The experimental technique, created by a team at King's College London, involves the schizophrenia sufferer having a face-to-face discussion with a computer avatar representing their auditory hallucinations - which are typically insulting or threatening in nature - in order to overcome their symptoms.
The new treatment helps schizophrenia sufferers confront these disembodied scolds, and learn to dominate them.
For most, drugs reduce the symptoms but about one in four continue hearing voices, said the study.
"Our study provides early evidence that avatar therapy rapidly improves auditory hallucinations for people with schizophrenia, reducing their frequency and how distressing they are, compared to a type of counselling".
"A large proportion of people with schizophrenia continue to experience distressing voices despite lengthy treatment, so it is important that we look at newer, effective and shorter forms of therapy".
The therapist, in a different room, uses a microphone to address the patient over the computer speakers, as well as voicing the avatar's on-screen tirade.
Hallucinations and voice hearings are extremely common among schizophrenia patients, and the standard treatment methods aren't always effective.
By 24 weeks, however, the patients in both groups had shown the same levels of improvement, suggesting the avatar therapy required booster sessions in the long term, the study said.
"Participants were randomly assigned to receive avatar therapy or supportive counseling with randomized permuted blocks [the block size randomly varying between two and six]".
Avatar therapy entails that patients give an estimation of what the voice haunting them might look and sound like, so that it can be simulated. Patients set targets before each session and practised standing up to the avatar and correcting any misconceptions it had about them.
The patients were encouraged to defy the avatar and learn how to control it. Over time, the avatar came to recognise the patient's good qualities.
As a result, there were no differences in outcomes between the two groups at 24 weeks. Also, the patients who received avatar therapy appeared to be less distressed about their hallucinations compared to the patients who had counseling.
Schizophrenia is a psychiatric disorder that affects around one in 100 people worldwide.
Researchers from the King's College London in the United Kingdom found that the experimental therapy was more effective than supportive counseling in lessening auditory hallucinations in patients.
Avatar therapy was feasible to deliver, acceptable to participants, and did not result in any adverse events that could be attributed to the therapy, the researchers said.
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