Posted Wednesday, March 28th, 2007, at 10:02 am Eastern by Mark Wallace

The first panel at Virtual Worlds 2007 was on Trends and Numbers, a general discussion of where things might be headed in terms of virtual worlds, moderated by Daniel Terdiman of CNET.

Panelists
Chris Collins, aka SL’s Logan Linden of Linden Lab
Joe Laszlo, senior analyst at Jupiter Research
Steve Prentice of Gartner Research
Justin Bovington of Rivers Run Red
Sibley Verbeck, CEO and founder of the Electric Sheep Company

Sibley: We’re at a point of being still extraordinarily undefined. It still only gives you so much value to look at the metrics of where VWs are today, because the activity around them has been largely exploratory. There’s incredible interest in the potential. People are interested, but VWs are not yet a key part of their business. We have a lot of questions, but not yet a lot of answers.

Justin: We’re just at the point where VWs are being defined as their own medium. It’s not its own solution in its own right, but part of a mix of solutions.

Collins: Growth in Second Life membership we’re seeing now is incredible, especially from overseas.

Prentice: We’re pretty much where the Internet was in the mid-90s. People are interested, but they don’t quite know what to do. Describing it as a media channel is probably one of the most accurate ways of doing it. Corporates are starting to understand that this is a channel that needs to be used along with everything else. But they’re still isolated islands. You can’t yet move your avatar or your assets from one world to another, That’s one of the constraints. There’s only one Internet. Once you can move from one to another, the growth you see today will look pretty stagnant.

Sibley: We’re just getting to the time where companies are interested in pursuing their business models through this new communications medium. Now we’re spending more time looking at designing a project that isn’t just a flash in the pan. Frankly, it’s sobering.

Justin: We thought it was going to get quieter. If anything, it’s got busier. We think 80 percent of the communication happens outside of Second Life. We’re trying to push the paradigm a little further forward.

Collins; How companies are working with SL recently is starting to build more on the community they’ve got. Philip made the great point, on a Web site you’re on your own. Brands want to take that commjunity that’s looking at their Web site and be able to offer a Second Life experience.

Justin: Whgat we’re finding is that a lot of companies are seeing SL as a great way to create additional content, using it as a content generator that then goes back outside Second Life. With VOIP technology coming in, we’re going to see podcasts, video poadcasts.

Sibley: There are a lot of great exaamples of successful businesses and uses of VWs, but they’re outside the VWs we might be talking about here. VWs fundamentally are commjuncaitoins mediua, as such I think the first natural ecosystem to make sense in a VW is entertainment, so all other businesses can find a home if the enteratianment exosystem is there to aggregate audience. If you loook at the most successful VWs, things like Club OPenguin and Gaia Online, especially those younger demographiscs, while they haven’t gone 3D and it’s not as open,. with the narrow focus they’ve shown the way of how do you build an audience, sell things to them, market to them, entertain them. I encourage everyone who’s interested in this to look at these already very successful examples.

Prentice: There’s a great tendency to think about commerce, but one of the biggest opportunities for larger organizations is to create community within the organizaiton. We see the VW not so much as a community space, which it is, but also as a collaboration space. Its an incredibly powerful tool. When you’re actually having a meeting in a virtual environtment, they can be much more involved. For a lot of large organizations, the opportunities lie to better improve their communications and sense presence. It’s like fooling people that they’re actually there. Interesting thing about 3D space is you get to see what the other person sees. You get that sense of being there, it’s a very powerful attribute. Nothing to do with commerce, has to do with oiling the wheels inside large enterprises.

Dan: What about ROI?

Someone makes the point that you can’t do events with much concurrency. Both Sibley and Justin disagree.

Laszlo: A lot of people are willing to experiment. It’s more R&D right now. We’re going to see a transition. In two years time there better be a firm set of metrics. It’s worth spending money to be in a virtual world right now.

Dan: How do you help them choose platforms?

Prentice: Working out metrics is difficult. The numbers just don’t add up. That’s not to say it’s not worth doing. The advice we give is, it’s early days, get in there, experiment, but don’t spoend a large amount of money at this point in time. Put it down to R&D and you will start to understand what works and what doesn’t. Don’t necessarily think about it as building up another media channel.

Justin: This is part of the media mix. We do find it galvanizes internal and external teams to take ownership of a campaign. I do disagree in that measurement and metrics is not just internal. Not hermetically sealed. We know from working with media planning companies that the buzz is amplified ten times outside SL at the moment. Web companies are not driving this. The bniggest uptake is from media planning agencies. My theory is that that’s because they got left behind in 96 and don’t want to get left behind again. If anything, the Web companies are quite hostile to virtual worlds.

Sibley: We try to stay abreast on the growing number of platforms out there and help companies make an informed choice. Have to take into account who your audience is. One natural thing for some media companies is that SL is split between adult and teen grids. Might not make sense, depending on who your audience is. There’s a lot of things to weigh, down to the details of the art assets.

Justin: I think we need more platforms out there. We need to have different experiences for different segments of the market.

Laszlo: There’s really two different things going on. One is beign in a virtualo world that already has a large population and being part of an experince that’s broader than you, versus building your own little island universe. If you have a large audience to bring, you can build your own. If you want to be in a VW that’s more shared, you can think about SL or one of these spaces that’s already established and has a resident population.

Audience member who runs Whyville points out that they had 6,000 kids at the same time at an event. And also that the panel is extremely SL-centric. “I believe that’s doing a disservice to the people sitting in the audience, because there is a lot more out there than SL. Philip said the community aspect is most important, not the graphics. SL is burdened with a platform based on a different conception of what mattered. Is SL thinking of changing that so it can actually do the social things that matter?”

Sibley: The biggest stab that SL is taking toward that end is open sourcing the client side code. Yes there are a lot of features that are not there that woudl be necessary for community-related features, but there are starting to be an opportunity for others to start developing those.

Collins: The lower barriers to entry for people coming into SL and creating whatever they want, it means that it’s evolving, and what Philip was saying is it’s incredible how it does evolve. Similar to how the Web got to where it was now, you can create anything you want to create.

Sibley: That’s true, the low barrier to creation, but what I htink the gentleman is pointing to is a low barrier to entry in enjoying or taking in the experiences. How do you find something that people have created?

Audience Q: Sounds like we’re at the beginning of the next gold rush. Are th eonly people who are going to make money on this the people who sell pickaxes to the gold miners for the next tow years?

Sibley: Now is the time to be helping companies actually sell things in the VW.

Justin: The gold rush was the Internet itself, we think VWs are braodbands killer app. There’s planty of room.

Collins: We’re seeing incredible growth in all areas, economic within SL, new registrations. Retention percentages has kept very consistent, which is incredible to see. [Doesn’t mention that retention is something like 10-15 percent.]

Audience Q: Woudl love to hear analysts talk about models other than SL.

Prentice: I try when talking with our client base to be as mutual as possible. One of the issues for organizations if you’re talking about creating stuff is intellectual property. How do you get money in and out of the world? You’ve got 2D worlds. This stuff does not have to be 3D. If you go down to back to what Nintendo graphics were like, you can do a tremendous amount. The models are different. No one model is perfect, it depends on what you’re trying to achieve. If you’re thinking VWs, do not fixate on Second Life.


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