Google announced earlier this week that it is to close down its Lively virtual world project, which it launched less than 4 and a half months ago, in order to focus its resources elsewhere.
It's not clear exactly whether it was user numbers or lack of revenue that has forced the closure, with Google simply hinting that the experiment hadn't "paid off".
As Lively joins the pile of other unsuccessful virtual worlds, you have to ask if it ever really had the chance to succeed. Although teen-targeted worlds such as Habbo Hotel seem to be holding up during the credit crunch, even the daddy of them all - Second Life - is struggling in the current climate.
It might be reporting an increase in the number of hours that users are spending playing the game, but Second Life is losing its premium accounts (users that pay a monthly subscription fee) fast.
July this year alone, saw a drop of 1410 accounts - around 45 a day - and was the seventh month in a row to report a fall in members.
This seems to make sense. In a time where people are cutting back, their "second world" surely has to be the thing that will take the first hit?
Having said that, the hype behind Sony's PS3 Home has been huge, but as an integral part of the PlayStation Network, it already has a core user base - as well as the fact it will be free. Having to fork out real-world cash for a piece of virtual land on which to build my virtual house has never quite clicked with me.
Then again, I've never quite got the appeal of logging into a make-believe world, becoming "someone else" and living out an "alternative life" over the Internet anyway. I know everyone likes to escape now and then, but it all just seems a bit extreme to me. Almost as if people are running away from reality.
For example, unhappy in your marriage? Get a bit of nookie online. Feeling a bit chubby? Make your avatar the spit of Angelina Jolie or Brad Pitt and be adored. In a dead end job? Pick your career and earn mega bucks. Who cares about the real world when you craft one just the way you like it through a computer screen?
Ultimately, and for this reason, virtual worlds will always be around. Some will make it, some won't and some will just do okay and be happy with that.
However, under the current economic climate, I think any new world trying to launch outside of a ready-made audience like PSN, is going to struggle to pull in both the numbers, and the revenue, to succeed. In my eyes, that can only be a good thing.