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Second Life: A blip or a business opportunity?

Wednesday, 21 May 2008

David Holloway, founder of the Metaverse Journal, writes

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Second Life spent over a year in the headlines as the latest tech freak show to amaze and scare the general public with. So has anything of note happened in Second Life since then?

Today's Crikey article on Second Life reveals that Second Life has cleaned up gambling and virtual banking and is cracking down on inappropriate sex play.

Business has had a rocky time, some have been burnt and others are thriving. Market research firm Gartner released some data last week citing a 90% failure rate for business in virtual worlds but they remain bullish on future opportunities, believing 70% of organisations will have some sort of virtual world presence by 2012.

Telstra is the most notable Aussie virtual world success story, with well over a year clocked up in Second Life and a growing user base. But as the media hype dies down, is Second Life ready for business?

Can Second Life become a global hub for businesses and organisations to meet and get things done?

Or does the corporatisation of Second Life risk making it as boring as the real world it copies?

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Con Frantzeskos Wednesday, 21 May 2008 5:18:19 PM: Second Life is an extraordinarily unfulfilling experience. With Second Life's own figures claiming anywhere between 10,000 and 12,000 active Australian users, server / experience limitations of 70 people on any one screen at any one time and incredible lag due to a lack of local servers, it remains a very questionable means to engage. You could only call Telstra a "virtual world success story" if you measured success by the amount of time and effort spent decorating a permanently empty room. Of course 90% of businesses are failing in virtual worlds such as Second Life - it's mostly ugly, it's mostly boring, and it's mostly empty. Virtual worlds are not a wise option for business - business dialogue is still best executed simply - and until virtual worlds become simpler than phone, email/text or face to face, then they won't get any traction. Currently, there are far more engaging conversation spaces online in Australia. Online forums such as Whirlpool.net.au, Vogue Forums, Overclockers and Bub Hub are just a few of hundreds of forums that attract incredibly large numbers of users, discussing issues at the core of any company's marketing and business strategy: product questions, reviews, technical analysis, CSR strategies and so on. The problem is that very few firms are actually conversing, answering questions, adding value, contributing to their experience - even when their stakeholders are crying out for it. It's beyond comprehension that many Australian businesses would choose to invest hefty amounts in complex marketing constructs, while simple conversations with interested, captive, engaged customers via online forums are being ignored. The few that are engaging are doing so with phenomenal success. Con Frantzeskos Edelman Digital Australia edelmandigital.com
David Holloway Thursday, 22 May 2008 4:59:43 PM: Hi Con, Thanks for your comments. I'd agree with you totally on the lag / engagement and until Linden Lab do finally get some Australia-based servers it will remain an issue. >You could only call Telstra a "virtual world success story" if you measured success by >the amount of time and effort spent decorating a permanently empty room. I'd disagree here - Telstra's success has been in regularly introducing new initiatives to keep its customers engaged. The opening up of parts of Telstra's islands to rentals was one of the more successful examples there. And at any given minute of the day you'll find a bunch of Telstra customers there, lag and all. >Of course 90% of businesses are failing in virtual worlds such as Second Life - it's >mostly ugly, it's mostly boring, and it's mostly empty. Ugly and boring are of course subjective assessments, and ones a lot of people would disagree with - there are now up to 65 thousand or so people online in Second at any one time. Graphically, Second Life is nowhere near as pretty as some of the more gaming-orientated worlds but that's improved over recent months. >Virtual worlds are not a wise option for business - business dialogue is still best >executed simply - and until virtual worlds become simpler than phone, email/text or face >to face, then they won't get any traction. I agree that simplicity is key but for some businesses a 3D immersive environment is actually a big plus. That aside, I've always maintained virtual worlds are an R&D exercise at this stage.
Laurel Papworth Thursday, 22 May 2008 9:32:38 PM: I think there is some confusion over Second Life - it is not a broadcast channel but a R&D area: an excellent opportunity for companies to create collaborative spaces to communicate with customers and test new marketing ideas in social (not interactive/digital) media. Anyone who looks at success as a) inworld sales b) volume of eyeballs (broadcast) or c) the ability to recreate exactly boring as batsh*t corporate offices in a 3D environment doesn't understand the R&D nature of social virtual worlds.
