Lively Is Dead at Google

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That was quick.

Google (Nasdaq: GOOG) is shutting down Lively, the avatar-driven virtual environment it ambitiously launched this summer.

"Google has always been supportive of this kind of experimentation because we believe it's the best way to create groundbreaking products that make a difference to people's lives," Google explains in its blog last night. "But we've also always accepted that when you take these kinds of risks not every bet is going to pay off."

Lively certainly seemed promising, but maybe Google realizes that if it's not going to be a contender, it may as well not play.

"This isn't exactly Second Life, with its commercial or hedonistic detours," I wrote at the time. "Lively lacks the playful diversions that Disney (NYSE: DIS) and Mattel (NYSE: MAT) code into their kid-friendly hubs. This is barely a kissing cousin to IAC's (Nasdaq: IACI) Zwinky, but it's getting warm."

In the end, that was the problem. Google may have brought something new to the table, letting registered users embed YouTube clips and Picasa snapshots into their virtual digs. But in the end, it was just one more virtual environment in an overcrowded marketplace.

Google's not alone in shuttering failed divisions; Yahoo! (Nasdaq: YHOO) has found itself shutting down Yahoo! Auctions, Mash, and its namesake photo-sharing site in favor of Flickr. When you're a dot-com giant, settling for market-share scraps just doesn't feel right.

Hopefully all of this creative gray matter won't go to waste. A lot of the Lively personalization features would look great on YouTube profile pages, or perhaps on Google's Orkut social networking site.

Either way, just as Google proved when it shut down Google Answers when Yahoo!'s model proved superior, online bellwethers are many things, but patient isn't one of them.

Other virtual worlds covered Foolishly:

• IRS to Tax Your Second Life?
• Disney Trashes Its Kingdom
• Zwinky Gets Swanky