• Larger play area - providing a fully immersive look and feel
• More sophisticated - improving quality of game play
• Higher-quality graphics - increasing authenticity and taking on movie-like qualities
• Console game attributes - a dynamic driving experience that puts players in the action
• Advanced effects - smoke, flames and other particle effects (including farts!)

Research by Manchester University shows that the practice, known as gold-farming, is growing rapidly.

The industry, about 80% based in China, employs about 400,000 people who earn £77 per month on average.

The practice is flourishing despite efforts by games companies to crack down on the trade in virtual goods.

Some gold-farming operations offer other services such as "power levelling" in which they assume control of a player's character and turn it into a high-powered hero far faster than the original owner could manage themselves.

Prof Heeks said very accurate figures for the size of the gold farming sector were hard to come by but his work suggested that in 2008 it employs 400,000 people who earn an average of $145 (£77) per month creating a global market worth about $500m.

But, he said, the true size of the sector was hard to estimate - it could easily be twice as big.

Lively is a mash up of instant message, chat room, virtual world, and Web page. Think: Second Life in a web browser. Rooms, like the avatars that represent the users within, can be customized and individually linked to. "If you enter a Lively room embedded on your favorite blog or website," Google's Niniane Wang said in the announcement post, "you can immediately get a sense of the room creator's interests, just by looking at the furniture and environment they chose."

Lively is a 20% project, still in Beta, and it shows. Even on a powerful machine the performance is clunky and, for the moment, it's Windows only. (Mac and Linux clients are on their way.)

"Virtual worlds with scientifically accurate simulations could permit learners to tinker with chemical reactions in living cells, practice operating and repairing expensive equipment, and experience microgravity," it says.

The document calls for a game engine that includes "powerful physics capabilities" that can "support accurate in-game experimentation and research".

"A Nasa-based MMO could provide opportunities for students to investigate science, technology, engineering, and mathematics career paths while participating in engaging game-play."

Other organisations such as the US armed forces already use online gaming as a recruitment tool.

America's Army for example introduces players to the "seven Army Core Values" and now claims to be one of "the most popular computer games in the world".

1. How a NASA-based educational MMO should be designed.
2. How a NASA-based educational MMO should support both formal and informal education efforts.
3. How a NASA-based educational MMO should connect to current and future NASA missions.
4. How NASA career opportunities exploration and significant STEM learning experiences would be incorporated into the design a NASA-based educational MMO.
5. How a NASA-based educational MMO game play would be engaging for all participants.

HBO said on Tuesday it has acquired the rights to a short-form documentary shot entirely within Second Life, as entertainment companies increasingly turn to virtual worlds as a source for new content.

"My Second Life: The video diaries of Molotov Alta" purports to tell the story of a man who "disappeared from his California home" and began issuing video dispatches from Second Life. The popular virtual world, which has its own currency and a growing economy, has drawn millions of users who create alter egos called avatars and interact with people from around the world.

HBO, the premium channel owned by Time Warner Inc, paid a six-figure sum for the rights, Douglas Gayeton, who made the film, said in an interview. Gayeton, who uses the avatar Molotov Alta in Second Life, said the documentary is scheduled for release in 2008.

Second Life has hosted dozens of real world companies in the past year, usually as a means of promoting products like cars or movies. However, Hollywood has been increasingly interested in using worlds like Second Life as virtual movie sets, a process known as machinima.

The virtual world for kids 6-14 launched in Canada in 2005 and claims 700,000-plus paying members; subscriptions run about $6 or $58 a year. The site also makes money from virtual goods and other online merchandise sold through the site.

Founders Lane Merrifield, Dave Krysko and Lance Priebe will join Disney and remain the senior execs responsible directly for Club Penguin. Former Disneyland employee Merriefield, now the CEO, will be an EVP of the Walt Disney Internet Group reporting to WDIG president Steve Wadsworth. The founders are the only shareholders; each stands to make $115 million.

The combination of Disney and Club Penguin made sense all along but Disney seemed to be more inclined toward growing its own communities-Toontown (2003), Disney Fairies (launched in 2007 with a game coming in 2008), the upcoming Pirates-in house. Iger said the company is still committed to that strategy and thinks it will be successful but sees in Club Penguin a successful standalone business. With the exception of changing the name to include Disney and supporting the company, Iger promised: "Club Penguin is going to continue to exist as is... The experience will not change at all. It will continue to evolve." Iger added: "We really don't intend to get in the way of that or do anything by virtue of the way we own it."

Games such as World of Warcraft and worlds like Habbo Hotel are fast becoming "significant platforms" in the converged media world, the report said.

"There's a whole ream of different genres and spaces emerging," said the report author Piers Harding-Rolls.

Revenues from subscriptions to MMOGs will hit $1.5bn by 2011, he said.

But the growth in MMOGs remains limited compared to developing markets such as video on demand, which is expected to be worth $11.4bn from revenues in four years' time.

The range of MMOGs has started to diversify in recent years with new genres and types of games. There has also been an expansion in the different ways the games generate revenue.

