The many forms of Eric Rice from Lively, all doomed.

As you probably already know, Google is shutting down it’s virtual world, Lively (very succinct notice here).

This is tragic and disappointing.  Despite my negative review of Lively in it’s initial form, I am baffled.  After spending at least two years in largely secret development (making 16,000 options for hair!) it was given only 4.5 months between announcement of launch and announcement of shut-down.  Sure, it hasn’t taken off like a rocket yet, but it’s in beta, with some of the most important features yet to roll out.  In my view, this is about more than just its performance to date; someone at Google either doesn’t believe in virtual worlds in the near term or perhaps more likely, didn’t believe that this particular product has a path to success.

If Google thinks that everything it rolls out has to set the world on fire in its first version and within 4.5 months, it won’t be succeeding with too many new products.

Nevertheless, I think we can learn some lessons from this so rapidly aborted world.

As I wrote when it announced in greater detail, Lively lacked a rigorous plan for success, at least that we could see from the outside.  Here’s a summary.

- It didn’t allow / wasn’t designed for kids under 13, which are the bulk of virtual world users today

-  After kids, the most experimentation with virtual worlds today is in enterprise use, and Lively was also not appropriate for those applications

- Large publishers didn’t want to use it because they didn’t want to scede control of their users to Google (Google log-ins, Google hosting, maybe future Google advertising)

- Advertisers need a huge audeince, which Lively hadn’t yet built

- Web communities that could use virtual environments, even very sticky ones, have a hard time getting users to download plug-ins

- New non-gamer users have trouble navigating 3D, especially with camera controls separate from avatar movement, as just one interface barrier of many

- If you can’t sell virtual goods, you don’t provide the most common incentive for people or companies to build and publish great content

All those rule out most great plans that could have made sense for Lively.  But what was the plan?  From what I can tell, it was to incite user generated content (rooms) that would then get used virally on MySpace.  In terms of content that motivates people to use the product, this looks like:

Google User/Content Plan

This is similar to Second Life in its focus on UGC (user generated content), betting that being on the Web, perhaps tied into social networking platforms and with Google’s existing users, Lively could take off more quickly.

The fundamental flaw was not with this plan, but that the execution of the product was not rigorously designed to make this plan work.  Seed content by professional 3rd parties (step 2a) was very weak - no really catchy games, constant stream of major events, interactive social applications, etc.  The tools for users were not yet well developed, and Google had no advance plan for dealing with the dark side of the UGC coin - porn.  So the virtuous UGC cycle never got going, and users therefore never caused viral adoption.

Beyond the specifics of Google’s example, the lesson is that if you want to launch a successful virtual world today, you MUST pick one of the four following ways to do it.

1.  Follow success, with a competitive advantage.  Today, that means kids’ worlds, since that is the one huge success of virtual worlds (counting MMOs separately).  Take the highly successful model of kids’ worlds, and add a twist - more compelling game play, a few MMO features, tie-ins to interactive toys, better AI characters, plots that follow your TV show, good old fashioned huge amounts of marketing $, or whatever.

2.  Translate success to a new market.  One could take the simple success model of kids’ worlds today and apply them to a new demographic, making the necessary design adjustments.  I think the opportunity is huge today for more success with teens and adults with very simple social virtual worlds around casual gaming and/or social networking - just up what works with kids’ to be demographically appropriate.

3.  Forget virtual worlds, and get there by accident.  This is how kids’ worlds started.  Not from the cadre of virtual world dreamers, but just from creating an app (fun games for kids) and adding a few features to it that just so happen to be features that in total, make the Web site look strikingly like a virtual world.  Who knew?  This is not semantics, it’s a whole different design point of view - creating a property with a user-focused vision that may or may not turn out to be a virtual world in the end.

4.  Strike out in a new direction, with a GREAT plan.  There is the most success to be made in this fashion, but it is difficult to be sufficiently rigorous with the plan and analysis.  It’s not a blind search process, however.

a) Expand the very simple type of diagram above to cover the exact motivation of the user at each key step in the process to success

b) Determine the technical and business requirements for making that motivation extremely high at every single step

This is what Lively needed to do and did not.  It is also what the Virtual Worlds Roadmap effort hopes to help people do (hopefully with some first content up next week).

The lesson is - stop creating half-baked platforms and products that don’t fulfill a complete cycle of user motivation and value!

It is as clear as it can be that a major recession is upon our economy. What is the likely effect on the virtual worlds’ industry? It’s impossible to say, but here are my predictions, perhaps in increasingly speculative order. I’d love to hear any other commentary.

