Telecom Media & Technology

Fri, 10/17/2008 - 13:25

In the latest Interfax guest column, Benjamin Joffe, founder of consulting firm Plus Eight Star as well as the Beijing chapter of the Mobile Monday organization, discusses the rise and fall, then possible rise again, of online virtual worlds.

Benjamin Joffe

Shanghai. October 17. INTERFAX-CHINA - In the latest Interfax guest column, Benjamin Joffe, founder of consulting firm Plus Eight Star as well as the Beijing chapter of the Mobile Monday organization, discusses the rise and fall, then possible rise again, of online virtual worlds.

After several years of Second Life hype and reading a recent article by The Economist about Google's Lively (Google's Web-based 3D space), I thought that a bit of analysis would be useful to bring some perspective to the current state of virtual worlds.

Virtual worlds are a fad, they're for pervs and freaks

The "pervs and freaks" comes from a user's comment about MySpace, but it sounded so nice I could not resist sharing it. Of course, uncontrolled environments are fertile ground for primal human instincts (see this "Sex in Lively" article). Second Life proved it before Lively, and more proved it before Second Life, including the Internet in general and even the still standing French Minitel [editor's note - a pre-Internet online system accessible via the telecom network]! But this is not the end of the story, merely the beginning. The thing to understand is what failed before to avoid repeating history.

OMG, I'm in 3D!

First, 3D virtual worlds are hardly a new thing. After they evolved from old text-based, then graphical MUDs (Multi-User Dungeons), services like There.com and Second Life appeared circa 2003 (five years already!). Key issues were generally the heavy client download associated with running the service. Beyond the technicalities, the failure of many brave attempts was generally caused by:

• Poor or absent business models (the "we-make-art-not-money" syndrome)
• Disregarded social features (the "service by geeks for geeks" or "irresponsible freedom" syndromes)
• In some cases, a tendency to reproduce the limitations and frustrations of our offline world instead of solving them (walking hours to get from A to B, low trust, etc.).

Unfortunately, for many virtual world wannabes, the Second Life model seems to have just too many flaws to sustain more than one company (whose key execs have already left - not necessarily a sign of faith in the service). Despite their tweaks and improvements, the various Chinese copycats are having a hard time gathering users and have recorded almost zero revenues. The not-so-well-known Splume in Japan has not done much better, despite a few innovative features and original browser-like approach. Only some Korean services such as PuppyRed, leveraging the digital goods model and targeting a younger generation, seems to be doing alright, though not exactly booming.

Chinese services more or less fall into two categories: Second Life copycats, usually reproducing its fundamental problems (like HiPiHi), or social network-based ones with lower graphical capabilities (such as 1D.com or iPart.cn) who do a better business but are hardly "fully 3D". What is still missing is a service with a low entry barrier, good usability, and that is fun and productive.

VW second coming

The "second coming" of virtual worlds, with services like IMVU [a graphical instant messaging system], Lively or Cyworld 3D in Korea are interesting to look at, as they try to correct some of the issues that crippled or killed previous services. To be honest, in most cases they don't innovate that much at all: IMVU and Lively teams include former There.com developers, while Cyworld 3D, whose purpose is to bring some novelty to a eight year old social network, seems largely inspired by the Korean virtual world for kids called PuppyRed, which itself has been around for some time too.

What we witness today is a gradual convergence of services that used to be disconnected and are now each bringing their own strengths to a larger picture:

Virtual Worlds (exploration / collaboration / creation), mostly created by engineers

• Social Networks (trust / groups / identity), engineers again with a bit more sociology and psychology        
• Online games (graphics / ease of use), the realm of designers and business people

So far, nobody seems to have found the magic formula but at least one model that seems to work well is the "digital goods" model. This one is rumored to having been pioneered by There.com (which introduced its virtual currency, "Therebucks", back in 1998), then adapted by Cyworld (with its "Acorn" currency), which in turn inspired IM service QQ to use its "Q Bi" currency in China and the "Mobile Game Town" service run by the company DeNA in Japan (with its "Mobagold"). There.com people who moved on to IMVU and Lively also took this concept with them, though Lively is still at a very, very early stage of its implementation compared to IMVU.

The next platform war is for the 3D Web
 
I think The Economist has been a bit hasty in its report on Google Lively. To me, this service is obviously an early-stage experiment for the future of the 3D Web that Google has to understand. Google's fundamental positioning is not as a virtual world operator but as a platform. If ads or companies move to 3D, they have to understand how to position themselves and there is no better way than to learn from experimenting. Moreover, the fact it uses a browser plug-in instead of a client download is dramatically lowering the usage barrier and is very much in line with Google's "Web OS" approach. So rather than a virtual world, this service should be seen as a 3D Web experiment, with still much to do (see this Q&A with Lively's experience designer Mark Young). Actually, both Second Life and Google people say that they do not compete.

When all is said and done, virtual worlds remain expensive endeavors. The return on investment of virtual worlds being still unconvincing, investors will have to be very patient as revenues, M&A and IPOs are still distant dreams. Changing the habits of netizens and migrating them to the 3D Web will take years and very few companies can afford to position themselves in that space the way Google does. Microsoft is said to have no strong 3D virtual world plans and Yahoo is very much 2D and a content-focused company, not a platform. Some 3D Open Source initiatives such as OpenSim are getting traction, but they also seem to reproduce many of Second Life's issues. Who will stand against Google to battle for control of the 3D Web?

Presentations can be found on www.slideshare.net/plus8star/. The author can be contacted at benjamin@plus8star.com.

The above is a personal opinion piece by the author. Its publication in no way implies that Interfax shares the views expressed in the article.

About the author: Benjamin Joffe is a renowned expert in mobile and Internet innovation, from social networking to FMC (fixed-mobile convergence) and digital worlds, leveraging over eight years of telecom, mobile and Internet experience in Japan, South Korea and China.
In 2005, he founded Plus Eight Star to bring best practices and innovative ideas from advanced Asian markets to companies worldwide. Joffe is also the founder of Mobile Monday in Beijing, a community of over 3,000 mobile professionals in China and a member of the global Mobile Monday global network to enhance information and connections in the mobile industry.