Gary Hayes Thursday, 22 May 2008 10:38:24 PM: Let's be clear about what Second Life is - A Social Virtual 3D Environment with the emphasis on Social. It ranges from a kind of anything goes 'party' at one end of the spectrum to a refined artistic or educational experience at the other. Many people use second life to extend their social networks, use it as a glorified chat room or immerse themselves and use it as an escape or aspirational lifestyle. The way people/avatars keep in contact and meet is no different to Facebook/MySpace - so we have friends lists, groups, mini profiles, keyword searches and lots of open chat, voice and IM. It is about community, it is about activity aimed at mostly couples or small groups. It does have a steep learning curve and once you have got over the hump there is a large amount of places to visit and things to do - it can seem overwhelming to the uninitiated. The key difference and one that makes it very sticky is the fact it is real time, synchronous and like any 'live' activity it is hard to log off mid conversation, shopping or dancing with a friend. So we get the 56 hours per month on average from the 520 000 regular users of the service...making it according to Media Guardian as the most sticky social network. So where does that leave businesses interested in experimenting with this particular flavour of a social net. I have written long and hard on the topic and these two articles cover most of the bases - www.personalizemedia.com/index.php/2007/09/03/corporations-in-3d-networks-psychopaths-or-welcome-friends/ and www.personalizemedia.com/index.php/2007/02/04/the-brand-owners-guide-to-joining-the-metaverse/ but the bottom line is - are you as a company, prepared to commit a significant human resource from your company to maintain and grow a community around your brand? Social networks are not about 'build it' and run - most companies who have failed in SL or other social space have simply entered for the wrong reasons and built great representational spaces without a nod to the existing culture or with an intention of activating a community. I built the Telstra islands initially and also introduced the first residential elements and within the first three months a healthy community was already in place - BigPond had the highest inworld traffic. Since then a heirarchy of community management has developed and although there are problems in potential over management and in-fighting, it is a healthy self-sustaining group of 100-200 regulars who spread their experiences and draw in thousands more. Other companies have simply created clones of industrial estates or even worse ignored an active community that grew up around their brand. There are other roads. One is the intranet route. Experimenting with inworld meetings or company R&D in protected islands/sims, free from the anarchy of the 'free-to-inhabit' crowd. Another is being very specific about what you want to achieve with clear ROI's or KPI's - so running inworld recruitment and interviewing has become popular recently as well as product appraisal and inworld questionaires. There are many other applications in the pipeline that I refer to as phase 3. Phase 1, push, build, get some press, forget about it and fail. Phase 2, specific applications, clear about Key Performance Indicators and willing to put the time in to growing community. Phase 3, true co-creation with the inhabitants with mixed reality elements and real world outcomes. More on my blogs. I often refer to SL as a sandbox. It is inifinitely customisable by groups or individual - anything is achievable and it is this unlimited element that is enticing to many. Businesses need to understand that although it is R&D there should be robust metrics to learn from the process and it would be to everyones benefit if like the early days of the web, there was a way to stand on the shoulders of those who achieved moderate success. There are some very clear pathways developing and whether it is Second Life or a likely more open source, distributed server version of a very similar environment as long as business operates the same way as niche interest groups do in social networks they will thrive and grow and eventually the business models will reveal themselves - but sitting outside and listening to the hype and anti-hype will, like those companies who sat on the fence in web 1.0, mean your several steps behind the leaders in this area.
Stuart Wednesday, 4 June 2008 4:55:35 PM: Check out this new Australian Drudge like website:

www.thehenryreport.com

Its independant, update daily and gaining wide popularity.

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Second Life: A blip or a business opportunity?

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