An Open Letter to Chip and Dan Heath about Second Life

November 21, 2011

The following is a guest post by Pooky Amsterdam.

Dear Chip and Dan,

I read, with interest, your article at Slate.com titled “Why Second Life Failed.” Me? I run a successful media enterprise in Second Life and produce award winning videos using the very cost and time effective 360 degree views of this graphical engine. I meet people from all over the globe, work, converse and laugh with them while doing incredible things. I do not have a blue tail (Though some of my best friends have tails) but I have a Chanel style wardrobe to die for.

I’d like to respond to a number of points that you made in your piece. You wrote:

“You—sitting right there, reading this article—you’re an avatar in Second Life. You work a Second Life job, earning Linden dollars. You have blue hair and a serpentine tail, and you’re dating an androgynous digital skateboarder named Rikki. Also, you are a ninja. Life is great.”

So far so good. Next, you wrote:

“At least, that’s the way things were supposed to unfold. In 2006, the future was Second Life. Business Week put Second Life on the cover. American Apparel, Dell, and Reebok, among many others, rushed to build virtual storefronts.”

That a company would build a store and not put anyone in it is bad planning. No company in their right mind would build a store in the physical world and leave it unstaffed. Just as in the physical world, this is a space and location. It’s virtual yes, but to succeed you still must know where and to whom you are selling. That there are businesses which make over a million dollars in Second Life is a testimony to what happens when you know your customers. Stiletto Moody made over a million USD last year selling virtual shoes.

Did Second Life fail – or did the business fail? There is a difference. Failure of the platform this is not, this is a failure of the business to understand their customers, and therefore their business. It was also a fault of consultants who overcharged and  gave an incomplete picture of the business model.  For in truth, it is how you handle your business after your location is built, no matter where it is, that determines your success or failure.

Let’s say, you went to China,  did not speak the language,  hired experts who said they would get you a store somewhere and you would make money, but actually no one bought anything (okay you had no Chinese speaking sales help in the store, but these experts said you didn’t need anyone there!) The shop is a failure – is it China’s fault? Did China just fail your business? Or did you have lousy advice and a translator who didn’t really know the language? Oh go ahead and blame China, it will make you feel better.

Knowing your customers and how to service them is critical. Customer support and marketing is the basis of all business.

“Reuters even created a full-time Second Life bureau chief. People rushed to sign up and create their own avatars. Blue hair and Linden dollars were the future.”

Yes there was a lot of hype almost 6 years ago – for good reason, the press and a lot of businesses jumped on the bandwagon, and without the necessary depth of either journalism or market research, were left with some egg on their faces. I guess this still hurts because for some reason, reporters writing about Second Life actually go to lists like “Help A Reporter Out” and ask for people’s negative reactions only, from Second Life, and then write articles. This actually happened two years ago, because I was on this list, saw the post, and read the subsequent BBC article written by Lauren Hansen.

“Looking back, the future didn’t last long. By the end of 2007, Second Life was already losing its fizz. “Businesses are shuttering in Second Life, it seems, because no one is using them,” wrote Morgan Clendaniel in a brutal piece in GOOD magazine.”

Oh for heavens sake, this article is about how the reporter couldn’t find his penis. No wonder the man couldn’t take his head out of his pants. Sex! Penis! 2007! and did I say penis??? All adult and x – rated activity has been moved to an Adult age – verified region called Zindra.

“There were never any employees at stores like Dell and Reebok when I visited, nor were there any customers. But that wasn’t that shocking because, for the most part, there seems to be no one in Second Life at all.”

Is it shocking that the press would feed into a hype cycle?

Below I quote from a January 2007 CNNMONEY.com article written by David Kirkpatrick:

“Linden Lab claimed 2.5 million ‘residents,’ meaning people who have registered for Second Life. But the service has only around 250,000 active members who still sign in more than 30 days after registering. Nonetheless, that group of active users is currently growing at about 15 percent per month.”

Please don’t get all excited about the “10% of registered users.” 10% is pretty much par for the course for virtual worlds. This is a rule of thumb, not gospel like the  (sarcasm alert) milk shake test. In 2007 a quarter of a million people was hardly “no one.”

Below is a Linden Lab chart which details information about the Second Life economy.

In 2009 the total size of the Second Life economy grew 65% to US$567 million, about 25% of the entire U.S. virtual goods market. Gross Resident Earnings are $55 million US Dollars in 2009 – 11% growth over 2008.

Second Life provides a brilliant platform for those who take the time (which granted not everyone has, but clearly – which some folk have and benefit greatly from.)

Your purporting of fallacies is self serving, and so I really wonder what is behind this. I am truly surprised most every time I read a reporter or analyst’s overview of  Second Life. (Exception of note is Vizworld as the reporter spent time in the field at a variety of places, recently) Most reportage is just bad, a retread of 2006/7. The authors are using a voice of authority, when they really are going after a target for easy pickings.

Hookers! Sex! Blue tailed Avatars! 2006!! Read what I’m writing! Buy my free book! Please!

“Today, Second Life limps along. In the first half of 2011, the company reported that an average of about 1 million users logged in every month—which, you have to admit, is about 999,990 more than you expected.”

I hope that you didn’t have your heart broken in Second Life, for I cannot imagine why you would say something like that. Is part of the milkshake test telling someone they shouldn’t like strawberry? Why would you not expect it? Who made you a platform god? Second Life has been around for almost 10 years. That is an achievement. Almost a million visits a month is impressive, so I don’t know what you mean by limps along.

The platform continues to enthuse and nourish many. I can give you a few first hand examples of a kind of experience very hard to find elsewhere. At a mixed reality event in 2009, I saw veteran journalists  Helen Thomas and Bob Schieffer, in Second Life.  They were  receiving the  Edward R. Murrow Lifetime Achievement award. She took questions from the virtual audience and I was able through my avatar, to ask Ms. Thomas a question. She responded with an amazing answer about the press, 9/11 and  the Bush administration. I really don’t think that is going to happen at IMVU.

When I interviewed Holocaust Survivor Fanny Starr, for the documentary “Why Now?“, a Catholic High School many miles away brought her class of 14 – 16 year olds also into Second Girls. In real time, these young girls talked with  this 87 year old woman who had survived 6 years in ghettos and concentration camps. They asked and learned what her life was like at their age. These stunning examples of what is happening on the Second Life grid are not going to happen on Facebook.

More? I interviewed a cancer survivor for treet.tv who started Relay For Life in Second Life. This year over $330,000USD was raised. It went directly to the American Cancer Society, and ACS put the live weekend’s events from Second Life on their home page while it was running inworld. The commitment  and the amount of money raised is phenomenal. Even more importantly, those in our extended virtual community who have experience with this life threatening disease are literally helping to save the lives of others, as they communicate with each other in real time. This isn’t going to happen on Twitter.

Under the brand Virtually Speaking, Jay Ackroyd and Widget Whiteberry produce 5 weekly public affairs programs in Second Life and on the web.

One of my favorites is Virtually Speaking Science, hosted by the Meta Institute for Computational Astrophysics (MICA) whose Scientists work at premier  institution like CalTech.   VS Science hosts are MSNBC.com’s Science editor Alan Boyle – author of The Case for Pluto – and Thomas Levenson, who, in addition to being the author of Newton and the Counterfeiter and Einstein in Berlin heads up MIT’s Program in Writing and Humanistic Studies and the Graduate Program in Science Writing.

I have been part of the listening, commenting and questioning studio audience for Jay’s interviews with Daniel Ellsberg, Gloria Feldt, and Dahlia Lithwick.

This might not be for all, but it is incredible activity by anyone’s standards. Nourishing beyond belief, if this is your interest, and indicative of what can be.

This has enabled bright and even brilliant people to keep advancing their intelligence while looking better than they ever have before.

