CBS to invest in virtual designer Electric Sheep

NEW YORK (Reuters) - CBS Corp. will invest in virtual world content developer Electric Sheep Co., the U.S. television broadcaster said on Monday. hoping to expand its reach beyond the living room.

CBS will participate in a $7 million round of financing, which includes existing investors Gladwyne Partners.

Electric Sheep develops 3-D properties in virtual worlds like Second Life, an online society that allows players to create characters that exist in a world they help create.

"We believe that all these virtual worlds represent next generation communications platforms," CBS Interactive President Quincy Smith said in a phone interview last week.

Corporate interest in tapping virtual worlds to market brands and products have surged in recent months as marketers test new technologies to reach consumers who now split their leisure TV-viewing time with the Internet.

Electric Sheep, consultants and designers of properties in 3-dimensional virtual worlds such as Linden Lab's Second Life, have accumulated a portfolio of Fortune 500 clients that include Time Warner Inc.'s AOL, General Electric's NBC and Viacom Inc..

Reuters Group Plc is an Electric Sheep client.

"We're helping (entertainment companies) bring their audiences into Second Life or other virtual worlds and then developing more entertainment experiences for that audience," Electric Sheep Chief Executive Sibley Verbeck said in a phone interview last week.

Verbeck, whose 45-employee company's headquarters is in Second Life, admitted that despite the media attention Second Life has attracted, it remains tough to learn for new users.

"We see virtual worlds at a very early stage right now," Verbeck said. "Perhaps like the Web in 1993."

Electric Sheep plans to use the financing to create software to make virtual worlds ready for mainstream consumption, he said.

For corporate clients, Electric Sheep said it offers tools that help them track usage in the world, providing data that could be used by marketers.

CBS has hired the company for several projects including development of "The L-Word in Second Life", and it filmed a commercial inside Second Life to promote CBS show "Two and a Half Men."

Electric Sheep also is developing a Star Trek-themed area for CBS in Second Life.

"Electric Sheep is a great platform from which to view the success of a lot of these virtual worlds and just see what's working and what's not," Smith said.