(Picture by Extra Ketchup.)

1. Elimination of at least 80% of Virtual World advertising, marketing, and sponsorship efforts.

Other than a short-lived craze to get into Second Life in 2007, this hasn’t yet been a huge category, with most efforts by brands to market within virtual worlds still considered highly experimental. But the steady increase in campaigns within growing worlds like Gaia is likely to decrease and even more experimental dollars into newer or less Web-based worlds is likely to dry up altogether.

This is the most predictable effect of the downturn - the Wall Street Journal has already issued this prediction in an article this week by Emily Steel. (Since the Journal isn’t freely available, here’s a link to a reporting of the article by Jeremy Liew on the Lightspeed Ventures blog.)

I continue to believe that without a doubt, virtual worlds will become the most effective advertising medium that has ever existed. But innovation in advertising is cyclical, relying on the extra $ thrown around on poorly-understood experiments in good times. So the likely economy of the next two years will postpone the rapid development of this inevitably huge advertising category.

2. Enterprise use of Virtual Worlds will Stagnate.

This may be more controversial as a prediction, but I feel that the vast majority of the current efforts in enterprise use of virtual environments is still well in the experimental R&D phase. In tighter times, corporate budgets will focus on proven value.

But what about virtual worlds saving on corporate travel costs? The problem is that, just as with the effectiveness of virtual world advertising, this is a prediction for the future, not a sufficiently proven reality of the present. I don’t think that current virtual world tools are sufficiently feature-rich to be effective in widely deployed corporate use cases. They point the way but are not there yet. So who is going to pay for the couple million dollars of feature development and customization that is needed for most use cases when the success is uncertain? Very few if any in this financial environment.

$50k experimental projects will mostly disappear with the experimental IT budgets that pay for them, and no one will get to the $2M wide deployment stage.

Remember, the bar is not even that a virtual meeting is useful, but that it’s so much more useful than WebEx or a conference call to justify the learning curve on very new software and the expense of setup and operation.

3. Kids’ Worlds will Continue to Grow at a Healthy Rate.

It’s not all doom and gloom in virtual worls!

Virtual Worlds aimed at tweens and younger kids are the first truly successful consumer application of graphical virtual worlds (beyond straight-up MMOs), and they’ve achieved success in time to be in a growth position during the recession. This is not to say that they won’t be affected - the lower risk tolerance of the downturn will lessen some of the bubble characteristics of this genre.

I predict that rather than having 100 copy cat kids’ worlds constructed for $1M a piece over the next 18 months we’ll see more ho-hum kids’ worlds fail and the best continue to grow. We’ll still see many new kids’ worlds come out with production values of $2.5M to $6M through launch. These will rapidly increase the graphical fidelity, depth of game play, and richness of features as compared to the most successful kids’ worlds today and as a result see better financial metrics (e.g. more subscribers, lower churn).

The fuel behind this continued investment will continue to be a combination of subscriptions and microtransactions, with the US market still tilting more toward the former and some other markets tilting toward the latter. Sure, some consumers will think twice about signing up for a six month subscription on-line for their kid or purchasing another pack of trading / virtual currency cards on every trip to the store. But many other consumers will see the many hours their kids’ play with these properties as inexpensive entertainment compared to options they may have indulged in previously.

In one way the economic downturn will be good for this category: limiting participation to major brands and the best capitalized independent efforts will avoid some of the hype boom and bust that was being set up by all of the “me too” efforts to publish kids’ worlds that were not going to be successful anyway. Instead, we’ll see some new big hits, steady growth in the category, and perhaps in 3-4 years some longer-term category leaders emerge as the WoW or MySpace of kids’ worlds. I could even see new teen worlds taking off during this period, but this is less likely primarily because the capital to create them will be harder to come by.

4. Many Startups Will Fail

It’s just an unfortunately reality that investment capital will be harder to come by at least to some degree over the next two years, M&A will be slower, and fewer business models will produce much revenue. It seems inevitable therefore, that many virtual worlds startups that might have succeeded in better times will simply run out of capital.

5. Virtual Conferences?

This is one of the few new uses of virtual worlds that I could see conceivably taking off over the next two years. I’d put the odds against it, but

a) Conferences suffer greatly in times like this, which might make the companies that run them more likely to take what is seen as a financial risk in allowing less expensive virtual participation.

b) I think that the technology exists today to set up virtual attendance of real-world conferences in a way that has some economic value more cheaply than one can for internal enterprise meetings or training.