There is, additionally, an incredibly vibrant artistic and powerful performance community who raise their voice every time something like this comes out.  I don’t have time to list all the incredible artists, musicians, performers, comics (Okay, Lauren Weyland) and others who play nightly to an international audience that assembles very locally – at their computers. Your arrow sorely misses the target. In fact you are wrong to set your sights on Second Life for anything but a remarkable phenomenon, one that people are truly a part of, yes admittedly in ways you have no idea about.  Because of the wide variety of activity from advanced topics to just hanging out and listening to some amazing music, it does have something for everyone.

And Will Wright of The Sims, (yes The Will Wright) just joined the board. I would say the future looks incredibly exciting here. Is Second Life a bit of a challenge? Yes, it is, and so it isn’t for everyone. It is for a better educated number of people who have disposable income and spend an ARPU greater than other virtual world sites (some estimates, like Nick Yee, have it at almost 10 times other VW ARPU, the population is older as well. It’s a great demographic). Virtual goods are a huge and growing market and some estimates reach $12 billion by 2015. The recent introduction on Second Life of building mesh makes for greater graphics (and lower lag). This is a profound platform for virtual asset creation

“But during this same period, Facebook averaged roughly 500 million logins per month.”

Please compare ANYTHING to Facebook – I think you would find many businesses, social networks, video companies, traditional media offerings such as Television shows, etc. fall a lot short of Facebook monthly logins.  Oh let’s use your favorite term – FAIL. What TV show has 500 monthly views? Does the Superbowl even get 500 million people watching it? The Oscars? And these are events judged by viewership. Second Life is certainly a form of social network – but it is really not the same as Facebook. What is?

“How did we misread the future so badly? Mind you, this Second Life hype didn’t involve distant, sci-fi predictions about the future. (“Someday we’ll all commute to the moon using unisex RocketCrocs!”) This was just five years ago. We were just months away from the iPhone.”

And don’t forget $580 million for MySpace!

“After enduring a lifetime of mega-fads that flame out—Apple Newton and PointCast and the  Segway—why are we so quick to extrapolate a few data points into a Dramatic New Future? Well, here’s the frustrating part: Sometimes the Dramatic New Future arrives, exactly as promised. The mega-hyped Internet? Yep, worked out OK. Ditto Google and Facebook and iPods and iPhones.”

Blue Mars did not really survive. And let’s be realistic, though valuation is intense on companies such as Twitter, YouTube and LinkedIn, what are the real numbers behind their profitability?  How many years did it take YouTube to finally begin to turn a profit? Second Life is profitable for Linden Lab, and for many who understand the platform. It has a clear business model, and does not survive on advertising alone.

And now, let’ go to this video – which I think is a good example of hubris, and true irresponsibility because the video while salacious does very little if nothing to prove any point at all.

Second Life Vice Capades: Virtual Hooker (VIDEO)

I can not stop laughing at this video from I think 2007 or 2006 (again?) – it’s priceless – Did it take this woman three weeks to fail at becoming a prostitute?  She was not able despite her best efforts at tarting herself up and trying her best, to find someone to pay for sex. Despite Second Life’s reputation for sex, often presumed, then highlighted, by the media, (sex sells?) it’s not easy to find random people for sex. In the entire film there was one place that people went to – yes that happens with people – there is porn on the Internet (it was in fact a driver for The Internet).  It depends where you go and what you look for, yes?

Of course she was looking to be a hooker, yet couldn’t find a client.  She bought into the hype that you could just go and start any kind of a business, anywhere. Even being a successful hooker might entail some business planning.

Also please note the adult region has been separated in an area known as Zindra for over a year. Now a fledgling prostitute would have to go there to ply her trade. The main grid has severe restrictions on X–rated businesses. These exist only in Zindra, in an age-verified region removed from the general population. So this video is quite outdated.

And sex might not be that easy to find, as that people develop relationships in Second Life with like minded people. You find others with common interests. Second Life racks up over a billion voice minutes a month, which is what former CEO Mark Kingdon told Robert Scoble when the Scobleizer interviewed him last year.

Would this woman possibly, if she found an outlet for herself and her creativity find someone who also was interested and interesting, and might they start becoming romantically involved? Possibly yes. She had 3 weeks to turn in a sex tape…… It’s very cute though, and not scary, hard-core or really well much of anything. I think she was brave and it was kind of funny. It tried a bit too hard, as did she. And maybe people go to Second Life to look for sex because they are lonely or horny or both, but come out with a whole lot more. I know this is true, and I also know many stories about Marriage 3.0 where Second Life has saved couples.

I will grant that the learning curve is tough, it is. It takes some dedication to master it, believe me I still move like a noob, and it takes that thing we just don’t have much of, time. It also takes patience and being able to laugh at yourself, which are not bad qualities to possess. And it takes a kind of humanity to reach out to others in this world, a curiosity. You kind of have to be a special person to really get it. Second Life offers the kind of premier experience you can’t get anywhere else. You must be able to understand it though, and when you do, you feel incredibly empowered and connected. Yes, it takes time and is not easy, it is worthwhile. And let me say this again – it isn’t for everyone, yet.

I don’t like cheeseburgers, but I don’t spend my time writing about why no one else should like them. I would never presume to dictate to someone else what to like, or what to do. I can’t imagine being Mayor on FourSquare, but obviously others enjoy this. Good on them.

“Christensen asks us to imagine a group of marketers at a fast-food restaurant who want to sell more shakes. As they comb the customer data for insight, they discover something interesting: Most milkshakes are sold to early-morning commuters who buy a single milkshake and nothing else. Why milkshakes?”

That inworld businesses generate millions of dollars, reflects the wealth of the Second Nation. Second Life provides great opportunities for business, virtual enterprise, shopping, social engagement and much more.  It is a great platform for prototyping, there are inworld TV stations, there are Film Festivals, and  real time discussion amongst groups or individuals who can chose how they wish to present themselves. What can be done on Second Life has only just been scratched. There isn’t much that can’t be done – except eat – no one has really invented virtual food you can eat yet. Whoever does wins, I’m convinced of this. My money is on the 3D Printer.

These commuters, according to Christensen, are “hiring” milkshakes to do a job for them: to supply a breakfast that is filling and non-messy and cupholder-compatible. So to sell more milkshakes, the marketers don’t need to create a more delicious milkshake. Deliciousness isn’t really in the job description”

Second Life is affordable, easy to get to, filled with interesting things to do and people to talk to. It is pretty cool home entertainment.

“So when you evaluate the next big thing, ask the Christensen question: What job is it designed to do? Most successful innovations perform a clear duty. When we craved on-the-go access to our music collections, we hired the iPod. When we needed quick and effective searches, we hired Google.”

And it became apparent that there was gold in them there searches, and now we have Bing. That it isn’t as big as Google does not mean it is irrelevant. I don’t know if it passes your Facebook test of 500 million hits a month. No industry that is successful has zero competition.

“And looking ahead, it’s easy to see the job that Square will perform: giving people an easy, inexpensive way to collect money in the offline world.”

Square takes a 2.75 percentage of the sale price for its service. At 800,000 merchants, they were wise to drop user limits from $1,000 / week, and should see business grow. That is until someone charges a 2.25% on a similar service, which if it is successful, will happen.

“But what “job” did Second Life perform? It was like a job candidate with a fascinating résumé—fluent in Finnish, with stints in spelunking and trapeze—but no actual labor skills. The same was true with the Segway. No one was interested in employing a $5,000 walk-accelerator. (Though, to be fair, Segway eventually got a part-time job saving tourists from exercise.)”

Actually it is like a job candidate with fluency in all major and most minor world languages, and expertise in everything from Rocket Science to fashion design. In other words, smarter than most employers and here is the rub, also somewhat intimidating. The Labor Skills though have created a platform which is robust and dynamic while turning a profit for it’s parent company. Labor also delivered Open Source code which is the basis of new grids forming all the time. Labor is creating right this moment.

