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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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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