For the past four years, Weber has been making games within the world of Roblox. Those games have been played more than 10 million times on the Roblox site, making Weber (pictured left) into a celebrity within the Roblox community of virtual tinkerers.

With Roblox, kids are architects of their own games and they learn software coding abilities that can help them later in life. Roblox uses physics to simulate a virtual world, allowing kids to construct things in building-block style. While the games aren’t graphically outstanding, they do remind everyone that a game doesn’t have to have high-end graphics to be fun. And Weber has proven to be a master at this art.

“Roblox is like a building game,” Weber said in an interview. “I started playing because I was always playing with Legos when I was younger.”

Weber, who took the “Stickmaster Luke” nickname from his early start making stick-characters animations in Roblox, hasn’t made any money from the free games. But he has picked up some skills on how to make games that could serve him well in the years ahead. And earlier this month, Weber attended the first-ever Roblox community gathering, the Roblox Rally, which was attended by more than 1,000 people at the Exploratorium in San Francisco. Lots of kids came up to meet Weber, who just graduated from high school in Pleasant Hill, Calif.

The success of Weber’s simple do-it-yourself games is one reason that Roblox is thriving. The company has 6.8 million unique visitors a month, with a total of 942 million page views a month.That has made Roblox into the second-most popular kids entertainment site, and it has enabled Roblox to raise $4 million in funding from Altos Ventures and First Round Capital. Roblox makes money from premium subscriptions, sales of in-game virtual currency, advertising and prepaid cards sold at retail outlets such as Best Buy, GameStop and Wal-Mart. Revenue at the company is up 75 percent from a year ago.

Roblox users build games by resizing virtual bricks to build scenes and characters in the Lua programming language. Then they add scripts other coding for games. The process is relatively simple and it’s a good way to learn programming. Rival game worlds include Second Life and Minecraft. All of these worlds are part of what futurist Paul Saffo calls the “creator economy,” where users aren’t satisfied with passive entertainment and want to create their own.

“I was a complete beginner when I started,” Weber said. “I made quite a few games and most of them were bad. My first hit was one that allowed players to build in real-time with each other and then fight.”

Four years ago, it was a big deal if 60 players played a game at once, but now the audience is measured in thousands. Weber copied some other games to see if he could do them better. Then he got more experimental, making games where trucks fall down a hill and you have to dodge them in order to climb to the top. Weber is pouring increasing amounts of time into each game, though only gets half-way through many games. Each full game takes about 24 hours of work to complete.

Now Weber’s “The Underground War,” (pictured above) where players dig under the ground, has crossed 4.1 million plays. A handful of other Stickermaster Luke titles have also crossed a million plays. One of his newest games is Laser Tag, pictured right. Weber has started work on around 97 different places in Roblox, but about 30 have turned into finished games.

While Weber isn’t making money from his games, he does earn in-game currency every time someone plays a game. And Weber sells virtual T-shirts for 30 “Robucks.” Making money would be nice, but Weber says, “Making games is fun. There’s some hype and notoriety in it, and it’s fun meeting new people.”

As for the future, Weber plans on going to community college.

“I feel like I can do anything now,” he said.

Humble is a veteran of Electronic Arts, where he served as executive vice president for the EA Play label and ran The Sims business. He has an impressive background in games, but Second Life has a lot of problems to overcome.

The company is fighting to hang on to users for its deep and engaging virtual world, where users can explore a huge virtual society, at a time when many users are instead turning to casual games on Facebook and other social networks.

Second Life’s appeal is that it allows users to create just about anything in the virtual world. They can, for instance, design virtual shoes and sell them to other users, known as Residents. The users can cash out that revenue as well, allowing Second Life to build a bridge from the virtual economy to the real economy. The virtual land mass of Second Life is so big now that it would be twice the size of Hong Kong in the real world.

Humble replaces Philip Rosedale, the founder of Second Life, who took the CEO position on an interim basis after Mark Kingdon resigned in June. Rosedale gave up the CEO position in October, leaving San Francisco-based Linden Lab without a CEO for a time. Second Life had reported user and transaction growth in the first quarter, but it cut 30 percent of its staff and eliminated an enterprise team in June.

Humble has spent more than 20 years in game development and worked on more than 200 games. Most recently as the head of the EA Play Label, he supervised the best-selling PC game franchise of all time, The Sims. Before joining EA, he was vice president of product development at Sony Online Entertainment.

“Rod is a great new leader for Linden Lab,” said Rosedale, in a statement. “Second Life has become a consistently large and profitable business with a thriving virtual economy built together with its passionate Resident community.  This has always been a big, long-term vision, it is still early and there is enormous opportunity for growth.”

In a statement, Humble (pictured) said, “I have a long-standing interest in how the boundaries of society and economics change as communications evolve in new ways. Second Life is unique: it sits at the intersection of virtual worlds, avatars, and human contact.”

