New media advertising in virtual worlds like Second Life appears to be dead in the water.

Virtual world technology firm The Electric Sheep Company let go nearly a third of its employees yesterday. The company laid off 22 employees, is scaling back its events staff and cancelling several projects, including the creation of an ad network for use within Second Life.

“We feel that the time is not right to place more bets on that currently,” said CEO Sibley Verbeck of the network. “We felt that large scale advertising to the current Second Life user base by real world companies is not a big opportunity in the short term.”

via Clickz; Image bru76