Second Life has performed the job of building the most exciting user created content platform in the world. You can make virtually anything, any place, any time, broadcast events, stream productions and find a remarkable wealth of opportunities. I am sorry that you couldn’t find the chunky bits in this milkshake – others have.

One complaint is “everyone is beautiful,” but do you know what that really means? We are not judged, as we are in the physical world by how we look, and the sometimes shallow reactions that affect our confidence and therefore our abilities.  Here, in Second Life, the way you look doesn’t matter. There is no better looking member of the family so to speak. What defines you is your character, and what you do inworld, what you say and what you really represent.  Again not for everyone….

“What about the Apple Newton, the first widely hyped PDA back in the 1990s? It was clearly applying for the right job—to give us mobile access to our calendars and to-do lists and such. But it was a lousy employee, with notoriously poor handwriting recognition and a limited attention span (from low battery life). PalmPilot got the job a few years later.”

What about Prodigy? Prodigy was far ahead of it’s time.

Second Life hasn’t failed anything as it serves its user base well, and turns a profit for it’s parent company. The limitations as I see are that it was so far ahead of the curve. The rest of the universe needs to catch up, and I am confident that it is doing so as I type. Second Life will be here 20 years from now.

“If the Christensen test alone could predict the future, then the two of us (along with Christensen) would be the richest venture capitalists of all time. It’s not a perfect predictor. But by our count, Christensen’s test calls correctly about a half-dozen of the big technology hype cycles of the last 20 years.”

Hmmmm……that is true! However it isn’t, but let’s just talk about the successful parts of the 6 technologies they called correctly, because it serves your purpose, as your writing similarly picks out the “flaws” of Second Life to support your case. If the Christensen test looked at 10 cases and predicted 6 right that is a huge difference than if 120 or even 1200 technologies were tested. You do not give an adequate frame of reference to judge your proclamation of victory.  Any more than you give relevant data in your prediction of failure. (“….which is 999,990 more than you would expect” whoa can I pay you to come up with an analytic like that?)

“At a minimum, it provides some protection against over-optimism. Think of it as a tinfoil hat to insulate you from the nuttiest predictions.”

I need tinfoil glasses to protect me from the erroneous and self aggrandizing reportage of those who can’t even be bothered to use a video or figures from this decade.

New user logins went to over 20,000 a day this week. This week……November 2011, not 2006. Why must the press bring up the questionable business practices of American Apparel from 2006 every time there is an article on Second Life? Please find something new, it is almost 2012. I beg you, I can’t keep stopping everything I’m doing from my incredibly vibrant and productive work inworld, to keep writing these wake up and dress your avatar replies.

For excellent reporting on Second Life, I would suggest Tateru Nino. She has a tremendous grasp of what is happening.

The Author: Pooky Amsterdam

Please feel free to contact Pooky Amsterdam at info@pookymedia.com.


Why Second Life Passes The Milkshake Test (But Fails In Other Ways)

November 14, 2011

Introduction

Chip and Dan Heath have published a new book, “The Myth of the Garage” (get it for free on Kindle at Amazon.com). In an excerpt of the book published at Slate titled “Why Second Life Failed,” the authors put Second Life to the “milkshake test.”

Adapted from Clay Christensen’s book “The Innovator’s Solution,” the milkshake test asks the question, “what job is a product designed to do?” According to the Heath brothers, “Most successful innovations perform a clear duty. When we craved on-the-go access to our music collections, we hired the iPod. When we needed quick and effective searches, we hired Google.”

The authors then conclude that Second Life failed the milkshake test:

“But what ‘job’ did Second Life perform? It was like a job candidate with a fascinating résumé — fluent in Finnish, with stints in spelunking and trapeze — but no actual labor skills.”

My Take: Second Life as Multiple Milkshakes

While I agree with the authors when they write, “today, Second Life limps along,” I disagree on the milkshake test result. In this post, I’ll highlight why Second Life passes the milkshake test, but fails in other ways.

Hired for: Escapism

Dictionary.com defines escapism as “the avoidance of reality by absorption of the mind in entertainment or in an imaginative situation, activity, etc.” And this is precisely what many users loved about the service. They “hired” Second Life as a perfect way to escape from the real world.

If you’re a middle aged man with a 9-to-5 job in real life, you could be a muscle-bound, highly attractive (and young) ladies’ man in your second life. In a matter of a few hours (or less), your “new you” (an avatar representation, that is) is ready to go explore the “world.”

Downfall: Turns out most of us want the opposite of escaping. We want the real world.

The mainstream has voted with their mouse clicks and tablet swipes. Their preference is rooted more in the real world and the ability to share, connect and stay in touch with friends, family and others. Instead of spending time on 3D islands, they’re logging on to Facebook, Twitter and other social networks.

Hired for: Self-Expression

It’s quite easy to “hire” Second Life for self-expression. Everything you do there can be about self-expression, from the look and appearance of your avatar, to art that you create in-world, to entire islands that you build there.

You can be a virtual DJ and spin tunes in Second Life (e.g. see Doubledown Tandino, @Ravelong on Twitter) or you can create virtual art to sell. So not only can you self-express, you can make income as well.

Downfall: With a complete free reign on self-expression, instances of prostitution, nudity, sex and lewdness drove away any chance of an ongoing presence from mainstream users.

Counter-example: IMVU is a service that allows for self-expression and is doing quite well. Interestingly, their Terms of Service do not permit you to “use explicit/obscene language or solicit/post sexually explicit images.”

Hired for: Simulation and Training

Perhaps its largest success in passing the milkshake test is in simulation and training. Several branches of the Federal Government have used Second Life for military training and combat simulations. Loyalist College in Canada used Second Life in a training program for border crossing patrol agents. And finally, Dr. Peter Yellowless at UC Davis used Second Life to teach about the experience of schizophrenia.

Downfall: Linden Lab didn’t take the necessary steps to formalize products, services and support around this particular use of Second Life.

If they “productized” a simulation and training offering (perhaps on private, self-contained islands), I think we’d be hearing about a lot more compelling case studies. And it might even place Second Life into a different product/service category.

Conclusion

While I agree with the Heath brothers’ characterization that Second Life is limping along, I continue to see potential in the service. Today, Second Life’s milkshakes are like Baskin Robbins (available in 31 flavors). They’d be better off going Neapolitan, with milkshakes available in chocolate, vanilla and strawberry only.

Related Links

  1.  Thoughts from New World Notes on the same Slate article.
  2. Summary of virtual worlds innovators from a Stanford Media X event.

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“It’s All Virtual” On Virtual Worlds

October 3, 2010

Introduction

Given Microsoft’s rumored interest in acquiring Linden Lab (developers of Second Life), I thought I’d assemble some recent virtual worlds content.

Related: “Microsoft Buys Vivaty For New Project, May Be Looking For More,” from Virtual Worlds News

Virtual worlds have taken a hit, as Twitter, Facebook and other services have become media darlings.  And while I love social networks as much as anyone, I do think the market is under-considering (if that’s a word) the potential of virtual worlds technologies.

At A Crossroads: Where Does Second Life Go From Here?

I analyzed different directions that Linden Lab could take Second Life.  Of course, one that I did not cover was an exit – if the rumored exit (Microsoft) were to happen, I’m very curious to see how and where Microsoft folds the Second Life technology into its business.

On a slightly related topic, I wrote about how virtual worlds can be more like Twitter and Facebook – that is, more social and more open to the rest of the web.

Related: Guest Post from Pooky Amsterdam, “The Business Benefits of Second Life.”

