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!
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April 6, 2008 at 3:01 pm
Troy McConaghy
I would agree that Second Life is an industry anomaly, but I’d also say that it’s the industry standard, the elephant in the room. Standard-setters are always anomalies. Consider Microsoft, Google or Amazon. Anomaly, anomaly, anomaly.
Let’s be honest, if SL didn’t exist, would there even have been an Virtual Worlds conference last week? Their top sponsor was the Electric Sheep Company. Millions of Us was a gold sponsor. Both of those companies got started in SL, and probably wouldn’t have existed if their founders hadn’t met each other in SL.
The other two gold sponsors were There.com and Slippcat. Quote: “The SlippCat system is the first advertising vehicle that has been designed specifically for virtual world applications such as industry-leading Second Life.” Industry-leading. They said it, not me.
There.com is SL’s little cousin, created by Will Harvey and Jeffrey Ventrella. Jeffrey is now at Linden Lab.
Second life residents aren’t “disillusioned with the commercialization of their world.” They enjoy the commercial side of Second Life - the internal economy motivates people to create a lot of great goods and services for each other. There are the sculptures of Starax Statosky / Light Waves, the music of cypress Rosewood, Second Style Magazine, the clothing of Simone, the plants from Heart Garden Center…
So far, the multinational corporations setting up shop in SL haven’t provided much in the way of goods or services (with some notable exceptions, the key word here being *exceptions*). That’s why SL residents are disappointed with them.
April 7, 2008 at 12:45 am
Prokofy Neva
Point-by-point comments:
*How do you know that the other worlds may not reach their plateaus as well? Some countries have under-18 populations growing faster than other demographics. SL is for adults, so why compare apples to oranges? Where are the other adult worlds? With far, far fewer users at this point.
*Go back and read the official economic statistics page, those figures aren’t correct, there is at least 40% or more women, and women spend more hours on line.
*Again, you seem to be comparing worlds where the object is, broadly speaking to play house or store (Second Life, Habbo, Stardoll) to worlds you aren’t even mentioning where the objective is to play war (WoW)
*This study makes no sense. Make an avatar…to do what? You make an avatar to socialize, have a business, whatever. The posing of the question seems off. If they asked whether people socialize or do business or do non-profit work, they would capture more of the diverse uses of SL which are completely absent from these other things. It’s like saying “We found that there were far fewer Ferrari drivers and 20-speed bike users than Matchbox toy car users.”
* The study about the “disillusionment” over commercialization is pretty misleading. It was made by a European study of European early-adapters who by their nature are the anarcho punk anti-capitalist types who will answer this way. A broader study of all world demographics would find there isn’t anything like this allergy to commerce at all, and if you ask people if they would like companies to rent land or ad space from them, or sponsor their events, they’d give a huge, enthusiastic YES! SL is more like RL — you can’t just expect to drop a product into somebody’s home or store and expect instant acceptance; the only reason you can do that in the MTV world is that there is no user-generated content.
* There’s an utterly false premise here, claiming that the 70 percent of the EU citizens interviewed by the EU polling company somehow contrasts with another segment of 80 percent of MTV users having purchased a brand. A more geographically weighted and balanced study of the entire SL population would likely find that more than 80 percent used the brand because they are adults who can buy their own branded products and not wait to pester parents like the teens in There.com/MTV
So all of your points are based on comparing apples to oranges, taking skewed samples from very biased sources with anti-commerce ideologies in general, and not realizing that this is a world of adults, not kids. Yes, you can sell way more Matchbox toy cars in the kid worlds that have statistically way more kids who who buy way more individualized units of the little cars. But you then have to offset that against an adult market where you could sell a few Ferraris.
No long-term market strategist would set up decision based on pitting one demographic against another if they had products that are bought in real life by all ages.
Second Life is long past the early adopter stage. Early adopters make up a fraction of the population. SL is now populated by the rest of us who came much later, after the beta test was over and the early years. We have homes, relationships, businesses, clubs, live music, non-profits, educational institutions and if any of these people leave Second Life, it’s definitely not going to be for Habbo Hotel or Stardoll. Call me when there’s another persistent 3-D virtual streaming world with user-generated content and a robust economy with real-money trade, then we’ll talk.
Habbo et al are not distilling SL’s essence; they are distilling the essence of TV for the masses — TV that is pushed, prefabricated, controlled for safety and content appropriate to the age group. SL doesn’t distill but transforms the elements of TV, theater, books, media to enable people to make their own lives.
April 7, 2008 at 7:38 pm
Ravi Mehta
Being the most successful company in your industry doesn’t make you an anomaly. Anomalies are different in kind not just scale.
Second Life is more akin to Altair and Goto.com (which created the personal computer and PPC search marketing industries respectively) than Microsoft and Google (which won their industries by emulating their progenitors). Amazon is an anomaly of a different form in that it is one of very few companies that both pioneered and won their industry.
As Troy mentions, there is no doubt that Second Life has pioneered the virtual worlds industry and laid the groundwork for innovative companies such as Millions of Us and Electric Sheep Company. At the conference, both of these companies discussed their very successful efforts outside of Second Life. Second Life is just one piece in a puzzle that they are building, and its a piece thats likely to have less and less relevance over time.
The problem is when Second Life is referred to as “the elephant in the room” or “industry leading”. How can it be industry leading when it is 5th or 6th in audience size and constantly losing ground?
Prokofy makes a good point that we’re comparing apples and oranges by comparing Second Life, a adult world, to numerous kids-oriented virtual worlds such as Habbo. Thats my point exactly. Second Life is a relatively small apple in a see of bigger oranges. By treating it as the unwarranted focal point of the industry, we run the risk of missing opportunities and making wrong conclusions about what users really want.
April 24, 2008 at 4:15 am
Virtual Worlds 2008 (NYC) Conference Series « Virtual Goods Insider
[...] Second Life is the Industry Anomaly, Not the Standard discusses how the relevance of Second Life is waning as more successful virtual worlds take center stage. [...]
October 8, 2008 at 9:27 pm
Bob Welch
Out of the gate Second Life relied on the imagination & creativity of it’s users when the other sites served up usable features for a mass audience to consume = bigger audience.