6. A new Virtual World Winter?

I’ve written before about how virtual worlds have had periods over the last 20 years of huge amounts of investment and then nearly complete bust. Are we going to hit another bust?

I actually don’t think so. I think we may see a number of platform companies fail as unfortunate startup victims of the times. But the kids’ world success and the broader if still niche adoption of some worlds like Second Life that can sustain themselves financially has I think gotten the industry just barely far enough that it won’t nearly disappear again.

If I’m wrong about #3 above, though, then we could see another several year gap in virtual world innovation.

What do you think? Disagree with any of the above or have any other predictions? Any virtual world applications come to mind that you think will grow rapidly over the next two years?

Now, if I could just sell these virtual credit default swaps I’ve been holding on to…

The following was presented as a part of a keynote at the Virtual Worlds Expo in September, 2008 in LA

Good Morning.

[some quick references to the crowd’s lack of screaming and flag waving, which I is a serious disappointment compared to all the speaches being given these days at the political conventions.]

If I did have the skills of a political party leader, I would be using them all now in the form of a timeless political tactic – namely, instilling fear.  That’s not going to happen today.  As it is, I hope to convince you to at least consider being concerned, and point out what I think should be done about it.

Consider this.

How many of you here at this conference today attended an Avatars conference in 1996 or 1997?  Hands, anyone?

One or two.

So not having been there, you may not appreciate the fact that with only one material difference, we as an industry have been in exactly this position before.  I don’t have time to review the history of virtual worlds, but here are a couple highlights.

The idea of a virtual world is old, even centuries old depending on how you define virtual world.  But there’s no doubt that what we’re here to talk about today existed by the late 1980’s.

Here are some images of Habitat that are about 20 years old.

(All of the historical images included in this post provided by Bruce Damer.)

20 years!

This was a graphical, social virtual world, over the internet, published commercially for consumers, with virtual goods and a virtual economy.  And it wasn’t the only one of its day.

I don’t have time to tell that story, but skip forward a vast 7 years in the history of the Internet, to 1995, and we have an explosion of consumer virtual worlds.  All of those pictured here below and others were launched within 2 years.  One of these is alive and well today to my knowledge; Active Worlds is up there – some of the others can still be logged into and have a handful of dedicated users.

Who among you have used any of these platforms other than Active Worlds?

Just a few – about what I expected.

Why is that?

Why, out of so many of us in this room who are so motivated by virtual worlds to be here today have entirely missed the birth and death of so many virtual worlds?  One can immediately conjecture many answers to that question, and unfortunately I don’t have the time to tell the full story.  But let me first assure you that the answer is not as simple as you might think.

Second, let me give you just the outlines of why this is a meaningful issue.

These worlds were not crude compared to what we have today.  The graphics might seem laughable, but you can guarantee that the graphics we have today will practically make us ashamed of ourselves in another 12 years.

When AlphaWorld first launched, it was entirely usable within a Web browser.   These worlds worked just fine over the Internet connection available at the time – they didn’t need to wait for widespread broadband.

Users could make their own user-generated content.

Traveler had lip movement that in many ways made it a more engaging medium for virtual meetings than most of what we experiment today for that same purpose.
These worlds were NOT underfunded – in the mid 1990’s, over $250M of Venture Capital funding was invested in virtual worlds.  Including both VCs and some pretty large chunks of change from companies that are in the room today, like Intel, Microsoft, and NTT.

$250M!

And there WERE users.  In fact

A larger % of US internet users were in virtual worlds in 1996 than today.  In fact, the only reason the comparison is close is the under 12 year old crowd of today; outside that demographic there is no one in VWs today by comparison.

Of course, the early Internet users of 1996 were the sort of early adopters more interested in VWs, but don’t fool yourself that the comparison isn’t meaningful; in 12 years we haven’t figured out a way to get the active user base of virtual worlds to break out of that same early adopter crowd other than in children.

Think about it – in 1996, virtual worlds were MORE advanced than the then-pre-cursers to Instant Messaging, virtual worlds were ahead of Social Networking, ahead of personal Web cam use to generate streaming video – all of which have exploded as forms of social communication on the Web by comparison.

In 1996 virtual worlds had an industry conference, tons of venture capital, a rapidly growing potential market of internet users in general, with plenty of groups like college kids ready to start spending tons of time communicating and sharing content on-line, and a decent initial % of internet users beginning to be hooked.

