Google's virtual world to die next month

updated 7:35 p.m. ET Nov. 21, 2008

MOUNTAIN VIEW, Calif. - Lively, a virtual reality service from Google Inc., is dying.

The company plans to shut down the service at the end of the year, reflecting Lively's inability to stand out from the rest of the virtual reality crowd. The pack of faux worlds is led by Second Life, where people deploy animated alter egos known as avatars to pursue digital fantasies.

Google introduced Lively to much fanfare in July, but management concluded it needed to sharpen its focus on its primary business of Internet search and advertising as the company's revenue growth decelerates in the deteriorating economy.

"We've also always accepted that when you take these kinds of risks not every bet is going to pay off," Google wrote in a blog post late Wednesday.

Even so, shutting down the service represents one of the few times Google has retreated since its inception a decade ago. Emboldened by its dominance of the lucrative search advertising market, Google has been extending its tentacles into other Internet markets, such as photo sharing, online payments and e-mail.

In one of its most significant steps back before this one, Google in 2006 abandoned a service that hired researchers to answer questions from users.

The employees who had been working on Lively will be reassigned to other jobs after the service shuts down, according to Google's blog.

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