I'm a partner in the advanced analytics group at Bain & Company, the global management consulting firm. My primary focus is on marketing analytics (bio). I've been writing here (views my own) about marketing, technology, e-business, and analytics since 2003 (blog name explained).
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Congratulations to my good friend Kevin Kelly, who's had a mission of helping others, the imagination to see a better way, and the guts to actually do this. Kevin and I worked together a while back at ArsDigita. I wrote recently about Kevin's efforts to go beyond some of SL's limitations with another venture of his, 500 Mirrors. "Reality, Virtually" is his very pithy description of what he's trying to achieve.
I connected recently in NYC with my ex ArsDigita colleague and good friend Kevin Kelly. Kevin is (among other roles) the CEO of 500 Mirrors, an enterprise-class virtual world platform provider, and was in town for the annual VirtualWorlds Conference at the Javits Center.
For the virtual worlds crowds, these are dark days, not unlike what things were like for the web generally in 2002. After flying high in 2006 -- including making the cover of Business Week -- Linden Labs' Second Life, the poster child for the category, has hit rough patches on several fronts, including usability and, security, and scalability. Electric Sheep, the leading interactive agency helping corporations build and pimp out their VW experiments, recently cut back its staff significantly. And as most of us have seen, even mighty IBM, the corporate pied piper of the VW movement, has been advertising against its own efforts. The remaining bright spots in the "classic" rich-client VW world these days seem to be in applications for kids: Webkinz, Club Penguin, Habbo Hotel -- virtual babysitters for kids that parents are willing to pay for, perhaps partly as diversions to keep them away from first-person shooters, MMORPGs, or perhaps as training for earning the big bucks playing WoW. Though 1300 people registered for the conference, things seemed quiet even for the cavernous Javits, with few attendees from big-name companies/ brands in evidence.
My overwhelming impression remains that this is an industry whose technological reach and ambition greatly exceed its grasp of imaginative use cases for which this medium is uniquely suited. Kevin and 500 Mirrors' CTO and founder Bob Flesch get this in spades. Kevin tells a story of a recent conference in SL that illustrates the state of things:
500 Mirrors' name reflects an approach to scalability it has developed that has effectively solved population limits for any practical enterprise and even consumer scenario. (Proof comes from production instances that unfortunately Kevin can't disclose without unpleasant consequences.) On the usability front, Kevin and Bob are focused on providing more by enabling less -- pre-scripting movement sequences to get someone into the right place in the right space, for example, or by turning off flying, or by simply making it impossible to get trapped in a corner. Finally, since each instance they set up for a client is isolated (whether hosted by 500 Mirrors or installed behind a client's firewall), attendees can't jump out to inappropriate places, and intruders find it harder to get in.
But the biggest insight comes from conceiving of use cases that make sense, and Kevin's got a separate business going that's nailed one of these. More about this in an upcoming post...
Things are booming. Nearly US$5M exchanged in January, up from US$235k in October 2005.
With the data provided by Linden Labs linked from here:
http://blog.secondlife.com/2007/02/09/state-of-the-virtual-world
-%E2%80%93-key-metrics-january-2007/
(The comments on this post are interesting, BTW)
I plotted this:
Short version: Since October 2005, 40x more folks, each spending 1/6 the hours, but exchanging 3x more money per hour.
Postscript: of course averages lie. There are sure to be massive concentrations in spending, both in terms of who is buying (big businesses experimenting) and what is being bought (land, skins). And these concentrations could be hints of a speculative bubble that will pop at some point, just like they do in the real world. After all, what if big businesses buy islands and no one visits them? They're unlikely to invest further, at least in the short term. And what if users buy cool outfits, and still can't make friends? Maybe they cash in those Linden dollars, buy some Ben & Jerry's, and crawl back to real world Saturday nights watching Love Boat reruns. At least, until a Dale Carnegie for the 21st century emerges to help us with our virtual world social skills.
Perhaps in upcoming releases of such data, LL could include some of these "who's buying what" stats? Won't be long I'm sure until we see firms cropping up that do all sorts of analysis on the SL economy. (Related issue: if economics is "the dismal science" in the real world, is it any cooler in virtual worlds?)