What happened?  Why does almost no one here today even know about anything that was happening then and why is it the case that almost no one involved in 1996 is still here in the industry today?

Why?

At the very least, I think you should agree that we should understand what happened so as to avoid the same fate – another long winter in the supposed progress of virtual worlds, and more bluntly – the failure of almost all of the efforts and companies involved in the industry at the time.

One bit of good news – I believe that we as an industry have one signature accomplishment of this decade that will prevent us from entirely repeating the past complete meltdown – that of children’s virtual worlds.

We have seen not just a fad, but the birth of a mainstream medium – in fact I believe that we’re seeing the beginning of the replacement of television as the primary digital entertainment medium for children – I believe that that is permanent.

But we as an industry can do one of two things.  We can spend the next 15 years tracking the age of these users and maybe, if we do it right, provide them virtual world applications to grow up with into their professional and family lives as adults.

That puts nearly pervasive adult adoption of virtual worlds at 20 years from now, if not more.

Or we can pick the other alternative.  I label this other alternative, the alternative in which we can have hope of success in a reasonable time-frame…really our only hope…

[yes, the irony here, unlike with the phrase it is inspired by, is intentional]

This may be funny, but it is also serious and important.

Don’t get me wrong, some of my best friends are geeks; I certainly like geeky.  Our innovation is geeky.  But that should not be the impression that end users get from our products.

At a time when online dating is no longer geeky, when social neworking is getting into the mainstream of every on-line demographic, when on-line casual gaming has huge time spent across a wide age range, virtual worlds do not inherently have to be perceived as geeky by consumers.  They aren’t necessarily geeky.

Let me make two quick points on where I think front of this war between geekiness and what can make us successful currently exists.

First, there are large feature gaps between the very general-purpose virtual world platforms that exist and the features that are needed for any one application.  For example, I’ve created the first draft of a white paper on live virtual events.  I think that this conference, for example, should sell virtual attendance passes.  I think that would broaden the reach of this conference significantly without cannibalizing the audience that wants to come here in person.  However, there is no virtual world platform today that has the features built in that would really make that virtual attendance far more valuable than the cost to attendees – in $ and in time and frustration.  That’s just one example and I won’t dwell more on it here.

So the conclusion to that point is that if you are publishing a virtual world or building a virtual world application, be ready to spend more of your time and $ on adding specialized software features to a virtual world platform for your use than you do on the content.

Second, I’ll give just one more concrete example.  Moving around in 3D with multiple degrees of freedom for you avatar and for your viewpoint or camera is a skill that only video game players already have.  Requiring that makes most virtual world applications dead on arrival in my opinion.

But note that we’ve trained perhaps 250Million of the 300 Million Americans how to navigate via point and click.  Whether clicking a link or controls for video or starting software, that is the familiar interface.  Show me the virtual world application that is built entirely from point and click where it is NOT a click every time you want to turn or move slightly, but where what you click on are the end goals and the sub-steps are automated, and I’ll show you a potentially very successful virtual world.

What I mean is, when I turn to look at the screen, I’m not thinking about rotating my head around and then up, I’m thinking, oh, what was on that slide again, let me see?

Those are just two specific points of many.

And just because kids’ worlds have in some cases been successful doesn’t mean that this is not relevant to that genre.

The booming success – with not just user numbers but financial return – of kids’ virtual worlds did not come from within this industry.  It did not come from people who were attending the virtual worlds industry events of the 1990’s and it didn’t come from people who were attending this conference before now.  It came, and of course we mainly think of Club Penguin and Webkinz and perhaps Neopets, from people who were creating kids on-line games or other properties and happened to put some simple characteristics of virtual worlds in place.   They happened to unlock the added value of virtual worlds in the simplest way possible and reaped the benefit.  Not geeky.

Kids’ worlds have started by being very 2D, but the competitive pressure of that industry will push kids worlds into way more sophistication very quickly.  So this is relevant to them as well as to all of the other aspiring as-yet-unsuccessful VW applications, from meetings to retail to entertainment.  Especially when in 3D, I should be clicking on “go join that conversation”, and the system should take care of my avatar movement, the camera angles on the people in the conversation, and so on.

Unfortunately I don’t have time to give a full explanation here.  But I have looked and thought about and talked to many people more fully about the virtual worlds industry.  And I can tell you, that outside of very simple virtual worlds for kids’ entertainment, we have not yet shown any major conclusive success, and that that is due precisely to way too much geekiness shown to and required of the end user.