Conference Coverage: FountainBlue Virtual Worlds (September 2010)

  1. 3 Virtual Worlds Technologies To Watch
  2. Trends In The Virtual Worlds Industry
  3. Hear From A Panel Of Virtual Worlds Entrepreneurs

Conference Coverage: Stanford Media X Virtual Worlds (August 2010)

  1. Stanford Media X Event: Virtual Worlds Entrepreneurs Show The Way
  2. Stanford Media X Event: IMVU’s Online Community

Trends In The Virtual Worlds Industry

September 28, 2010

How do you keep up with industry trends?  You hear from the people setting the trends.  On September 24th, FountainBlue held its annual virtual worlds conference on Cisco’s campus in Milpitas, CA.  The event featured a session titled “Trends in the Virtual Worlds Industry: An Update on What’s New and What’s Coming.”

The panel:

  1. Facilitator Jeff Pope, Founding Partner, Spark Sky Ventures
  2. David Helgason, CEO and Co-Founder, Unity
  3. Chris Platz, Creative Director and Art Lead, Stanford Sirikata Labs
  4. Eilif Trondsen, Research and Program Director of the Virtual Worlds @ Work Consortium at Strategic Business Insights, SRI International
  5. Mark Wallace, Conversation Manager, Linden Lab

Related News: From Virtual Worlds News, “Unity Launches Unity 3, Wins Innovation Award

Terminology

The panel agreed that the term “virtual worlds” may no longer be applicable.  Eilif Trondsen noted that many technologies (e.g. Teleplace, Protosphere), provide virtual spaces (for corporations), rather than an entire virtual world.  Interestingly, at a Stanford Media X event, IMVU noted that they’re “NOT a virtual world“, either.  Chris Platz noted that he refers to the technology as a “real-time 3D collaborative spaces.”

Adapting to a changing user community

Platz noted that many virtual worlds technologies were designed for an older audience – one that will soon give way to a younger generation (e.g. Gen Y).  The technologies will need to adapt to a user base who grew up in a “virtual world” – they will have a different set of expectations.  An audience member noted that for some kids, their first experience online is in Club Penguin (or a similar “world”) – before they experience the broader web.

Platz encouraged virtual worlds to tear down the “walled garden” (e.g. closed system) in favor of an open system that integrates with Facebook, Twitter and other systems.  Platz developed and experimented with a Flash-based MMORG (massively multi-player online role-playing game) that ran as a Facebook app.  He predicted that some time soon, someone would develop a fully functional 3D virtual world embedded in Facebook – one that users interact with while on Facebook.com.

Avatar or no avatar?

The panel had an interesting debate on the use of avatars.  The debate was spurred from a point made about someone’s notion of an “ideal corporate learning environment”, which listed the following attributes:

  1. Ability to give presentations
  2. Virtual whiteboard
  3. Document collaboration
  4. Desktop sharing
  5. Use of avatars is secondary

What the debate really boiled down to is not “avatar or no avatar”, but “immersion or no immersion?”  Mark Wallace from Linden Lab took the “avatar stance”, noting the deep association between a user and her avatar – and the resulting impact of that connection.  Wallace noted that Second Life residents whose avatars participate in virtual weight loss programs actually lose weight in real life.

Audience member Laura Kusumoto noted that Wallace’s example referred to “Club One Island” on Second Life – I wrote about Club One in a posting about a Stanford Media X event in which they presented.

For me, it’s useful in a group learning environment to receive signals about the other members of the group (e.g. are they paying attention, are they engaged, are they asking questions, etc.).

There are non-immersiveness tools that can be leveraged (e.g. webcams, text chat, message boards, etc.).  However, I do see the value of immersiveness for learning – I’d compare it to an in-person team meeting vs. an audio-only conference call.

Augmented social graph reality

David Helgason made an interesting prediction with regard to augmented reality.  Helgason believes that the future of augmented reality includes your social graph overlaid onto your AR experience.  In the near future, your smartphone may be able to perform facial recognition on a person – and overlay your social graph connections to that person (on your smartphone’s display).

Perhaps the more immediate opportunity is already happening – via location based services as opposed to augmented reality.  For example, I arrive at a restaurant and find reviews from people in my social graph.  Reading my friends’ reviews lets me know whether I should go in to grab a table.

Second Life Enterprise

Linden Lab’s Mark Wallace was asked to comment on future plans for Second Life Enterprise.  Wallace noted that Linden Lab is taking a holistic approach to the entire platform – looking to make improvements to the user experience that apply to all users.  Wallace would not comment specifically on Enterprise, noting that the improvements underway would benefit everyone.

Conclusion

This isn’t your father’s virtual world any more.  From hearing this panel, I’d say that virtual worlds technologies (or, real-time 3D collaborative spaces) will continue to morph and blend immersive experiences with the social graph, social gaming and augmented reality.  As facilitator Jeff Pope noted, it will be interesting to gather again in 12 months to re-assess where the trends have taken us.


Stanford Media X Event: Virtual Worlds Entrepreneurs Show The Way

August 20, 2010

Introduction

Media X at Stanford University hosted a workshop titled “Cashing In on Virtual Worlds: Entrepreneurial Insights for the Healthcare Industry.” The workshop was organized by Parvati Dev and Laura Kusumoto, who combine leading edge research, expertise and hands-on experience with virtual worlds and virtual worlds platforms.

In her introductory remarks, Ms. Kusumoto provided a perspective on the current state of virtual worlds. While the consumer-focused virtual worlds have seen notable platform closures (e.g. Google Lively, Metaplace, There.com, etc.), there has been positive activity on the enterprise side of virtual worlds, including virtual events and virtual trade shows.

Virtual Worlds: On An Upswing?

Kusumoto referenced a recent Gartner Hype Cycle Report that positioned “public virtual worlds” in a phase of “Trough of Disillusionment.”  The good news is that the subsequent phases are called “Slope of Enlightenment” and “Plateau of Productivity.”  Web 2.0, Tablet PCs and Wikis are positioned in this “Slope of Enlightenment” phase in Gartner’s cycle.

In the afternoon, we heard 5-minute pitches from entrepreneurs who were looking to launch virtual worlds businesses related to health care. These entrepreneurs showed me how virtual worlds (and notably, the surviving virtual worlds platforms) can embark on an upward path towards enlightenment.  Here’s my view on how virtual worlds are evolving:

Circling back to the Gartner Hype Cycle, I look back at the following progression:

  1. Technology Trigger: Artists and Hobbyists discover this technology for self-expression
  2. Peak of Inflated Expectations: Fortune 500 brands enter the mix, expecting a transformation of marketing and advertising
  3. Trough of Disillusionment: An assortment of virtual worlds platforms fold
  4. Slope of Enlightenment: Entrepreneurs develop innovative businesses that ride on top of virtual worlds platforms

The entrepreneurs who presented are leading the way towards enlightenment and the virtual worlds platforms (e.g. Second Life, Unity, OLIVE, etc.) stand to benefit.  The new business model is the purchasing of virtual land (or, the licensing of virtual world platform technology) that entrepreneurs leverage to drive monetization and revenue.

In a sense, this is similar to the smartphone app store – the entrepreneur creates intellectual property that rides on top of a “platform”.  The entrepreneur then leverages that platform to drive revenue to a direct sales channel (customers).

Noted Entrepreneurs

I’d like to highlight some of the presenting entrepreneurs (and their businesses).

Club One Island

Lose weight in a virtual world, on Club One IslandCeleste DeVaneaux gave a fascinating overview of how participation in a virtual world program can facilitate habit change.  It’s one thing to urge people to eat slower – it’s another thing to show them how.  And, to have their own avatars practice the habit of doing so.  Club One Island runs on top of the Second Life platform.

Related: How I lost 20 pounds in Second Life (featuring Club One Island – by Hypergrid Business)

CliniSpace


CliniSpace is a collaborative virtual medical environment created by Innovation in Learning, Inc. (the company led by Parvati Dev, one of the event’s organizers).  The goal of CliniSpace is to provide virtual world-based training to physicians, nursing students, etc.  A virtual patient can start out completely healthy, but then be programmed to worsen, such that s/he requires CPR within 15 minutes.  The service runs on top of the Unity platform.

