Virtual Worlds--Game Over

I was on a panel talking about Brands and user engagement in virtual worlds. Ad Agency people seemed pretty unconvinced that they should push their clients back to virtual worlds.

The most amazing thing about the Virtual Worlds London conference last week was that the organizers (Show Initiative) think Virtual Worlds space is GAME OVER. Their next show in New York has been hastily renamed “Engage!” 

From the conference site: Engage! Expo (formerly the Virtual Worlds Conference) is the event for business, media, entertainment, youth brands and agencies to meet and learn how to combine their existing online efforts with the unparalleled engagement opportunities, new revenue streams and cost savings of the 3D Web and Virtual Worlds. 

Speakers include: "Chief Barbie Girl" Rosie O'Neil.   So that's clearly hotter than a bunch of vw geeks?

So “Virtual Worlds” is not a hot enough topic to draw a crowd. Why? Short answer = too many over-funded kids/tween worlds stirring up noise and burning cash like drunk pirates on the one hand-- and on the other the tarnished image from the over-hype of Second Life still in most people's head. The first wave is truly over and 2009 looks like nothing but bad news for the virtual world space I guess? So Show Initiatives is getting out while the getting is possible.

I have been thinking about some of what I saw and some tidbits of conversations with people (below some relevant stuff maybe). My notes from first day of conference here.

My main observation is that “virtual worlds” is an idea from dreamers, searching for a technology, seeking a market.

Habbo Hotel, not Linden Labs, is the big virtual dog atm. They got audience and they are on the move it seems—today they post more than 5.5 million visits in the last 30 days compared to Second Life at 730,000. (ya, sure SL is more realistic, but  who cares? Not the kids and tween for sure.) I was on a panel with a Habbo VP type and they are after big corporate sponsors. I hope they land someone as it will validate the real-time social network side of the virtual world space. But regardless they are building one of the strongest inworld brands and will have a dedicated following that can transition into many other types of inworld experiences.

Linden Labs really seems adrift in turbulent seas. The CEO spoke about attacking not 1, not 2, but 3 markets = Consumers, Enterprise and Education. In fact they don't have much of an offering for any of these markets. The talk about being more professional seem upon reflection to be taking all the excitement out of SL which actually is their main advantage. I mean “collaboration” using stiff avatars and oooo “sharing a desktop” inworld. Apparently Linden uses this for their internal meetings—and doesn't everyone want to be as organized and productive as Linden Labs? From Gene Yoon VP at LL and posted on the SL blog:

Second Life is one of my most important business productivity tools. Linden Lab has seven offices across four time zones, with more than a fifth of our employees working from home. Without using Second Life as our team collaboration environment, we wouldn’t be able to run such a distributed workforce and still have the tightly knit company we have today

Then the panicked announcement from Kingdon of  “behind the firewall” sims. Still no details on this and in general what is even possible? Separate inventory servers? Using your own names? How can you manage access across the grid? Is there a new viewer also? Lot of questions to address. All news from LL just looks scattered and reactive.

(btw, if you want a cheap, good-enuff solution for online collaboration—we use basecamp+skype+yammer (hat-tip to Sibley on yammer). We find SL to be too slow, distracting and tedious for most teamwork but wtf do I know).

And the competition is attacking SL on all sides now. So what about the announcement early this week when Linden announced that it would introduce even more land—which will potentially be the straw that breaks the land market all together. Is this their “consumer” offering—overpriced prims and killing off the island owners who rent land? And then what of Kingdon's statement that the SL audience is getting younger? Is that good news? Or is it just that the older people are leaving? Yeah, yeah enough about Linden Labs already...

In terms of realistic virtual world competitors, SL is still of course ahead?--nope. But the Forterra stuff we saw at the booth look pretty solid and realistic. It is not a public grid like SL, but has all that enterprise-stuff. Main issue is not capability, but price apparently. On the other end of the spectrum are two interesting enough Opensource options: OpenSim and Wonderland (by Sun focused on enterprise collaboration). Check my running list of virtual world platforms here.

But...if you really wanna see some hot enterprise-stuff for 3D and collaboration—Catia by Dassault will show you what it really looks like. PLM is way beyond desktop-sharing. IBM is the exclusive solution provider for this software and it runs enterprises like Airbus.

The other interesting thing to see at the conference were the browser-based virtual rooms. No client to download, they use Flash Action Script 3 to deliver real-time 3D spaces, avatars and chat. Smeet looked pretty good and had a lot of services like money and voip. Then a former Habbo guy started iLemon from his office in China which also looks pretty good (although the clocks on their website are wrong). iLemon's 2.5D virtual rooms looked best.. Electric Sheep has Flock and of course Google is there with Lively. I didn't see the presentation on Lively but chatter from most people that I asked who did see was that Google wasn't putting much effort behind it. But do they have to? Sun btw is only investing 5 engineers in Wonderland and looking to the community for most code.

OpenSim has a lot of potential really. First, IBM is starting to crank up a lot of new code and service hooks. Watch the FRI thing. I also met the guy from TribalMedia SE who started OpenSim. They are now funded by a Swedish company to make OpenSim service company (and maybe sell for $1 billion like MySQL???). I think Linden is in a tough spot on this thing. OpenSim uses their client at no cost. SL must continue to enhance the viewer—and in so doing improves the OpenSim offering. Maybe LL did get it all backwards and should have released the server-side and kept the viewer proprietary? It is really a hard situation because a lot of the issues with the virtual world experience is in the viewer and now Linden has to expose the improvements and then also let people make competitive viewers—and even charge for those licences. But maybe this is what LL will need to do themselves in order to survive—charge for the software more directly.

Second Life needs a “freemium” offering mix probably with a better viewer feature set, more avatar functions/smoother and better inventory control. I bet they could even charge for inventory somehow (like Flickr). I still think the concept of all inventory available all the time, to all people, for free is fundamentally flawed.

Orange (France Telecom) presented their Orange Island experience over the last 11 months. They spent a bunch of Euros on this and only objective was to “experiment”. They weren't too bothered even that they only got a little traffic (100s of av/week). Seems like the experiment was more about how not to ruin their brand in SL—is that possible? And they want to have a look around like Sony did and IBM still does 'cause one day they are gonna do their own thing. And do it way bigger that 4 sims.

A panel on investing in virtual worlds was pretty bleak. Kids/Tween worlds will have a lot of failures as they market still isn't generating cash from traffic and further venturing funding has dismal future.. MMO space is something like $30-40 million to launch a new one (and no one is eager to roll the dice on that. BTW, IBM supports Eve Online—didn't know that. And IBM has a big enough MMO/Game team—or do they just play this stuff?). In general my feeling is that the venture market is turning it's collective back on virtual worlds. But they also in deep reflection time due to financial crisis anyway.

I thought the discussion about the virtual world roadmap were really interesting. In fact, we agreed to host a session at the end of April 2009 here in London. I will post more details about this.

Final thoughts--

* What are virtual worlds really good for? Better question—what is the right content for a virtual world and how does that provide a foundation for an online community? Online community is the hot topic, virtual world is another option for real-time interaction and unique experiences. (Gee..that sounds like a speech I could make with a Barbie girlie?)

* The conference had no technology to link inworld participation or share meeting happenings. Was a big flop to see that not even the conference saw the value in virtual worlds. I suppose not even Linden Labs can figure that out too well—they are harping about a new blog to enhance community and not using inworld as outreach--guess it's not that effective for community afterall.