Future of SL Beyond e-tech (continued)

Our previous episode described a new player the table, Onlive.  Onlive offers the prospect of a major change in the infrastructure used to deliver online games and the virtual reality that they live in.    This episode examines the prospects for this change and some of the futures it may offer.

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OnLive potential: Executive Summary

1. Lower barriers to entry = Major market growth in people and hours online, wider range of demographics, possible success as a web TV channel.
2. Lower barriers to switching = Increased competition, increased use of specialized vendors, increased product differentiation.
3. Major reduction in the network advantages that Linden Labs now enjoys. 
4. Linden Labs could benefit substantially from the increased market, provided it can respond effectively to the increased competition.  If LL fails to respond effectively, it will be replaced by organizations that can.  

How will OnLive work?

OnLive seems to aim toward an aggregator business model (like a food court).  They would offer games from a number of vendors.   They mention “Try before you buy,” so they may plan to offer a service in which you have a trial period, after which you “buy” the game from the vendor at, say, list price.  Then you would probably pay Onlive a monthly service fee for running the software for you and sending you what is equivalent to a video feed of the results.     A parallel service might allow people to rent a game or rent to buy (for the fickle fingered crowed).  

Almost certainly OnLive would arrange for existing users of the game to move to the online service and to come in with their existing accounts.    Since having an account in use probably establishes ownership of a copy, there should be no charge for the game “upload.”    There would still be a monthly service charge.  This arrangement would help to develop a large user base in a short amount of time.  Major game vendors might want to resist, but that would create a major public relations problem for them.  User view is likely to be, “I bought the game.  I have the right to run it on any machine I please.”

OnLive would probably seek to aggregate service over games.  In that model, you use one password to access your account and from that account, you access all the games available to you.   You might also receive just one bill, with OnLive serving as a billing agent for the game servers. 

Technology  

The technology model is similar to web hosting.  You pay somebody to provide disk storage and computer services.    The computer services would be a bit more powerful than in web hosting, but they would initially be similar to the graphics card you now put on your machine (BTW, nvidea is a partner).  The hardware could start with existing graphics cards, if necessary.   The bandwidth requirements are probably less than needed to run a website, since the system is only servicing the subscribing user.  

Users will have the needed bandwidth and computer power.  The sweet spot for those things will be driven by the increasing use of services like Hulu as a replacement for TV over the air of via propriertary cable services.  The main computing requirements are in the cloud.  The system could work on any laptop and probably on any netbook.  Even a smart phone could provide  limited services.

Economics

Ok it can be done.  But can it be profitable at a price people will pay?  Take website hosting as a model.  You can rent a website for less than $12 (USD) per month.    Maybe the cost would be a bit higher with a graphics board or chip.  But compare that with the cost of a gaming computer.  The last computer I bought cost me about $1500.  That would cover, for example, 100 months (8 years+) at $15 a month.  The economic case looks quite favorable.  And that is without considering the possibility of ad-subsidized plans.

Business models

OnLive would expect to get revenue from a monthly service fee and from the sale or rental of games.  The game makers would expect to get revenue in the same way they do now – but with a greatly expanded market.    The owners of major games would probably want to avoid the service aggregator model because it would make switching too easy.  Thus major games might be in separate walled gardens by themselves or with other games from the save vendor, at least for a while.

Second Life and the Open Source Lives (OSLs)

The Lives don’t have software for sale.  They could, however, provide client software running on OnLive instead of on home machines. The user would still pay OnLive for hosting the client and streaming the results.  The revenue streams presently available to Linden Labs would continue to be available, possibly benefitting from increased traffic if Linden Labs could cope with the increased traffic. The OSLs would presumably try to draw traffic by offering some special advantages that fit the interest of particular communities. They might draw revenue from ad sales or from user service charges (for running the cliet servers and interconnection). 

Under an aggregator model, OnLive might make several open source clients and multiple OSLs available to the same account with Second LIfe.  Probably the user could easily switch among the collection of clients and of Lives (SL and the OSLs). That easy switch could have major implications for the future of SL and of the developing OSL’s.  When the switch is at the click of a button, people will do more testing.  If they like what they find, they could shift their business smoothly and easily. 

And that brings us back to the start of this discussion:  Community and Network.

How would the Onlive model interact with the network effect?

“I am not interested unless my friends go there too.”     That is what I said, and I am sticking to it.  But that “unless” shows a lot more give under the OnLive model.  I can easily imagine chatting with my friends in SL when someone says, “Let’s go look at the new Rezzable.  We can all switch worlds in, say 20 seconds.  About the same time it takes to teleport--on a good SL day.   No more effort than dropping over to another sim.  Maybe we won’t even break the conversation, because we may be talking in Skype or Google talk.  (I don’t really need SL voice for talking to friends – they all have my Skype ID anyway.)

Where do we go from here? Tune in next time and see.  Or drop in your own comment and say.  Couple of terms to think about: product differentiation, niche market. 

The music scene in SL.

This Wednesday, JWheels Presents

• July 1st, 5:30pm SLT
• The best in SL entertainment. Every week we will bring you SL's biggest acts all on one stage.
• This week we give you musician  Cosmic Haystack.
• This week at Lauren's Place.
• Cosmic Haystack

Good 'ole Country Bluegrass banjo pickin’ with a Cosmic twist! Jazz/Funk/Rock fusion virtuosity . . . on the banjo!  Impossible, you say?  Open your mind and your ears to Cosmic Haystack!  Taking a traditional musical instrument and warping it around adventurous noodling, Cosmic must be heard to be believed.

Theater scene in SL

Casting Call

Mahana Machinima has updated its casting call for actors in a video.  The call has been distributed through the Theater Backstage notice list.  People can subscribe to that list at the Cookie Visitors Welcome Center.

I GAVE AT THE OFFICE – continues its run.

An original farce written and directed by Lailu Loon
Remaining performances
June  30        7 pm SLT
July  1            7 pm SLT
At the Amphitheater, Ivy Falls