InWorld Solutions


InWorld Solutions “incorporates a wide range of avatars, content and features specifically designed to facilitate clinical and educational applications.”  InWorld can facilitate treatment for substance abuse by having patients in a virtual world, with their doctors observing from the same physical space – or, from within the virtual world.  Patients can experience peer pressure (virtually) and be advised and coached on how to respond.  InWorld runs on top of Forterra’s OLIVE platform.

Conclusion

These were just a few of the innovative business concepts brewing in one particular industry (health care) around virtual worlds.  As more entrepreneurs launch virtual worlds businesses, the platform vendors (e.g. Linden Lab / Second Life, Unity, Forterra / OLIVE) stand to benefit.  And importantly in this vertical, another entity stands to benefit: the human condition.

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Top 5 Virtual Event Posts Of 2010

August 5, 2010

Here are the Top 5 posts (on this blog) for calendar year 2010.  The Top 5 List is in descending order and based on the number of page views per blog posting.

#5: Virtual Events 101: Tips For Building Your Virtual Booth

My guess is that many readers built their first virtual booth during 2010.  This posting provided tips planning and objectives, content strategy and booth staffing.  In addition, it provided tips on content presentation, “search optimization” and how to stand out from the crowd.  This posting is part of a broader Virtual Events 101 page that provides tips on virtual events.

#4: Bringing The Physical Event Experience To Virtual Events

This posting did some brainstorming on features that virtual event platforms could provide to bring physical event experiences to virtual events.  Then, it covered tips for virtual events, including how to gauge attendee interest, how to connect with interested attendees and how to create better attendee networking.

#3: COMDEX Re-Launches As A Virtual Trade Show

This was big news back in March, that the famed COMDEX show would return as a virtual event in November 2010.  I’m looking forward to seeing what’s in store this November at COMDEX Virtual.

#2: How 3D Virtual Worlds Can Be More Like Twitter And Facebook

Twitter and Facebook have taken the world by storm – this post received a lot of traffic by association.  I thought it was logical that 3D virtual world platforms could adopt some of the principles developed by Twitter and Facebook, such as the pervasive “Like” feature from Facebook.  I posited on some new concepts, such as closed circuit TV and on-demand TV for virtual worlds.

Finally, I guess I foreshadowed “Second Life Shared Media”, when I suggested that web content be embedded in-world – Linden Lab announced that feature a few short months after my blog posting.  More recently, I wrote about Second Life being at an important crossroads.

#1: The Future Of Virtual Events

There’s always something about the “future” that generates interest and curiosity.  I’m still a believer in the vision of the future (for virtual events) that I painted here.  While none of it has come to fruition, it’s just a matter of time.  In the future, that is!

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At A Crossroads: Where Does Second Life Go From Here?

July 2, 2010

Crossroads

June 2010 will mark an important month in the history of Linden Lab and Second Life.  On June 9th, the company announced a restructuring that included a 30% reduction of their staff.  On June 24th, the company announced that CEO Mark Kingdon was stepping down and named company founder Philip Rosedale its interim CEO.

Second Life is clearly at a crossroads – it will be crucial for Linden Lab to determine the best path forward.  To do so, they need to identify the right questions to ask and then determine the right answers to those questions.

What is your audience and customer segmentation?

Second Life takes quite a broad approach today – there are a wide assortment of communities [audience] (see their Destination Guide) and an equally wide assortment of land owners [customers].  Having cut 30% of staff, the question at this juncture is whether the company (and the platform) is well suited to cater to “anybody and everybody” or whether it’s better to narrow the focus.

One “focus area” may be in evolving the platform to cater to the hobbyists and loyalists who helped grow the Second Life community from the early days [consumer focus].  Another focus area, while unlikely, may be in catering to corporations for business use (I say “unlikely” because the Enterprise group was let go in the June staff reduction).

Yet another focus area may be in catering to particular categories (e.g. Music, Art, Education).  If Second Life focused their resources around building the #1 immersive music experience, would that have a larger impact than evolving the broader platform to meet everyone’s needs?

So the question really comes down to “narrow vs. broad” – by identifying narrower segments to target their service, can Second Life create a more rewarding and enjoyable experience for both residents and land owners?

What is the revenue model?

Today, the Second Life revenue model is based around a virtual economy, whose currency is the Linden Dollar.  Residents purchase Linden Dollars with real money (e.g. US Dollars) and can then buy land (in-world) or buy virtual goods from in-world merchants.  One of the challenges inherent in this model is its dependence on others to sustain a viable audience (community).

The model works when the audience is growing and the community is thriving; however, when the audience declines and becomes less active, purveyors of virtual land find the ROI less compelling and the audience decline snowballs (since users have fewer residents to interact with each time they login).

Are you a media company or technology platform?

Second Life can go one of two ways here – they can morph into a media company (and have direct influence over the audience) or they can move to a pure-play technology platform provider, which shifts the audience generation “burden” to licensees of the platform.  As a media company, they’d be similar to Facebook, Zynga, IMVU and Slide, with revenue being a mix of advertising, sponsorship and the sale of virtual goods.

Today, I’d say that Second Life is somewhere in between – they’re a technology platform that has no explicit and associated “force” to drive audience (like a media company does).  Resolving this “grey area” will be important.

Where do you take the technology?

To some degree, the technology vision was shared in the June 2010 restructuring announcement – the company will migrate Second Life to a web-based experience, with no software download – and, they’d look to integrate popular social networks to be more accessible and relevant.  Of course, there’s a delicate balance to manage here, since a core component of the Second Life community uses the service for the immersive experience that a downloaded client can deliver.

Here, Second Life can take a page out of OnLive’s book – if OnLive can deliver immersive, action-rich, multi-player video games from the cloud, then one would imagine that a 3D immersive virtual worlds can move to the cloud as well (though, of course, it’s not trivial to achieve).  Second Life needs to think beyond the web as well and determine the viability for apps running on iPad/iPhone, Android and related mobile operating systems.

My Answers (Recommendations)

These are obviously complex questions that require a lot of analysis – in addition, there may be other questions that need to be asked.  The answers to these questions are interrelated and need to be answered together, not individually.  Here are my high level answers / recommendations:

  1. Audience and customer segmentation: Go narrow – you’ll lose segments of your user base, but the core segments you choose to focus on will see solutions and experiences that are more targeted and relevant.  Build upon these small successes and grow outward again.
  2. Revenue model: Move to a SaaS licensing model (priced in US Dollars) – keep the Linden Dollar currency system in place for the purchase of in-world virtual goods.
  3. Media company or technology platform: Become a pure-play technology platform that partners with media companies as a sales channel.  Give media companies incentives and easy-to-use tools that foster growth in virtual real estate – encourage them to be your sales champions and bring their audiences into the community.
  4. Technology evolution: Complete the transition to a 100% web-based offering (no small task!) – and, on the journey there, have plans in place for iPad and Android apps.

Times of turmoil give companies the opportunity to throw convention out the window and reinvent themselves.  Consider another company whose original founder returned to transform them from a “has been” to the most valuable technology company on the planet:

Apple Computer.

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The Business Benefits Of Second Life

March 23, 2010

Veronica Butler-Borrer

The following is a guest post by Veronica Butler-Borrer, known in-world as Pooky Amsterdam (@PookyMedia).

AVATAR started off being the word of the new decade, and for good reason.  The blockbuster movie, which allows a man to take on a completely new form through a kind of mental transfer, has made hundreds of millions of dollars. It also speaks to the new decade in terms of new possibilities.

While Second Life has been part of the Internet for a while, recent changes and upgrades have made it more compelling as a business and media platform.  Recent economic conditions have also required new strategy to save money on travel costs.  And increased attention to environmental changes has required us to look more closely at green alternatives to business.  Facts and figures plus improved opportunities are now encouraging us as a business community to re-examine Second Life.

