This summer, I caught up with Craig Sherman, formerly CEO of Gaia Oline, an online hangout/virtual world primarily for teenage girls. This interview was taken before Craig stepped down as CEO. But his thoughts on the direction of Gaia and the evolution of gaming should give anyone interested in virtual worlds and social gaming a good perspective.

In the past couple years, social games, like Zynga games, played over Facebook have been all the rage. They've seemed to cause virtual worlds to lose the popularity they once had. How has the virtual world market evolved and where does Gaia fit in? I asked.

Five years ago, there was a proliferation of virtual worlds, said Craig. But it's always the case that consolidation occurs and only a few are left standing. In the pre-teen space, the popular sites today are Club Penguin, Webkingz, Poptrica , and Roadblocks. In the teen space, the top contenders are Habbo Hotel, and Gaia Online. What's happening over the past couple years has been the rise of social games, but they've mainly been targeting an older crowd, say Craig. Those games are Zynga as well as Playdom. 

Despite the press and popularity of these games, they've only served to make the gaming and virtual world categories even more hip, meaning Gaia is benefiting from the awareness of social games that Zynga is creating, Craig suggested. Additionally, Gaia addresses the teen market and has no plans on trying to move upstream to an older crowd of 40-somethings, which is Zynga's demographic, said Craig.

But that's not the case for the pre-teen market, which Gaia is considering, said Craig.

Watch the interview for more on the evolution of gaming and how Gaia is working with major media companies, such as Time Warner, Viacom and Sony.