But don’t give up!  At the same time, we have all the technology we need.  We have all the tools we need.  This doesn’t mean publishers should shy away, it means we should be spending our time on the right work.  If we don’t, this industry absolutely will go through another several year winter and we’ll be looking at 2015 before we get very far – I guarantee it.

So in conclusion:

1.    There is a session tomorrow on the Virtual Worlds Roadmap, an effort to get more rigorous with this general type of thinking – either come or check out the Web site that will launch tomorrow; http://www.virtualworldsroadmap.org

2.    Join my Multi-Global War on Geekiness.  It’s not about eliminating the geeks, it’s about keeping them completely hidden from our users.

It’s an important cause; please help.

Thank you.

There is a “world” bias within the “virtual worlds industry” that is delaying the mass-market success of this new medium.

At it’s core, the issue is this. Are most users going to

1. go into a world that can be many things, and then say “what/who is there here that I’m interested in and how do I find it/them”; or
2. be doing something on-line, find out that they may be able to do it more effectively or entertainingly via a virtual world experience, and try out that one experience.

I believe that at a minimum, 95% of those over the age of 18 will begin to use virtual worlds via path b. This has many ramifications; the following is just one that I contend derives from the point above.

Several “virtual worlds on the Web” companies are taking the approach of being a vast network of virtual spaces that anyone can embed on their Web site. This is very attractive from the point of view of the startups or other companies (e.g. Google) who are following this strategy and their investors - they get a direct relationship with someone else’s customer, signing them up for their network and their advertising. It’s a sneaky way to collect eyeballs in a medium that is predicted to have unprecedented stickiness and advertising value. It’s a classic VC risk to get to a billion dollar valuation.

We can call this the Meebo strategy after the company that is starting to employ it very well with synchronous text chat on Web sites. I am skeptical that Meebo’s value will last for long, since text chat is well understood, there will be competing tools (as with Web page forums) that offer the same service for less greedy business models, and at least mid and high-end publishers will likely want to reclaim their relationship with the user and their control over a very simple form of advertising. But maybe I’m wrong. What I am more confident about is that getting people over the age of 12 to use virtual worlds on Web sites is vastly different in 2008 than getting them to use text chat.

With virtual worlds, I predict that the Meebo approach will never get off the ground with the same mid and high-end publishers, at least to the point of significant profit for those pursuing it. If you want to put a virtual space on your MySpace page, then sure, you will grab a free plug-in or widget of some sort. But to get beyond a throw-away experimentation phase (think last year’s marketing efforts in Second Life), Web publishers will need to see significant use numbers for any virtual space that they devote considerable page real-estate to and drive users toward.

And in-turn to achieve those ROI-producing numbers, multi-user virtual spaces on Web sites will need

1. significant customization to fit the audience and context that they are embedded in; not just customized graphics and interactive objects, but extensive, separate feature sets;
2. tight integration with the rest of the web application and experience that the site provides

Take retail, for example. As long as virtual shopping for real-world goods means going into a 3D store that is completely separate from the (rest of the) Web page, whether in Second Life or Google Lively, it will remain the “toaster with wi-fi” of our industry. It uses cool new technology, but doesn’t gain any use-case advantage.

Nevertheless I believe that it won’t be many years before more e-commerce is done by consumers using virtual spaces than without using them. It’s possible that you could provide a limited customer service benefit by including a simple virtual space built on today’s Vivaty, Lively, or ESC’s Webflock for that matter. But to move the needle on e-commerce done through your Web site by incorporating a virtual space, I believe that requires a whole new type of Web site; a complete redesign that blends 2D search, display, and transactions with 3D (or 3D-ish) browsing, social interaction, and live customer service. This will not look like a Web page of today, and it also won’t look like a Web page of today with a box stuck on it that is a virtual space using a 3rd party network.

And this isn’t just for functional applications like shopping; thinking about making virtual spaces successful within purely social Web sites leads to similar conclusions, in my view.

Fundamentally, I think it will be a long time before the majority of Web users will think of themselves as belonging to a virtual world, or having a consistent virtual identity that they trot across the Web. Maybe 15 years. And the only way we’ll get there is by sneaking them into it unawares, one application at a time. Users of all types ARE ready today for very easy to use virtual environments, but the value they are ready to receive is embedded within a community, site, or application on the Web.

The point: I don’t see large-scale success coming from getting users to sign up to a virtual network of spaces and surf from space to space. I see millions of users beginning to use virtual spaces as a part of vertically integrated sites and applications. Therefore, there isn’t much value in those networks, and their 3rd party registration and lack of customized flexibility is in fact a hindrance.

