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This looks interesting, but it appears to be completely tied to this "NovelSphere" site, which severely limits its potential uses.

There exist a variety of other visual novel engines that are more open, including the HTML5-based MIT-licensed TyranoScript[1] and the Japanese-only not-quite-as-open Almight.jp[2]. If you're not in need of HTML5, Ren'Py is probably the most popular VN-engine outside of Japan, and is also available under the MIT-license[3].

[1] http://www.evanburchard.com/tyranoscript/

[2] http://almight.jp/

[2] https://github.com/renpy/renpy

ok, let me know what you want to do with visual novel engine. We'll consider making better licence policy with your idea!
Well, for one I'd like to be able to publish the game on my own site if I want; what if NovelSphere eventually goes down -- would my game disappear with it?

In addition, as far as I can tell the "NovelSphere" site seems to be Japanese only, which I would imagine is a major roadblock if I want to release an English-language game.

Now we're planning to open the English version of NovelSphere, give us some time. NovelSphere allows you to publish your game on your own site or any place, with <iframe> tag. And...I'll consider adding sentences which enables you to publish games out of NovelSphere in case it goes down, to our license.
Yeah, Ren'Py is the entrenched contender here. It can now generate iOS and Android apps along with desktop ones, it has Steam API support built in for commercial releases using the engine, and the engine using a domain-specific language on top of Python makes it flexible enough that people have put in turn-based strategy, RPGs, etc inside Ren'Py games.
People do amazing things with Ren'Py. Given that it now has some mobile reach, I have to say that I don't see what a fairly limited proprietary HTML5 engine could offer if I were to make a VN, though maybe I'd have some reasons if I did it as a business rather than a hobby.

edit: I hope this didn't come across as too negative, changed a bit to clarify.

I could see them running into problems with the Telefónica owned phone company O2. The branding used by both is very similar as well as the name.
Doubtful, as O2 is first and foremost a chemical compound and as such it seems hard to claim any trademark outside of very specific trade areas. Since this engine has no ties to the telecommunications industry, I highly doubt it will be a problem.

In fact, they lost a court battle recently to Hutchinson 3G over a 'bubbles' trademark that O2 holds.

http://news.bbc.co.uk/1/hi/business/7450513.stm

The relevant portion of the trademark (https://inventively.com/search/trademarks/78618164) is as follows:

  interactive entertainment services, namely, providing online electronic games services by means of any communications network;
Hi, I'm a leader of the O₂ Engine developer team. Please let me know if you have any problems or questions!
Nice project, I love visual novels and I toyed around with my own engine a few years ago.

I'd put a full KAG3 code example somewhere on the page (rather than the tiny picture). I hadn't heard about KAG3 and I have no idea how to write it.

Good luck!

KAG3 is the scripting language of an existing popular (native) engine Kirikiri; from skimming the O2 site it seems to be implementing an alternative interpreter, similar to how ScummVM implements the LucasArts engine. Unfortunately I can't seem to actually see the SDK to confirm this without figuring out enough Japanese to sign up on novelsphere.

There's some old English documentation on http://kirikirikag.sourceforge.net/contents/index.html (which seems to be a translation of the original upstream Japanese version).

Thank you!

Just like mook said, O₂ Engine is just a Kirikiri-compatible engine written in JS, so the site he introduced will provide you with useful information.

Anyway, we'll put sample scripts later!

How do I test this stuff out? I'd like to try this out, but I see no download links or documentation anywhere on the linked page... Am I missing something obvious?
The example is in Japanese it seems, and I couldn't understand a thing.