I haven’t had time (I must admit that as a soccer fanatic, the World Cup has cut deeply into my spare time) to search the Blogosphere for what I suspect is a raging debate of what is going on at Linden Lab these days, and what recent actions announced in their blog post late last week (see http://tinyurl.com/24k2bgd) will mean for the future of Second Life, and perhaps also what implications the Linden Lab actions may have for virtual worlds more generally. But let me share a few of my own observations, from where I sit, and invite you all to share your perspectives.
Since I am usually a pretty optimistic guy, let me start with my “half-full” perspective before I address the “half-empty” issues.
Good News
I have long felt that we won’t be able to jump the “Moore Chasm” (from Geoffrey Moore’s well publicized chasm between early adopters and “mainstreet”) with today’s Second Life (and most other virtual-world environments). Two of the main reasons are: (1) large client download (SW installation), and (2) time investment to climb the steep learning curve to gain comfort in operating in these virtual world environments. We need to put more effort into enabling browser-based 3D immersive experiences. I was therefore very pleased to see in a Linden Lab statement that appeared in PRNewsWire last week (see http://tinyurl.com/34njzs5) that browser-based applications—as well as mobile applications and virtual goods marketplace—will now become an increased focus at Linden Lab.
A friend of mine who used to work for Linden Lab also told me recently that Linden Lab has for a long time been very serious about both phone and browser-based client and that the choice to now focus on consumer and social networking websites gives LL the motivation to finish these initiatives.
I also think that my friend Henrik Bennetsen, now leading the Sirikata team at Katalabs (after spinning out of Stanford University), is right by pointing out that virtual worlds need to integrate more with the Web, as this is where you find most developers, users, and tools today. So the more closely virtual worlds can integrate, and the faster this happens, the better we will all be. And Mark Kingdon, the CEO of Linden Lab, seems to recognize this and wants to move faster down this road. This is also good news, especially for newbies and for enterprises—large and small—that are interested in using virtual worlds environment for a variety of business applications (such as prototyping new products and services and collaborating with customers and supply chain partners anywhere in the world, and doing so in richer ways than can be done on the “flat Web”).
In an interview with Mitch Wagner (see http://tiny.cc/tac2n) Kingdon said last week’s actions were “not a cost-cutting measure” but when you cut 30% of your staff (estimated at between 300 and 350 at the time of the announcement) you will obviously save some money. And if these savings are put to (better) use in the 3-4 areas of renewed focus (mentioned above) this might put Linden Lab in a position to accelerate growth in the future.
Bad News
Mark Kingdon’s announcement also has some negative implications and right now I am not sure whether the sum total end up in the half-full or the half-empty side of the ledger. But here are just a couple of issues I think we should all be concerned about:
- Perception about virtual worlds. The actions taken by Linden Lab has already attracted considerable attention, not only by virtual worlds proponents but by the business press in general. They will no doubt raise (new) questions about whether virtual worlds are really viable and since Second Life is the “posterboy of virtual worlds” it will also raise concerns about the industry in general. At a time when business conditions are already difficult, and investments are hard to find, the action by Linden Lab will likely increase scrutiny by potential investors of any new deals they are considering.
- Undermining enterprise interest in virtual worlds. Platform developers focusing on enterprise applications may find it especially tough to find new funding, as Linden Lab made it clear—as much by what they did not say in their announcement as by what they said explicitly (i.e. increased focus on the consumer side of the business)—that business in the enterprise market side of their operations have not been as successful as they had expected. Erica Driver, one of the most respected analysts in the industry, has also made similar observations in their writings (Seehttp://tinyurl.com/29cb7yq for example). In a seminar at PARC (formerly Xerox PARC) recently I heard Harvard Business School Professor Andrew McAfee refer to a research finding that clearly illustrates the challenges facing developers of new and disruptive technology: Potential adopters tend to underestimate the potential value of new technology by a factor of 3, while also overestimating the value of the incumbent technology also by a factor of 3. The result is that new technology needs to be at least 9 times better than an existing technology to see rapid adoption! Clearly a major hurdle, especially for technologies—such as virtual worlds—that are not typically viewed as “mission critical.”
Implications for NVWN
In my breakout session of the TrainForSuccess session in Second Life recently, the point was made by a Danish participant that virtual worlds, and Second Life in particular, are (still) suffering from a negative perception, especially in the press. And virtual worlds tend to be connected with “fun and games” rather than serious business applications. It is likely that last week’s action by Linden Lab, and making it clear that they see their consumer business as having much greater revenue and profit potential, at least in the near term, will add to skepticism about the role of virtual worlds in business.
Thus, we need to work harder to communicate clearly how business can use virtual worlds and how small and medium sized businesses (SMEs) in particular can level the playing field by using virtual worlds environments. We must also have strong and compelling examples of how SMEs around the world have already started down this road and show how they have benefited from using virtual worlds technologies.
We also need to have clarity in the various implications—both positive and negative—that Linden Lab’s actions may have, and the signals they send (and perceptions they create) about virtual worlds.