In a way it sounds like I’m arguing for walled gardens. But in fact, what I’m saying is that the wall between the virtual spaces and their context on the Web is a vastly more important one to break down than the wall between different virtual spaces.

We need to connect virtual spaces to the rest of their context on the Web - vertical integration; not connect them to each other, horizontally integrating them into a “world”.

I don’t usually blog specifically about ESC here, but I’ve had a number of people recently ask what ESC is focussed on these days, and today we’ve made an announcement about one of our initiatives. You can follow ESC news and its thinking on virtual worlds at the aggregate Sheep blogs here.

The Electric Sheep Company has for 3.5 years now been a company dedicated to bringing about the mass adoption of the metaverse through building virtual world applications. We’ve built considerable expertise through building applications for consumer entertainment, marketing, enterprise communication, recruiting, R&D, and other purposes. We’ve learned how to design the right experience for a particular audience through the use of interactive tools available, and keep learning with every project.

Creating new technology has always been a key part of that process. Because virtual world software is generally in its early stages, we often find ourselves extending it to attempt to accomplish what we need to. Second Life in particular is a fantastic platform for experimentation; our very first consulting project was building a search tool for Linden Lab, and in the last 3 years we built quite a bit of software connected to Second Life.

Last year we made a major first attempt at overcoming usability barriers in Second Life by creating our own downloadable viewer and launching it as a part of the CSI:NY in Second Life project. While that viewer was only a first step, it caused us to conclude that without more access to the server side of that platform, we weren’t going to get the feature set to a point where it was complete for any specific mass market virtual world application that we believed could have near term success.

That thinking extends across the virtual world technology landscape, as I’ve written here - considerable amounts of technology have been built over 20 years, some of it great, but from my point of view we remain without the feature sets needed for most applications that are likely to quickly obtain ten million regular users outside of the under 13 year old demographic.

With that in mind, one of the things ESC has been working on is software designed to fulfill some light-weight virtual world applications on the Web. We’ve announced today our WebFlock application; a tool set for embedding flash-based virtual spaces within Web sites and integrating those into any existing Web applications.

This isn’t a consumer virtual world play by ESC; rather we’re adding to the roster of virtual world tools available for anyone creating a consumer experience, and we think this tool will be a great fit for a set of use cases that isn’t currently well served. Primarily we see it as enabling virtual spaces for casual audiences who are already coming to a given Web site. WebFlock allows for taking a community of interest, whether around a movie, TV show, sport, pop culture, etc. or around an activity, like dating, and adding the core value of virtual worlds - synchronous experiences where users feel like they are in a space together. We’ve announced that we’re using WebFlock to create an experience for Showtime’s The L Word, and we have other projects underway as well, from simple promotional spaces to entire new virtual worlds that are based on WebFlock.

ESC is continuing to perform projects on any virtual world platform. We typically are hired in part to help organizations choose what technology stack makes the most sense for them to use. I certainly continue to believe in the power of 3D, for example, that would lead certain use cases toward the downloaded virtual worlds, including the new crop of 3D Web plug-ins.

For many of the potential projects we encounter, though, we are excited to now have what we see as an optimal tool for creating an entirely white labeled (no 3rd party network users have to sign up for), and no download/install/plug-in virtual experience that can be highly customized and woven throughout a Web application. We believe this will quickly help spread virtual spaces around the Web. As we’ve watched and been a part of the latest spurt of growth in virtual worlds, it seems to us that one of the most important ways to move the industry forward is through bringing large audiences into virtual worlds one step at a time, which means no barrier to entry, clear relevance to something they already are engaged in, extremely easy interfaces, and clear value for their time. Those have been the goals driving the WebFlock feature set.

ESC looks forward to not only using WebFlock to create such virtual world applications, but also in making the software available for other companies and studios to use and customize themselves.

Of course if you want to know more about WebFlock or ESC’s services across any virtual world technology, please contact us.

I’m thrilled to see Google announce their long-rumored virtual world technology. This will cause all the more companies to look into virtual worlds seriously, and the platform, with no license costs or hosting fees will be great for experimentation. (And I’m also thrilled to pay homage via the portrait below of the former ESC futurist, Jerry Paffendorf, who has been attempting to taunt Google into virtual worlds for years via bold fashion statements.)

(Picture by Annie Ok.)