Rosedale founded Linden Lab in 1999. The company says its revenues exceed $75 million and it has been profitable, excluding restructuring and non-cash stock compensation expenses, for each of the last three years. It has 220 employees. In the third quarter, the company said 750,000 Residents spent more than 105 million hours within Second Life and exchanged $150 million worth of Linden dollars in the economy.

Based on those numbers, Second Life is doing better than a lot of virtual worlds. Rivals that have shut down include Vivaty, There.com, and Metaplace.

It doesn’t bode well for the virtual world category, which has had a number of high-profile failures this year.

While it isn’t a large number of layoffs, it’s a sizable percentage of the company’s employee base, which was at 110 employees in June when we interviewed then-CEO Craig Sherman. In August, Mike Sego replaced Sherman, who remains on the board of the company.

[Update] In a statement, chief operating officer Elaine Kitagawa said, “As with any company in a fast, emerging area, Gaia continually evaluates its business to find additional ways to create and meet market demands. In light of this, Gaia has indeed restructured its staffing this week, which resulted in open positions in some areas and reduction in others. Gaia believes this move will better enable it to pursue growth in the social gaming and virtual world communities arena. ” [end update]

In June, Sherman said the company had 9 million unique visitors and han seen steady results in hanging onto its users, even in the face of the enormous popularity of social games on Facebook. Gaia targets 13- to 25-year-old youths with a casual, two-dimensional anime-cartoon-like virtual world.

The world is akin to a fantasy world, offering a richer experience than a typical Facebook game. The average revenue per paying user is about $30 per month. Rivals include IMVU and Habbo.

Gaia’s traffic has declined a little, but not dramatically, according to Compete.com. The company makes about 60 percent of its money from the sale of virtual goods and another 40 percent from ads. Some of those ads are pretty creative; when the film Alice in Wonderland debuted, Gaia put rabbit holes in the world for users to jump into. But since the recession hit in 2008, ads haven’t been a stellar business.

Gaia was founded in 2003. That was eons ago in teen time. Now teens are flocking to social networks such as Facebook, where they can play games and communicate with a larger body of people.

Virtual worlds such as There.com, Vivaty, Metaplace (bought by Playdom) and others have all shut down this year. Second Life appeared to be bucking the trend, but it has seen layoffs and a change in top management. If there is a blessing in the downturn for virtual worlds, it’s that there is less competition than there used to be.

Gaia had hoped to drive more engagement with its own massively multiplayer online game, zOMG!, embedded within the Gaia Online world. That ad-based game is a full-featured game with quests and missions and has helped with monetization and retention, but it didn’t really pull in lots of new users for Gaia, Sherman said.

Wagner James Au

Journalists are fickle. But Au’s shift from Second Life to Blue Mars — a terraformed virtual planet where he will write an in-world blog dubbed Blue World Notes — is like an epitaph for an era and the beginning of a new one.

There is a business opportunity here, as one generation of technology gives way to another. World of Warcraft, a six-year-old fantasy role-playing virtual world, has more than 11 million users and generates more than a billion dollars a year in revenue for publisher Blizzard Entertainment, a division of Activision Blizzard. By contrast, virtual worlds such as Tabula Rasa and All Points Bulletin never caught on, resulting in losses of tens of millions of dollars. If opinion makers such as Au say that one world is cool and another one obsolete, other users may take notice.

Second Life itself was built mostly on its perception of coolness. Founded in 2003 by Philip Rosedale, Linden Lab’s Second Life became a virtual world in which Residents, as users of the online world were called, could create anything they wanted. Second Life’s growth really took off as it stopped charging subscription fees and users began engaging in commerce, selling the virtual goods they created. (Au is pictured left with his Second Life avatar).

Second Life went into its own hype cycle a few years ago, landing on the cover of Time magazine in 2006. One company, Digital Pastry, which makes women’s shoes for Second Life, has generated more than $1 million in revenues from the sale of 200,000 pairs of virtual shoes since early 2007, for example. But as corporations such as IBM and Dell moved to cash in, users got tired of the fad. They moved on instead to the simpler graphics and to Facebook.

Vivaty, Metaplace and There.com shut down their virtual worlds. Second Life has held its own, generating lots of e-commerce and some user growth; but it also succumbed in some ways as its parent firm lost its chief executive and laid off 30 percent of its staff; its efforts to become a productivity tool for real-world enterprises has stalled. Watching these developments, Au, who is the author of The Making of Second Life, wonders if Second Life has lost its mojo.

