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.)

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.