What causes me to be skeptical about the likely success of Lively is that I can’t tell from the outside that there was a “Roadmap”-like logical exercise behind its design. Was there a need for particular applications identified that would have a competitive advantage by using virtual world technology and then product design and featured decisions made based on the use cases for those applications?

It may be that there was, although the typical characterization that Google acts as highly talented engineers creating interesting and innovative solutions but without business direction would predict otherwise. ESC is a company always in search of better tools for any virtual world job; therefore we would love technology that opens up new use cases. Here’s the results of my thinking on the case for using Google Lively.

• By far the most active part of the virtual world industry is in entertainment for tweens. My understanding of the Google Lively terms of service as well as the feature set and structure is that this demographic is not supported and likely won’t be soon.

• Significant experimentation, at least in the form of many small scale projects, is being done by companies looking to use virtual worlds inside the enterprise for meetings and training applications. These companies all tell us that they want to host the virtual world inside their firewall and in many cases customize the software; those actions are not supported by Google Lively.

• Large media companies who are publishers of virtual worlds, including efforts to expand beyond the tween demographic, have told me directly that they are not interested in having their work in a new medium hosted by Google; they fear that they’ll lose more advertising models to Google down the road.

• Advertisers thinking of using virtual worlds want one of two things: either a) execute a great marketing effort in a virtual world that already has a lot of eyeballs that they can easily get in front of, or b) an experience they can easily drive their own traffic to that adds to the effectiveness of their other marketing expenditures. On a) Lively doesn’t yet have users (obviously they just announced, so give it some time and we’ll see), and on b) Lively requires the installation of a plug-in, which even the most enticing ad just won’t get that many mainstream users to install in order to interact with a brand on-line.

• There are indeed many Web sites that have large communities, but all but the very most tech savvy and fanatical communities (MLB comes to mind as a very rare counterexample) also see huge drop off for any activity that involves installing a plug-in or registering for a 3rd party registration system.

• A significant portion of virtual world efforts currently underway are built around the ability to sell virtual goods as their primary business model. This doesn’t seem to be supported currently in Lively - of all the shortcomings listed here, I’d assume that this one will be over come soon, but still may take a while to set up since the Google Warehouse doesn’t currently seem to support virtual good sales.

All of this would seem to indicate to me that Google Lively might end up being another Google Video, at least in its current direction.

That said, it should be noted that Google executed very well on what they chose to pursue, and the unpredicted could happen. One of the best things for innovation is to have free tools to play with, and this is a pretty major addition to what aspiring publishers or entrepreneurs can easily use. Second Life was a major innovation in its ease of 3D content creation and scripting; that certainly got more of the latest virtual world party started. Google Lively is a major step forward in having a space on the Web with free hosting, industry-standard content formats, and lots of available content via the warehouse.

The completely critical factor in Lively’s potential success is adoption of the plug-in. Google Earth and the Google Toolbar have taken years and in the latter’s case a lot of marketing dollars to get to modest usage (the installed base is large but the use doesn’t seem to indicate truly mass adoption, from my point of view). It may be that with ties to social networks and significant effort Google can work its way up over the next 3 years to mass adoption of its plug-in - that would be a HUGE step forward for virtual worlds. I’d love to see it happen.

But given the points above, I don’t think that will be an easy path; publishers aren’t going to throw all their users at it any time soon. My bet: other companies come up with the perfect virtual world applications, and Google eventually acquires some of them.
If you have any insight into great applications for Google Lively, I would very much love to hear it!

Forrester, publishers of business and technology research, recently published “Web3D: The Next Major Internet Wave.” I wish it were freely available so that I felt in the clear to dissect it in great detail here, but understandably Forrester has to make money by charging $279. Here is a little free commentary on the report, though.

The first half of the report is not interesting to those of us in the industry, as it’s a very high level overview of some of the applications of virtual worlds that will eventually be used in enterprises. You know the drill - in 5-7 years (it’s probably been 5-7 years for 15 years now) companies will be more innovative and efficient by using virtual worlds for training, simulation, improved remote collaboration, 3D presentations of data and prototypes, and remote sensing and control of infrastructure. While many of us could write a version of that content in an afternoon, if you need a renewed tool to get someone outside of the virtual world industry to take these sorts of ideas seriously and a list of topics their enterprise should be thinking about, point them to this report.