Pooky Amsterdam's Second Life avatar

What makes doing business as an avatar in Second Life a good choice?

  1. You can virtually meet people from anywhere in the world easily and inexpensively
  2. Your Avatar can be an extension of yourself and increase personal investment for you and the business community you are addressing
  3. VoIP puts you in the same room with those you need to speak with
  4. You can share any documents you need to
  5. You can work in real time on those shared documents
  6. Any 3D product or place can be re-created cost-effectively and to scale for business decision making
  7. You save on time and travel expense by just logging in from your computer
  8. You can establish a secure environment by restricting access to your location
  9. Training and Education done in virtual worlds returns great results
  10. Video created in Virtual Worlds (known as Machinima) or cinema done on machine will get your message to the public through regular distribution channels (e.g. YouTube).  In addition, it will be available as video content on your web site, plus be something you can include in your video emails

These are the main reasons to think about doing business virtually.  Let’s look into this a bit further.

Analysis: Benefits of Doing Business Virtually

That’s right, once you download the free client which is Second Life, you can enter a 3D world where you can meet by prearrangement, those whom you would like to, from anywhere in the world.  Of course this will take some organization, but that is easy to facilitate.

Your Avatar is an identity that you construct to carry out your work in a virtual world.  Allowing this creation to personify you means you invest yourself in it, and interact as well.  This is also not a bad thing, as in creating an other self which is “better, faster, stronger” will also result in your being able to transfer some of those properties to your real world person.  If you saw a digital image of yourself running on a virtual treadmill, would you feel like going to the gym? Probably so, according to a Stanford study showing that personalized avatars can motivate people to exercise and eat right.

It doesn’t yet beat Skype for number of chat minutes a month, but the VoIP technology in Second Life is excellent, and has served over a billion minutes of voice chat a month.  That means you can speak to people anywhere in the world, in the same virtual room, sharing important documents or any 3D representation for absolutely free.

Second Life Viewer 2

The latest viewer for Second Life (Viewer 2) also allows for shared media within this Virtual World and that means you can view ANY content on the web in real time with people from (or outside of) your organization.

This includes of course, Google Docs and Etherpad.  So you can make decisions together from your office, or home, without having to fly anywhere.  This is a remarkable opportunity that is afforded people who are on this site.  Plus, being able to recreate objects in 3 Dimensions means you can build anything to scale, whether it be a building or an engine, and have your people discuss this matter, again in real time and vocally.

When you have your own location, you can also set permissions to that landing point and area so you are the only ones who have access to it. This will not compromise your security at all, when you are discussing matters of confidentiality.

Second Life Case Study

Consider the case study entitled, “Virtual World Simulation Training Prepares Real Guards on the US-Canadian Border: Loyalist College in Second Life,”

The executive summary reads:

Before September 11, 2001, Customs and Immigration students at Loyalist College spent three weeks closely tailing professional border guards to experience the daily routine of their future job. In a post-911 environment however, this was no longer allowed. Training suffered until the Director of Educational Technology at Loyalist College catalyzed a virtual border crossing simulation in Second Life for Loyalist students.

The amazing results of the training and simulation program have led to significantly improved grades on students’ critical skills tests, taking scores from a 56% success in 2007, to 95% at the end of 2008 after the simulation was instituted.

This is proof positive that training in a Virtual World environment has documented benefits.

I present a video which my company made to show you some of the amazing opportunities that the Virtual World of Second Life can afford.  Video is a hallmark of professionalism, and being able to have content on your website, and/or through video email is an important way to integrate your customer base.

Before embarking on a Second Life journey, you may want to seek expert help; it will save you time and ultimately money if you begin your investment with those who are knowledgeable about the world you are about to enter for business.  Just of course if you wanted to have a meeting in Paris, you would need concierge services there.  Pookymedia can help you get started.

Please feel free to contact Pooky Amsterdam at info@pookymedia.com.

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How 3D Virtual Worlds Can Be More Like Twitter And Facebook

February 8, 2010

3D Virtual Worlds Diagram

Facebook and Twitter have taught us that people of all ages love to utilize the web for self-expression, connecting and staying in touch.  3D virtual worlds have similar characteristics: the ability for self-expression via customized avatars and the creation of your own ‘island’; the ability to connect with friends (or meet people you’d never get a chance to meet in the real world); and the ability to be part of a vibrant community.

In addition, 3D virtual worlds offer a fully immersive environment, that allows you to escape from the real world – and, experience virtual representations of real-world locations. For virtual worlds experiencing declining usage, however, “community” becomes a challenge to maintain (i.e. imagine using Facebook when none of your friends or family are using it).

Mark Kingdon (in-world: “M Linden“), the CEO of Linden Lab, laid out his vision of Second Life’s evolution, tying it in with the recent acquisition of Avatars United.

M. Linden on Community:

“When we talk to the users who sign up but then decide not to stay, they say they left, in part, because they had a hard time finding people to hang out with. Either their friends weren’t there, or they have a hard time meeting new ones inworld, or sometimes both.  We need to fix this.”

M. Linden on Social Sharing:

“Another part of the “social glue” of any community is the concept of sharing.  Inworld, it’s easy to share and we’ll make it even easier.  But sharing between Second Life and the larger social Web is not as easy.  As an avid photographer (well, aspiring to be avid), I’d love to be able to easily share my snapshots from Second Life with my friends on other Web services, and be able to watch a feed of the people I’m interested in.”

Reaction

Kingdon’s blog posting generated a wealth of comments from the Second Life community – I’d characterize the comments as mixed to fairly positive.  My own reaction to the blog posting was very positive – my use of Second Life (and other virtual worlds) would increase based on my knowledge of in-world events/happenings attended by members of my social graph.

Here are my thoughts on how to increase community engagement and social sharing in a 3D virtual world.

Facebook and Twitter

Direct Integration with Twitter, Facebook

With Avatars United, according to Kingdon, “you’ll start to build an activity feed (similar to Facebook or Twitter) that keeps you in closer touch with the people you’re connected to in Second Life.” While I see value in a single feed that aggregates content from multiple social networks, I see equal (if not more) value in direct integration of Twitter, Facebook, etc., into the virtual world.

The Twitter API and Facebook Connect make doing so fairly straightforward.  A B2B company with an island in Second Life may want to integrate a Twitter stream that displays tweets related to the company.  Similarly, the company could prompt visitors to tweet about their visit and have that message be distributed to all of the visitor’s followers on Twitter.

By enabling this, the owner of the island generates “free” promotion to the social web – and, the underlying platform gains wider reach as well.  A relevant analogy is Ustream’s Social Stream, which allows viewers to “chat with your friends over Twitter” while they’re viewing a live video.

On the Facebook front, imagine if the virtual world platform enabled Facebook Connect, thus allowing residents to sign in to Facebook and find a list of their Facebook friends who are also residents.  Then, imagine showing users a real-time list of their Facebook friends who are in-world right now, with “links” to teleport to the friends’ locations.

Borrowing from another popular service (Foursquare or Gowalla), the virtual world platform could enable residents to “check in” at different locations (islands).  Broadcasting their whereabouts to their social graph may result in more “planned encounters” within the virtual world.  If my friends just checked in to “virtual island”, I may choose to teleport and join them there if I happen to be free.

“I Like It!”

Virtual worlds could create a stronger “shared experience” by allowing visitors to leave a trail of breadcrumbs reflecting their visited locations.  If I “friend” someone in-world – or, if an in-world resident is a Facebook friend of mine, then I might want to follow the path they took during their last session.  Additionally, the platform could support location endorsements, in the same way Facebook allows me to “like” a friend’s wall posting.

As I enter a location in the virtual world, I can see whether members of my social graph previously visited – and, what their comments were.  Alternatively, I could see a list of all past visitors – with a link to view their in-world avatar and profile.  If a past visitor panned a location, but I enjoyed it, allow me to send an offline message to that user, who can read my message the next time she logs in.  This allows me to connect with other users even when they’re not online (a form of virtual world email).

