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Toney, Alabama, United States
Software Engineer, Systems Analyst, XML/X3D/VRML97 Designer, Consultant, Musician, Composer, Writer

Tuesday, October 2, 2007

Flea Markets and Hype Cycles

Daniel Terdiman at CNet reports the Yankee Group (more analysts) say that Second Life is failing to live up to the hype. DT has been an SL fanboy and has been trying to position himself as a geek culture pundit. I guess that is like being what Norman Mailer was to the hippie culture except with more dayglo, less prose and virtual money (a hippie dream if ever there was one... well that and flying).

Since Daniel hyping Second Life provided a nice increase in the Virtual World bubble that spawned other worlds thus making it possible the bubble is permanent if still a lot islands of automation (as proprietary systems were once called), here are some things for VR/VW fans to consider:

1. As a business world, the attraction to SL is like ANY web site: eyeballs and traffic. Worlds with the technical problems SL has can't keep the traffic coming. Everyone in the VR business knows this and the cost of content are the to basic business problems that must be solved up front. Picking a solution means you have to understand how cost of content and cost of services collude to narrow your choices.

2. Is SL an entertainment site or a business site? Despite all the ranting about the cool factor, the 3D web, and so on, these are still simply MU web sites. Content type proximity is the same as having shacks next to the upper Beverly Hills. Gated neighbors pick their near neighbors. Location Location Location. In the nightclub metaphor Rosedale picked up on, you can't mix the hard drinkers with the pot smokers. It just doesn't work. A nightclub picks a demographic and culls for it. If you are a believer in the 'power of emotional connections' or just the profitability of having a blue room in your basement, you know these aren't to be mixed without great care, understanding and bouncers.

3. Assurances of security and privacy are fundamental to most businesses. 3D hosting for business and 3D hosting for the virtual living room are two different businesses sharing overlapping technologies. Those assurances are part of the service contract. Read it. Can't find it? Find another provider. That contract is what keeps your business information from making it onto CNet.

4. The web clients for a true metaverse need to be free but profiled. IOW, the client on the PC doesn't/shouldn't be the client on the mobile. They should be profiles of the same language. That is the best way to get the costs of the content down and to ensure there is a healthy competition for client innovation and service costs. If you find your provider developing core technologies at this late date, find another provider. Providers who maintain big service farms should be in that business, not research arms for IBM. Focus. Focus. Focus.

5. Standards already exist for these. If you are a company wanting to get into this market and don't want to pay VC or startup vig, or even trap your content inside a Google warehouse, find the standards that are mature and IP-unencumbered. They do exist. That way your company doesn't have to risk indemnity problems later or watch the content die as a result of an SL folding in the face of a market slump. 3D content is VERY expensive. Shelving it because a client died means you picked unwisely. If there is to be a downturn in the VR/VW market that is more than one or two worlds turning their lights off, it will be because the bean counters discover these worlds are returning no value and have no staying power.

If SL were to collapse, there would be plenty of other worlds to go to, but all of that content you paid Electric Sheep to build for you would go into your avatar's coffin for some Wayback machine archaeologist to dig up later. As cool as a seamless metaverse sounds in the blue room, the truth is this is expensive software and electron pipes that evaporate in a ring of blue smoke when the platforms change or the electricity bills are also too high.

Hype is never a reason to enter a market. OTOH, a slump is not a reason to abandon one. If your VR vendor cannot adequately forecast business results based on the combo-pack of services you purchase, you do need to find one that can. The VR/VW market is here to stay but building a market inside another market warehouse is far more risky than renting your own building. It is the equivalent of selling rolexes at a booth in the flea market. The neighborhood determines the traffic.


Jordi R Cardona said...

Hello Len

I don't think SL will disappear. They just used big money to attract all kinds of public.
Now people are leaving mainly 'cos it is too aggresive. And corporations leave 'cos there is no real money won.
Now there's a process that will end with 2 possible paths:
a) as they have powerful features for cybersex, they will focus on it. I would recommend them to do this, and it may be good for all the other 3d worlds too, as all people interested in it can go there and to Jewel of Indra.
b) all people will go and the hard core users will return as they will feel they have got their loved-small-family-place back. It may be also nice for many people.

What do you think?

Len Bullard said...

I think they will continue to work with big businesses on business applications. Yes, they could create pure cybersex sites and that is big business too. I've no care one way or another, but as I said with years of experience in nightclubs, you can't mix crowds that don't have a natural affinity to one another.

But my main point is that right now, if the financiers pulled out I don't think SL is yet self-sustaining or could grow and innovate. In the face of the growing competition, they will have to or they become like the once posh nightclubs that become seedy. The doors stay open given the regulars, but the growth stops and the owners/managers change a lot. In cases such as this, the customers who've invested considerably to build worlds become as businesses in a once fashionable shopping mall that still has some traffic but a lot of boarded up space.

It is very important that efforts to create standards be based on open IP-unencumbered sources. Otherwise, these now popular VR worlds are roach motels for the content. The Financial Times just published what I think is a realistic sober assessment of the economics of this business.


Len Bullard said...

IBM catches on and says so:


But as usual, they claim they thought of it and the A-list bloggers go along with that.

This is the web doing what it does best: warping the timeline to the advantage of the highest energy region of space.