Now the cable channel aims to push the boundaries of false reality one step further. This week, MTV will introduce Virtual Laguna Beach, an online service in which fans of the program can immerse themselves - or at least can immerse digitized, three-dimensional characters, called avatars, that they control - in virtual versions of the show’s familiar seaside hangouts.

"You can not only watch TV, but now you can actually live it," Van Toffler, the president of the MTV Networks Music, Film and Logo Group, said in an interview.

Wednesday's introduction of Virtual Laguna Beach is the first of three virtual worlds that MTV plans over the next year as part of an effort to steal a march on popular Web sites like MySpace and YouTube that have diverted the attention of the MTV audience. Virtual Laguna Beach will be making its debut two weeks after the abrupt dismissal of Tom Freston as chief executive of Viacom, MTV Networks' parent. One reason cited by Viacom’s chairman, Sumner M. Redstone, for replacing Mr. Freston was that the company had not been aggressive enough in its online expansion. Judy McGrath, the chief executive of MTV Networks, said the timing with the Web site was unrelated to Viacom’s corporate turmoil.

As Tessa, Chase, Cameron and the rest of the cast attend the Winter Formal in this week's episode (10 p.m. ET/PT Wednesday, Sept. 27), viewers can live the experience for themselves a day earlier in Virtual Laguna Beach (VLB), the new, immersive 3D social-networking experience from MTV Networks' Music Group. They can also catch the following night's episode a day before its on-air debut -- a move that marks the first time a television show premieres in its entirety in a virtual world.

A two decade veteran of the UK music and game industry, Laukosargas recently left work for family reasons, mostly. "The main reason I stopped is because I had a child," as she puts it, "but I was also getting very disapointed with the lack of inspired work in the games industy." As it happens, she worked for a time on Black & White, the classic "god game" from legendary British designer Peter Molyneux.

"It was an experience that gave me a real insight into how great games can be," she says. "It was a truly brilliant idea but it lacked play testing, I think." She's referring to the constant micromanagement required by the player, acting as a tribe's god, to provide a steady stream of resources to survive on. "It required TOO much attention." She nods to her island. "It's a balance I'm still working on here."

So while she raises a child at home, she takes creative respites to nuture a self-sustaining ecology in Second Life, adjusting variables here and there, working for the moment when she can stand back like Newton's clockmaking God and let her world unfold on its own. And, well, have her Sunday of rest.

Even this early into its creation, she's noticed some limited forms of emergence (the holy grail of artificial life developers) particularly in the development of her plant life.

As in a traditional video game, players navigate a virtual world in a bid to stay alive. The twist? Computerized movements in Mice Arena are mapped to and from the real world, where an actual predator (your hamster) gives chase to a digital avatar (you) by pursuing a real piece of bait. The avatar's movements in the virtual environment direct the bait around a small tank fitted with actuators that mold and twist an elastic latex floor into the changing terrain of the game map. The hamster's pursuit in the tank is monitored by infra-red sensors that relay its position to the computer screen.

Researchers at Emerging Art and Architecture Research Group, or RASTER, and Singapore's Mixed Reality Lab have so far developed a game engine for Mice Arena, and they're currently syncing it to actuators that manipulate the shape of the arena floor. They are also in the process of building a remote-control bait mechanism for the hamsters to chase. They expect to demonstrate a fully functional prototype by November.

"We want to enable pets to play games in a way very similar to the way human players' play," said RASTER's Vladimir Todoroviæ, a collaborator working on the Metazoa Ludens project. "To play a computer game with your hamster would definitely make us think about where we have come with digital tradition now."

It may sound like a really complicated version of Ms. Pac-Man, but the goal of the game makers is ambitious: to merge human spaces with pet spaces through pervasive computing interfaces. By creating high-tech, pets-versus-owners computer games, researchers hope to gain new insights into animal behavior, and perhaps develop new technologies that could close the gap between the species.

To Joseph Bankman, a professor at Stanford Law School, the question is not one game players or publishers should worry too much about.

"I think the common-sense answer is that the IRS wouldn't and shouldn't go after folks until they sell the assets," Bankman said. "The common sense reason for this is that for most folks, the 'assets' represent enjoyment value--what we call imputed income--that's not taxed. It's a little bit like getting an autograph of a baseball player or movie star. You could sell the autograph, and folks do, but we don't tax folks who get the autographs and don't sell them."

Jon Jacobs, a director of independent films, plans to call the space resort, in the science-fiction themed game Project Entropia, "Club Neverdie." Like other land areas in the game that has been visited by 300,000 players, the resort grounds will spawn dinosaur-like monsters, which visitors can kill.

Jacobs will take a cut of the virtual resources that the carcasses yield, like hides.

Jacobs, 39, plans to hire famous disc jockeys to entertain visitors once a week or so at the resort but still reckons on netting $20,000 a month from the hunting tax and other income.

"I want to operate this thing at the level of a major nightclub in a major city," Jacobs said.