More importantly for our topic here, I was pleasantly surprised that the report spent a portion of its limited scope on doing some initial roadmapping. The thesis of this portion is:

“Web3D will evolve during the next five to seven years from an immature emerging market to a standards-based, interoperable global environment — assuming that gating factors are addressed (see Figure 3). “

Forrester researchers, led by Erica Driver, concluded that the most likely scenario for the future is one where open source projects, standards, and collaboration between technology providers will create a compatible global virtual world, or Web3D. More importantly, they contributed a list of what they see as the major barriers that must be overcome to reach this point, including

• improved software interfaces and new hardware-based and mobile interface devices
• standards, such as for servers, client software, avatars, profiles, inventories, animations, scripts, and identity

Less likely, but the main alternative described in the report, is that proprietary walled gardens are most successful, open source projects do not provide a layer of compatible underpinnings, and therefore innovation is stunted, taking additional years to achieving great value from virtual worlds.

As you know if you heard my talk at the Virtual Worlds 2008 Conference, I think that these are not actually alternatives, but that we are in for both of these scenarios simultaneously over the next few years. Because gaming, social networking, and today’s prototypes of virtual worlds are all combining, we are likely to have a blurred spectrum from today’s fully proprietary, big budget MMOs, to standalone virtual worlds that may just use standards for one or two features for the benefit of security or cost savings in content creation, to the 3D Web where open standards are used to publish virtual spaces across millions of Web sites.

So as with determining the question of “when will application X of virtual worlds take off”, which ends up being a complicated analysis of when an array of technology features will arrive in compatible ways, the realistic answer to “proprietary vs. open Web3D” is much more complex. I see one of the tasks of roadmapping the virtual world industry to be taking each type of virtual world, or each virtual world application, dissecting BOTH the technology required and the business environment in which that application will likely come to market, and then making an educated guess as to how proprietary vs. standards-based that virtual world application is likely to be in its first successful versions.

Some applications will surely be walled-garden, but that doesn’t scare me as much as the Forrester authors seem to have been because I don’t see that as preventing a wide swath of virtual world potential being more compatible.

So stay tuned - as I try to come up with more roadmapping content here, hopefully we’ll get to the bottom of such questions - at least as best we can until reality plays out and shows us where we’re wrong.

Almost regardless of what virtual world experience one wants to create, there exists no technology today that can support that experience really well straight out of the box. Whether creating a 2D flash virtual world for kids, 3D enterprise collaboration space, or anything in between, you have to select a technology stack among a rapidly evolving and imperfect set of choices based on the features you need and then perform the software development to put those pieces together and fill in any gaps.

As an introduction to that process, ESC has written a white paper, “Technology Evaluation for Marketing and Entertainment Virtual Worlds” on some of the technology choices available and some of the topics one should consider when picking among them. This is written with entertainment virtual worlds on the Web in mind, but much of the content is relevant to other situations as well.

To get the white paper, please fill out the form on this page and it will be e-mailed to you.

More specifically, here’s what you’ll find in this draft paper:

1. The near-term evolution of virtual worlds can be seen as the gradual intersection of multi-user gaming, social networks, and today’s virtual worlds. One of the ramifications of this convergence is that future VWs will gravitate toward a new place in the “Engagement Plane”, as explained herein. I’d be very interested in any commentary anyone has on extending the “Engagement Plane” analysis;
2. A list of the typical items that incur cost when one is creating a virtual world;
3. Examples of design trade-offs considered when picking & creating a virtual world technology stack;
4. Feature and performance criteria for virtual world technology choices;
5. A high-level summary of how some of today’s technology options compare with that feature and performance criteria list;
6. A long list of other topics worth considering that are not otherwise addressed in this report.

Please use it and let us know how it can be improved!

This blog will be discussing the current and near-term state of virtual world technology: the wide array of technologies that exists, what those are good for in combination, what gaps can easily be overcome to achieve useful applications. It attempts to create a roadmap of what efforts are required to achieve various parts of the truly huge potential value of virtual worlds. While the content here will focus most often on technology, it is meant to summarize the technological details in a form useful for making business decisions.

Linked below are the presentation slides I used at the Virtual Worlds 2008 Conference in New York last week (April 3-4).  As soon as I get the audio from the conference organizers, I’ll put a more useful post here with a voicethread of the talk.  Also coming shortly is the ESC whitepaper comparing some virtual world technology choices - check back later this week.

See the slides on Slideshare

Download as PDFs from Slideshare

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The Electric Sheep Company creates Web-enabled social and virtual world experiences. This blog is written by many members of our team, and contains a mixture of corporate messages and individual opinion pieces. To learn more about ESC, please visit our website.