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Virtual Worlds, Part the Second
By Jon Menaster | April 28, 2007
So you’ve tried Second Life. You know about Sony’s upcoming Playstation Home. You think the idea of hanging out with your friends online in a virtual environment that you may or may not be able to create sounds like fun. Well, what’s the other side of the coin? What’s the business and monetary part of online virtual worlds look like? That’s what this post is all about.
Second Life is the more established of the two (Yes I’m ignoring There and a few other worlds, there’s no time man!), so let’s look at SL first. The blog Second Life Insider tracks the daily movements of money on Second Life, and for April 26th $1.2 million US dollars were spent, and $30,000 of stock was traded on the WSE (World Stock Exchange). Wow. That is unbelievable. Where do they come up with those numbers, you ask? On the Second Life’s official Economic Statistics page, of course! Those numbers alone should make businesses stop and take pause, if nothing else.
What are the business uses of Second Life? Well since everything is user created, there is a market for clothing, items, and other do-dads that have been designed by builders. Several shopping websites have been setup, that can take dollars, transfer them to Lindens (The official currency of Second Life), pay them to the seller, then facilitate the transfer of the purchased item to the Second Life user in-world. One example of these is SL Exchange. One interesting item would be the Virtual Reality Room, which in essence is just like the Holodeck on every nerd’s favorite show, Star Trek. It allows you to load up any type of environment you can think of, just like a Holodeck. Wired evan wrote an article entitled “Second Life’s Must-Have Stuff”, so people are definitely making money that way. Even American Apparel is getting into the clothing on Second Life act, opening up a store in the Linden Labs world.
Besides offering goods, one can offer services. This is where most of the companies are currently making inroads into Second Life. For instance, H & R Block even bought its own island and created a “virtual tax experience” where people can go for free tax information. They can also purchase a discounted version of the company’s “Tango” product. I prefer swing dancing, myself.
So who else has shown up? Scion released a virtual car into Second Life to promote itself, along with Pontiac and Toyota. Coldwell Bankers has entered Second Life in an effort to get into the online real estate business. This really is serious stuff, and companies are spending a lot of money to get things going online, although it pales in comparison to traditional advertising outlets. Maybe that’s why it’s so popular! (As of today, the LindeX (the online currency exchange over at Second Life) shows a ratio of 267 Lindens to every dollar. Pretty soon Second Life is going to have a GDP that will rival small countries!)
Sony’s Playstation Home has yet to be released, so I’ll just be touching on it briefly. It’s scheduled for release in Fall of 2007, and will be available as a free download for PS3 owners. In Second Life, you must pay a monthly fee to own any land; I wonder if Home will be the same. Right now, the biggest difference to me is the space in which you enjoy each virtual environment. Second Life is only available for computers, and as such is usually enjoyed in the comfort of your bedroom (or maybe the family room if that’s where your computer lies), whereas Home will be used in a PS3, and as such will be proudly displayed on the biggest television in the house. Why would you do that, you ask? Well it just so happens that Sony plans to make movies available for download directly within the Home environment. So you could be hanging out with all your friends online, then all decide to watch a movie, and it would immediately be streamed to everyone’s televisions, so you could all enjoy the movie simultaneously. Who really notices the person next to you in a movie theater anyways? (Unless you just needed a place to get away from Mom and Dad so you could make out with your new girlfriend).
The key question is, how does Sony plan to make money off of this, because of course money drives our wonderful capitalistic society. Turns out that they plan to lease space to companies, which can then offer their own games or products or services or whatever, but Sony has been curiously quiet about which companies have signed up and how many there really are. Now I’m sure businesses will be lining up at the door to target that ever-so-hard-to-reach 13-21 year old male market that spends gobs of money on video games every year (Incidentally, a study by the Wall Street Journal found that more money had been spent on video games than movie theater tickets over the past two years, to the tune of $8.9 billion versus $7.3 billion in box offices receipts), but what will their capabilities be? In Second Life, users can use a scripting language to create anything, but it remains to be seen whether Home will be that open and available to either companies or users. Honestly, I know of not a single friend that owns the PS3, and although I have heard of people buying it simply because it’s a cheap blu-ray disc player, I wonder if this will help Sony with PS3 sales, or if this is merely an effort to capitalize on a trend! Only time will tell…
In the end, online virtual worlds could become the next World Wide Web - what consumers will use when they go shopping for clothes, immersed in an online exotic locale before they take the leap to buy plane tickets to the real one, how they interact with their friends (This stuff makes Web 2.0 look so last year!), and maybe even how they met their husbands or wives. The potential is out there, unfortunately nobody knows what the best iteration will look like in ten years, so companies should really just hedge their bets and be everywhere, and that way when the next big thing hits the front cover of Time magazine, they’ll already have mastered it. And for you individuals, spend some time on either service and see if you feel comfortable building houses, selling clothes, running a detective agency (There really is one on Second Life!), and maybe it could become your hobby/business venture. You won’t know until you try.
Topics: Business, Life, Philosophical Musings |