Source: flickr (User: Indiewench)

Virtual World Closed-Circuit TV

Business owners leverage closed-circuit TV technology to perform surveillance of their store front or office.  Wouldn’t a similar service be useful for virtual world residents, especially those who “own” an island?  While we tend to be online during our waking hours, it may not be practical to be in-world all the time.  How about a virtual world thin client – it provides a read-only “view” of a given location, similar to closed-circuit TV.

Since it doesn’t allow you to navigate, teleport, interact with others, etc. – the client is entirely lightweight and can sit in a corner of your desktop with only a portion of the CPU/RAM consumed by the full-blown client.  So if you’re interested in a given location, the closed-circuit TV can alert you to visitors – and with one click, the thin client can launch the full client and teleport you to the location.

Services (like this one) that can instantaneously connect users are a win-win – they generate more logins to the platform and enable more connections, upon which a stronger sense of community develops.  Alternatively, the virtual world platform can provide even more lightweight notification mechanisms: it can generate an email, Twitter direct message or Facebook email whenever a user enters a designated space.  The notification could contain a link that teleports the recipient into that space to connect with the current visitor(s).

Embed Web Content In-World

As Twitter and Facebook have demonstrated, users of social services are inclined to share interesting content, often in the form of web links.  Within a virtual world, “sharing” often results in the launching of a web browser to render the shared page.  Why not provide sharing capabilities that render the shared content on an in-world wall or projection screen?  This keeps users engaged, while retaining their attention in-world.  Building upon this, I may want to look up Facebook friends and be taken to all locations in which they shared content in-world (as I have an interest in what my friends are reading and sharing).

On Demand TV (for Virtual Worlds)

Facebook has a great utility that allows me to record a video on my laptop’s webcam, upload it to Facebook and share it on Facebook.  Virtual world platforms should enable users to press a “record” button and have their current session saved for later playback.  Perhaps I’m attending an in-world concert or watching a keynote presentation – capturing a recording of the session allows me to share it with members of my social graph who weren’t able to attend.  Treet TV provides similar services (with professional quality) – this capability empowers end users to create on-demand programming with the click of a mouse.

Conclusion

3D virtual worlds have a lot to offer already – by adopting useful social sharing services, they can tap into the phenomenon (social media) that’s the force behind many of today’s most popular web sites.

Related Links

  1. Wagner James Au in New World Notes, “How To Make Second Life Truly Mass Market, Part 1: Deep Integration With Facebook

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Virtual Worlds: Where We Were, Where We’re Going, What Does It Mean to YOU?

September 30, 2009

On September 25, 2009, FountainBlue held a conference at Sun Microsystems’ Santa Clara (California) campus.  The title of the conference, “Virtual Worlds: Where We Were, Where We’re Going, What Does It Mean to YOU?”.

What follows is an event summary and guest post by Linda Holroyd – CEO, FountainBlue

Introductory remarks, framing the discussion were provided by:

  1. Michael Gialis, New Business Development for Sun Microsystem’s Lab and Chief Technology Office, Founder of Virtual Worlds Roadmap Group
  2. Barry Holroyd, CTO, Masher Media

An Overview of the History of Virtual Worlds – What is it, Where Has it Been was provided by Benjamin Duranske, Associate, Pillsbury Winthrop.

Our first Panel Discussion: Virtual World Business Trends featured:

  1. Moderator Sibley Verbeck, CEO, The Electric Sheep Company
  2. Panelist Joshua Bell, Director, Technology Integration, Linden Lab
  3. Panelist Tim Chang, Principal, Norwest Venture Partners
  4. Panelist Benjamin Duranske, Associate, Pillsbury Winthrop
  5. Panelist Michael Gold, CEO, Electrotank

Our Second Panel Discussion: Virtual World Case Studies featured:

  1. Moderator Jeffrey Pope, Founder of Virtual Worlds Roadmap Group, Former Virtual Worlds VC and Virtual Worlds Entrepreneur
  2. Panelist Jack Buser, Director of Sony Playstation Home
  3. Panelist David Helgason, CEO, Unity
  4. Panelist Damon Hernandez, Lead, Web3D Outreach, Web3d Consortium
  5. Panelist Greg Nuyens, CEO, Qwaq

Below are notes from our conversation, along with resource links from our presenters.

Virtual Worlds offer a dynamic, ever-changing landscape of technology, community, interaction. Although Virtual Worlds have evolved over the past few decades, it is now coming to the mainstream, and its impact is deep and broad. It affects many facets of the way we do business from the financial, economic, technology and legal aspects, as well as HOW business is done, leveraging software the enables creative and dynamic interaction between people with virtual presences and online communities overall.

Virtual worlds are evolving from the walled gardens of the 1990s to more and more dynamic, interactive and creative sites that incorporate user content and creativity. This seems to be following the familiar evolution of the web itself; America Online and Prodigy became supplanted by more open browser standards from Mosaic.

Indeed, Virtual Worlds are evolving from a fad and a toy to a valuable business tool, serving and connecting various stakeholders. The graphics abilities introduced in the 80s and 90s brought in the era of avatars and games which were wildly popular, with some running still today. Now these graphics are being harnessed in virtual environments to effect value in a variety of non-game related use cases.

As more people got more deeply engaged, user communities arose and questions on policies, procedures and how users can interact and communities can grow arose. In addition, a business model evolution is now occurring where we are redefining who developers, publishers and retailers are and how they work together, as well as who is funding, marketing, and servicing these individual users and user communities. Users continue to raise the bar for what they can do and how they can do it, increasingly demanding more customized solutions and experiences tailored to themselves personally, and to the communities they join.

Adoption has not reached explosive double-digits figures yet for most virtual world communities, but with that said, in general the virtual worlds for kids sub-industry has benefited from the fastest and broadest adoption rate and continues to grow, showing that this is not a transient fad, but a real opportunity. Indeed, savvy publishers, manufacturers, producers and others selling to the kids market are factoring in web sites, books, toys, and virtual world communities as part of their marketing and outreach efforts. Successful examples of this maturing mass market segment include Webkins and Club Penguin.

Both panels remarked on the huge opportunities available in the media and entertainment industry. According to latest PriceWaterhouseCoopers Q2 2009 report, media and entertainment investments, totaled $115B, averaged $2 million per deal and totaled 52 deals, mostly from Silicon Valley (19), but also 10 from New York, and 6 from LA/Orange County. https://www.pwcmoneytree.com/MTPublic/ns/print.jsp?page=industry&industry=7100&region

The panelists and presenters had the following advice for virtual worlds entrepreneurs and intrapreneurs:

