model (see image to right), and the avatar can then be customized with a body, clothes, effects (scars, tattoos, etc.) and backgrounds. You then record a message and sound effects, and your avatar is created. The end result has a moving mouth and facial expressions while you talk, and the effect is quite stunning. Eyal calls it “bringing Pixar to the people.”

Here are a couple of videos they made with my picture – see here and here. I’d embed these but they auto-play and people would not be happy. Also, sorry for the lame audio, this was done in the hallway at Web 2.0 while I was surrounded by the Fox team. But I want to show what Gizmoz can do based on a couple of minutes of setup.

The personalized avatar product is still in private beta. The existing product on the site requires the use of a library face, but can be customized and a personal voice can be added. These avatars can be embedded in websites, and Gizmoz also has a downloadable application that adds these avatars to all major instant messaging services.

MySpacers are going to go absolutely nuts over this. Lots of Screenshots below.

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