“I’m convinced that Blue Mars is the cutting edge,” said Au, in an interview. “It’s been thrilling and frustrating to see Second Life’s trajectory. It could take them a long time to fix their problems. “

Au said he believes that if any virtual world has a chance of unseating social networks, then it will be something that looks like Blue Mars. Blue Mars’ graphics are based on the visually arresting 3D engine from Crytek that powered games such as Crysis, but its activities are aimed at casual game players, such as those who enjoy parlor games on web sites or social games on Facebook. Au thinks that somebody will pick up the mantle of building a community around user-generated content. That passion is why the Honolulu-based maker of Blue Mars, Avatar Reality, chose Au for the job. As he was with Linden Lab from 2003 to 2006, Au will be a paid contractor for Avatar Reality, though Au says he will remain objective when reporting.

It will be very tough for any virtual world to reach the kind of mass market that Facebook has secured. One problem is that 3D worlds have often required hefty computers and big downloads. Second Life’s flaw is that it takes a couple of hours to learn how to navigate through it, whereas other virtual activities are instantly fun. Avatar Reality is hoping to achieve an instantly playable yet gorgeous 3D graphics world through cloud computing. Once Blue Mars launches that capability (which would resemble technologies being fielded by OnLive, Otoy and Gaikai), users will be able to participate in the high-end 3D world even if they don’t have sophisticated computers. That may happen in the next couple of quarters.

Au isn’t alone in defecting to Blue Mars. John Zdanowski, former chief financial officer of Linden Lab, is now Avatar Reality’s CFO. Au will be joined in Blue Mars by virtual style and fashion columnist Janine “Iris Ophelia” Hawkins (pictured in avatar form, right). Au paid heed earlier this year when a group of die-hard Second Life “steampunk” artists set up shop in Blue Mars as if they were colonists. Au thinks that Blue Mars will be more attractive to the broader third-party development community because it embraces the kind of graphics tools that animators already use.

Blue Mars launched its open beta in October, 2009, and began selling virtual land to third-party developers in January. The company was founded in 2006 by Henk Rogers, who introduced Tetris to the world, and Kazuyuki Hashimoto, former chief technology officer of Squaresoft and former vice president at Electronic Arts.

Au says he will continue his older Second Life blog, New World Notes, on a part-time basis.

AFK Interactive’s M4 platform (Massively Multi-user Mobile Monetization) is the holy grail for gamers: It allows you to stay connected to massively multi-player online games (MMOs) like World of Warcraft, virtual worlds like Second Life, and social games like Farmville from any mobile device.

AFK is well aware that the majority of mobile devices, in particular low-end cellphones, won’t be able to run MMOs and complicated virtual worlds for some time. Instead, it has developed a way to accomplish key interactive tasks from your phone, like chatting with users in-game, buying and selling virtual goods, and crafting items. M4  supports practically every mobile platform available, including iPhone, Android, BlackBerry, Windows Mobile, and Java-based devices.

The M4 platform is a server-based, thin-client platform that can be easily deployed by any game publisher. Since it’s thin-client based, much of the work is done on the server and is then pushed to the user’s mobile device — allowing for complicated tasks to be done on low-end hardware. It also allows users to log directly into their online game profiles.

AFK believes that mobile companion apps for games, like Blizzard’s recent World of Warcraft Auction House iPhone app, are going to become huge in the coming months. Since its M4 platform is already capable of doing much more than mere auction house work, and is easily deployable, AFK hopes that developers see it as an easy way to get their games connected to mobile devices.

The company also has multiple revenue models in mind: Revenue sharing with publishers on micro-transactions, revenue sharing on game subscriptions (for MMO’s that require monthly fees), and it also have the ability to charge a set price for every downloaded app.

AFK’s first product was for the MMO Fallen Earth, which launched in June. It’s also negotiating on deals for major upcoming MMOs, fantasy sports games, and virtual worlds.

Based in Cary, N.C., AFK’s core team comes out of a major mobile game and app developer. We’re still awaiting funding information.

The most anticipated games of E3 — Game fans are waiting for the E3 Expo next week to get a glimpse of the biggest games coming out later this year and next year. VentureBeat writer Dean Takahashi lists his 20 most anticipated games of the show.

Investing in Russia? Better hire bodyguards and hunker down — Could Russia potentially be the home of the next massive tech boom? Our answer: No way.

Pepsi hides video in barcodes on soda cans — The giant beverage-and-snacks concern announced this week a new experiment around barcodes, in collaboration with a startup called Stickybits.

iPhone now as fragmented as Android — Transpond’s Peter Yared writes that when his company built applications for iPhone and Android last year, his engineers loved the iPhone and were annoyed with Android. That all changed in the beginning of 2010.

How Apple is setting itself apart from the pack of iPhone clones — Steve Jobs showed this week why Apple is innovative enough to stay ahead of the pack of companies that want to clone the magic of the iPhone. With the iPhone 4, Apple is going to have a headstart on its rivals again.

