Virtual Worlds News has an article today about CitySpace, a virtual world being developed by LivePlace. The long and short of it is that CitySpace is a 3D virtual world with incredible graphical detail that will require no download. I have no idea what kind of gameplay it will have, if any, but if the world displays like it does in the video, then it's a major technical achievement.
Of course, it won't work like it does in the video. Apparently there is some suspicion that the demo includes pre-rendered segments, but even if it doesn't, the thing is going to be as slow as molasses. If anyone has tried out Google's Lively, you might realize that even with such a big name behind it, it's going to be an uphill slog to get users to play in a virtual world that not only requires a download, but takes a full half-hour to load a room with the download. It kind of defeats the purpose of being able to embed the virtual world in a webpage if it doesn't load on a realistic timescale. If this is a problem for the relatively simple graphics of Lively, just imagine the wait times you'll face to get into a room in CitySpace.
This reminds me of a post I made on the RocketOn blog about why it was better for us to go with a 2D virtual world. I don't think that the primary market for social virtual worlds is the same as the market for ultra-realistic 3D environments that let you show off your fancy computer specs. That said, if by some miracle it is able to show off that kind of graphical detail rendered server-side without making users wait hours to enter a page, it will be pretty exciting.