This article is primarily inspired by Virtual Worlds By The Numbers: Today and The Future, a session in the Marketing and Entertainment track of Virtual Worlds 2008 conference in New York City. The panel included Yuanzhe (Michael) Cai, the Director of Broadband & Gaming at Parks Associates; Jack Myers, President of Myers Publishing, LLC; and Joey Seiler, Editor of Virtual World News. It is part of a series on Virtual Worlds 2008.

What do you think of when you here the term “virtual world”. For most people, the term virtual world evokes images of Second Life’s muted, sometimes absurd 3D landscapes and its overly geometric, lightly textured avatars. We’re all familiar with Second Life’s somewhat clumsy rendition of the real world where the fantastical looks out of place, but the realistic doesn’t quite fit either. Its exactly what I imagined in the early 1990′s when the notions of cyberspace, metaverses, and virtual reality came of age.

And, if you haven’t noticed, the press loves Second Life just as much as the industry. It has the perfect name for a headline, and the sordid details of its residents’ lives are as juicy as those of Client #9.

Second Life’s membership of 13 million registered accounts pales in comparison to many of its virtual world brethren (Habbo claims to have 90 million), and its ratio of active users (estimated at 1.4 million) to registered accounts is a mere 11% compared to the industry average of 25%. When you look at virtual worlds by the numbers, Club Penguin, Habbo Hotel, Stardoll, and their counterparts are what really matter and are what the virtual world industry should be obsessing over.

Here are a couple of hints that Second Life is an anomaly rather than the industry benchmark:

  • In the past year, Second Life’s membership has languished, while every virtual world of equivalent or greater size is growing rapidly. As mentioned, its active user ratio of 11% trails far behind the industry average of 25%.
  • Although Second Life is one of the top 5 virtual worlds that people have tried (Neopets, Second Life, Webkinz, Disney’s Toontown, and Club Penguin), its the only 3D one and the only one not aimed at kids.
  • Second Life is male dominated (70% men vs. 30% women), but most other virtual worlds of equivalent or greater size are either gender neutral (Habbo Hotel) or predominantly female (Stardoll and Barbie Girls).
  • According to the Parks Associates study, 36% of respondents participate in virtual worlds to play games and 21% participate to create and manage an avatar. On average, only 19% of virtual world participants are looking to escape real life. The motivations of Second Life users are very different. The most popular reason to participate in Second Life is to escape real life (cited by 50% of users) or to create an avatar (cited by 40% of users).
  • Second Life residents are disillusioned with the commercialization of their world. According to a research study of 200 Second Life residents, 70% of Second Life users are disappointed with corporate activities and 40% think that the corporate activities are one-time affairs and won’t last. Those prognostications will likely fall on deaf ears. Consider that 80% of users of MTV’s virtual worlds have purchased a branded product and their users have generated over 50 million viral endorsements via their use of branded items. Habbo Hotel, Stardoll, Gaia Online, and others have had similar success with branded items and sponsored campaigns.

Linden Lab deserves a lot of credit for what they’ve created with Second Life. They built a visionary product that has inspired an industry, and their media machine has ignited the general public’s interest in the space. But, as with many visionary products, their future lies with a small, but fervent early adopter audience. In many ways, Second Life is to the virtual world space as Everquest was to the MMORPG space. Just as World of Warcraft brought MMORPG’s to the masses, Habbo Hotel, Gaia Online, Stardoll, and others are distilling Second Life’s essence into an elixir fit for mass consumption.

Second Life is dead. Long live Second Life!