And here are five more stories we think are important, thought-provoking or fun:

Four years on, Twitter still struggles with downtime, admits mistakes — Twitter said its engineers made a few mistakes in managing the service’s internal networks, creating a resurgence of “fail whales” this week. And it says its efforts to fix those mistakes may not be enough to keep the service running reliably during the biggest World Cup matches.

PG&E loses $46M Prop 16 battle in California: A win for grid innovation — Despite a massive $46 million campaign, Proposition 16 — the California ballot measure backed by utility Pacific Gas & Electric — failed in Tuesday’s election, with 52.5 percent of voters saying no to the company’s attempt to block local governments from creating or growing their own municipal utilities.

Glam Media launches an ad network for quality content — Samir Arora passionately believes that quality writing, photography and video will win against hastily slapped-together Web content designed to appease Google’s ranking algorithms. That’s why Glam Media, his vertical media company for women online, has spent more than 18 months developing its own display ad platform, which Arora officially launched this week.

With new fund on hold, Elevation Partners loses a rock star (not Bono!) — Is Elevation Partners’ headcount heading down? According to an email she sent to contacts, Patty Halfen Wexler, a principal at Elevation, is leaving the high-profile Silicon Valley private-equity firm at the end of the month.

Second Life maker Linden Lab cutting 30 percent of staff — The big workforce reduction seems to undercut all the good news that the San Francisco company has been trumpeting.

What’s more, Linden Lab‘s Second Life virtual economy is adapting to the new business model of virtual goods. Last year, in the midst of the recession, Second Life’s virtual goods economy in user-to-user transactions was $567 million, up 65 percent from the year before. And in the first quarter, the growth continued, according to Mark Kingdon, chief executive. The world remains the largest user-generated virtual economy.

San Francisco-based Linden Lab is announcing today that March user-to-user transactions topped $57 million. For the quarter, user-to-user transactions were $160 million, up 30 percent from a year ago. The company’s monthly unique user number peaked in March at 826,000, up 13 percent from a year ago. This was at a time when virtual worlds such as There.com, Vivaty and Metaplace were closing down.

“It has been a vibrant market, and has become a full-time job for some people,” Kingdon said in an interview. “We set another record in March.

While user-to-user transactions make money for Second Life Residents, as members are called, they indirectly benefit Linden Lab, which makes money through sales of virtual land, premium subscriptions, and sales of Linden dollars, the virtual currency which Residents use to engage in transactions inside the world.

Kingdon believes that Second Life has continued to thrive because it nailed a particular kind of customer: the creative class. These are the artistic people who have fun creating avatars, or virtual characters, goods, and homes inside the virtual world. They put those goods up for sale, making the world more fun and the economy more vibrant.

On a trip to Paris, Kingdon met a Parisian boutique manager who designed her own fashions in Second Life. She quit her real world job to work on a Second Life business that had partner designers in Japan. Members are creating 250,000 virtual objects a day and are uploading them for sale in Second Life. That’s a long way from the giant beanstalk, which was the first virtual item created in Second Life, back during its beta test in 2003.

On top of targeting a creative class, Linden Lab has poured resources into attracting new users. It is doing a small amount of search engine ads and affiliate marketing deals, and it is also making improvements in its user interface. Back in December, the company started offering homes to new users. With a single click, a user could move into an incredible Japanese home or a cabin in Lake Tahoe.

It has also redone the experience that users have when they first log into the world. On March 31, the company launched a new viewer, which is used to view the world. It was designed to make 3D browsing feel more comfortable for new users and to make it easier to find places in Second Life.

Second Life has come a long way from its hype cycle a few years ago, when everyone in the media from Time magazine on down predicted a huge gold rush for virtual worlds, led by Second Life. Journalists opened up shop in Second Life, as did major corporations. Reuters opened up a virtual bureau and dedicated a full-time reporter, Eric Krangel, to the beat.

Knockoffs proliferated. At one point, there were more than 200 virtual worlds just for kids. Many have collapsed.

Inside Second Life, lots of companies left ghost towns. But about 1,400 businesses remain, and the online voice chat they engage in generates billions of minutes of usage. Companies such as IBM are staging virtual conferences inside Second Life.

“A fair amount of the press left,” Kingdon said. “The customers stayed.”

Even as Facebook grows past 400 million –dwarfing the numbers of Second Life — more than half of Linden Lab’s customers report that they are active on Facebook. Hence, Kingdon argues that Second Life is complimentary to other social media, which generates traffic for the virtual world.

Linden Lab has 350 employees, but they aren’t creating virtual goods for the company to sell. Linden Lab leaves that up to its Residents, while most of the company’s employees work as developers or in customer support. The developers are hard at work on ways to connect Second Life to the social Web more explicitly, so that content created in Second Life can flow into other places.

“Our strategy is to bring more of Second Life out to the Web,” Kingdon said. “The distinctions between Second Life and the Web will blur more and more.”