  1. The growth of an individual virtual world, and the industry altogether might grow in fits and starts, depending on technology availability, user communities, adoption of standards, bandwidth constraints and other factors. Awareness of these challenges and addressing them headlong, in collaboration with other stakeholders will help drive the growth of the industry.
  2. Minimize the barrier to adoption and drive the user base for your community: making adoption friction-less a critical factor for success. Make sure that there are no technology hassles (installing separate plug-ins and technologies), process hurdles (logging in, taking surveys, confusing steps), or marketing/branding confusion (they have to know where to go and that their trusted colleagues have recommended the experience), for example.
  3. Take advantage of the ‘Hybrid Tiered Solution’, where general users (about 85%) get in free, and a certain percentage (around 15%) pays through micro transactions for premium services and a smaller percentage (1-3% for example) pays for ongoing subscription levels. The successful organization will offer a solution which would serve the individual needs of all three types of users, treating them all as valuable members.
  4. Leverage the social communities (FaceBook, Twitter, iPhone, etc.) of the audience to leverage the growth of your community.
  5. Content is king. Everyone wants more content, richer interaction, more activities, more engagement, etc. The successful company offers solutions which engages users while also setting appropriate controls and boundaries.
  6. Focus on the needs of your target audience, whether they are frequent texters, or users of Twitter or FaceBook, creating a virtual world that lets them interact the way THEY want to will attract the audience you’re targeting.
  7. Research patents in your space, and consider IP issues associated with user-generated content. Find the edge of the law to remain competitive, but stay on the right side of the law to avoid litigation and other problems.
  8. Policies, regulations and enforcements in the virtual worlds space are rapidly evolving. Leverage resources to stay informed and be prepared to help shape, respond to these changes.
  9. Adoption of hardware such as headsets and webcams etc. will continue to occur, but not nearly at the pace of the evolution of software. Therefore, if your virtual world incorporates hardware components, create games which work with existing hardware, and leverage existing markets.
  10. Create a simple communication device to share information to the whole community, like a leader board, as it would generate discussion, invite more engagement, and help with the viral growth of the community.
  11. Ease of use can be defined as the first 30 seconds, the first 30 minutes, the first 30 hours, and the first 30 days. Strategies for retaining and securing users for each of the ‘first 30s’ may vary, but they are also inter-dependent, and must always focus on the needs of the customers.
  12. When designing a virtual worlds solution, speak to the people who would use it, like nurses or service station attendees rather than doctors (if they are not the ones who will use the solution) and managers (if they are not the ones serving the customer).

The panel raised some questions which could lead to hot virtual world business opportunities:

  1. What are the challenges and opportunities in synchronist and asynchornistic communication? How can solutions bring more people from more places together and more richly interact?
  2. How can virtual worlds assist with visualizing and modeling to support the innovation process and more cost-effectively make real technology- based solutions?
  3. What opportunities can data analytics and data visualization provide?
  4. Solutions across sectors offer opportunities. What might work for the education market, for example, might also serve a life science market. In addition, the technology for conducting a quest for a game might be adapted to organizational and productivity tools for businesses. What could this mean for YOUR company?
  5. What are the intersections of where gaming meets music or education or homework and what solution could you create to serve the needs of that market?

In summary, our panelists and presenters have shown and told us that Virtual Worlds:

  1. Are not only becoming more and more useful, they are also engaging and fun and potentially profitable.
  2. Are being adopted in different ways to create and serve communities for personal and business benefit.
  3. Are being increasingly more integrated into everyday business functions from training to education to service, branding and outreach. As such, challenges such as IP, security, privacy, and other factors will arise.
  4. Are mature enough that metaphors and examples exist, making it easier for potential customers and partners to understand new technology and business model solutions. Second Life, early games, Mosaic, Silicon Graphics, Tivo, Qwaq and other others have forged the business, technology and cultural grounds and helped grow the industry. They have been around long enough so tools and technologies and solutions are available, and the technology adoption curve is not as steep.
  5. Is not dominated by the US, as adoption of virtual goods and mobile platforms for example is 4-5x faster in Asia and Europe.

Additional information and resources:

  1. Presenting Entrepreneur Brian Bauer, OnTrack Health, winners in the Enterprise, Other Category (Collaboration in Health Care): http://ontracktechnology.blogspot.com
  2. Panelist Joshua Bell, Director, Technology Integration, Linden Lab http://www.lindenlab.com
  3. Linden Lab: Second Life enters the realm of the enterprise. Joe Miller, VP of Platforms and Technology Development, at Linden Lab talks to CNET’s Dan Farber about the challenges in developing dynamic and reliable backend operations for the 3D virtual world of Second Life. Miller also discusses how they’re incorporating new hi-tech conferencing tools for business users such as VoIP solutions and video streaming technologies. http://video.zdnet.com/CIOSessions/?p=310
  4. Linden Lab’s Blog on the Economy https://blogs.secondlife.com/community/features/blog/2009/04/16/the-second-life-economy–first-quarter-2009-in-detail
  5. Second Life Starts To Grow Again, Wagner James Au, Wednesday, April 15, 2009 http://gigaom.com/2009/04/15/exclusive-internal-second-life-data-shows-returning-growth/
  6. Panelist Jack Buser, Director of Sony Playstation Home: http://www.playstation.sony.com
  7. Panelist Tim Chang, Principal, Norwest Venture Partners http://www.nvp.com
  8. Presenting Entrepreneur Dustin Clingman, Immediate Mode Interactive LLC, winners in the Enterprise, Virtual Meetings Category: http://www.immediatemodeinteractive.com
  9. Presenter, Sponsor and Panelist Benjamin Duranske, Associate, Pillsbury Winthrop
  10. Entrepreneur with display booth, Andrew Filev, CloudMach, http://www.cloudmach.com
  11. Emcee and Sponsor, Michael Gialis, New Business Development for Sun Microsystem’s Lab and Chief Technology Office, Virtual Worlds Roadmap Group and Survey: http://virtualworldsroadmap.blogspot.com/
  12. Panelist Michael Gold, CEO, Electrotank http://www.electrotank.com
  13. Presenting Entrepreneur Sherry Gunther, CEO, Masher Media, winners in the Consumer, Six to Twelve Category: http://www.mashermedia.com
  14. Panelist David Helgason, CEO, Unity: http://www.unity3d.com
  15. Panelist Damon Hernandez, Lead, Web3D Outreach, Web3d Consortium http://www.web3d.org
  16. Presenting Entrepreneur Troy Hipolito, CTO and Owner, ISO Interactive, winners in the Consumer, Teenagers to Adult Category: http://www.isointeractive.com
  17. Presenter Barry Holroyd, CTO, Masher Media, http://www.mashermedia.com
  18. Presenting Entrepreneur Stevan Lieberman, SpotON3D, winners in the Enterprise, Other Category (Virtual Real Estate and Office Tools): http://www.spoton3d.com
  19. Entrepreneur with display booth, Greg Howes, IdeaBuilder, http://www.ideabuilderhomes.com
  20. Panelist Greg Nuyens, CEO, Teleplace, formerly Qwaq http://www.teleplace.com
  21. Demo presentation by Chris Platz, Creative Director, Sirikata, Stanford Humanities Lab and Computer Science, projects: Virtual Museum and Virtual Live Music Performance: http://www.sirikata.com and http://shl.stanford.edu
  22. Panel Moderator Jeffrey Pope, Founder of Virtual Worlds Roadmap Group, Former Virtual Worlds VC and Virtual Worlds Entrepreneur, and Founding Partner, Spark Sky Ventures: http://www.sparksky.com
  23. Presenting Entrepreneur Terry Thorpe, Chairman, KohdSpace, winners in the Enterprise, Virtual Events and Tradeshows Category: http://www.kohdspace.com
  24. Panel Moderator Sibley Verbeck, CEO, The Electric Sheep Company http://www.electricsheepcompany.com
  25. Demo presentation by Nicole Yankelovich, Principal Investigator, Collaborative Environments program including Wonderland v0.5, Sun Labs will demo the new features / functionality and capability of our re-architected platform: http://www.projectwonderland.com

In conclusion, the opportunities in the virtual worlds space are massive, with the convergence of technologies and markets and solutions. And it will take basic business principals, including strategic leadership and superior execution, constant education, lots of hard work, and a network of influential contacts to remain competitive in this rapidly growing and evolving space.

At FountainBlue, we support transformative leadership, one conversation, one leader, one organization at a time. We therefore hope that you have enjoyed the meeting, and that the meeting and these follow-up notes, along with the attached updated list of attendees, and the attached bios, provide you with both food for thought and great connections. We will also post our notes to our community on both BigTent https://www.bigtent.com/groups/fountainblue and LinkedIn and invite interactive conversations around these notes through those communities. Although we welcome you to share our notes, with proper acknowledgment to FountainBlue and our sponsors and speakers, we ask that you DO NOT forward the contact list as it is intended to be shared with fellow attendees only.


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