There's No Virtual Worlds Industry

I'm still chewing over much food for thought from Virtual Worlds 08. I wouldn't say there was any real big news generated, after the story about the IBM firewall and Linden Lab, although towards the end, there was a bit about MOU apparently working on Sony Home; and the announcement of a consortium of worlds and games that would develop metrics for ROI (Linden Lab not in the list); and an estimated 100 million people involved in online games and virtual worlds (last year, it was more conservatively estimated at 40 million; in one law workshop the figure of 73 million gamers alone was given).

That is, there's plenty of news if you are a parent or child, but not if you are part of the SL blogosophere. The future was so full of pets and kidz and tweens that at one point, I staggered out of the panel up to the Second Life Grid booth and grabbed Glen Linden, who happened to be the one standing behind the counter then, and said, "Please, please, tell me you will keep turning this on in the morning. I've been to the future and it's all...pets, and pets of pets...." "He said they did plan to keep turning on the world, servings willing, but it was then down almost all of Saturday, costing me a lot of aggravation with the usual "your land isn't working" and "your land won't let me teleport" and "your doors won't open even with my name in it" and "your land won't let me rez stuff out". With our favourite named brand, you may not have much to take to the bank or off the server or to the courthouse, but the one time everyone assumes you are a full-fledged owner of a Second Life sim is when the entire world is down and the person on your property doesn't realize it's not just your sim, and not your fault. It's universal. Metaversal. Wait.

This year's Virtual Worlds 08 conference and exhibition, organized by Virtual Worlds Management, a division of Show Initiative, was more than double the attendance seen in San Jose in October 2007, with probably half or more of the people not having been active in virtual worlds before, many new companies, or companies new to the field, and many more displays. In fact, it was impossible to go and examine each one of the worlds and/or tools for worlds on display, it was literally a kind of "worlds' fair".

This is a conference attended by game and world developers, software makers, toy manufacturers, a few stray gonzo game journalists and bloggers, lawyers, major media corporations, advertisers, US, Chinese and other government officials -- and this year lots of venture capitalists. So obviously such a diverse crowd with a great many pieces of the elephant can't be described as any one trend or entity -- they don't amalgamate.

Last year, Virtual Worlds Management, which trademarked that name plus "Virtual Worlds Conference" listed 35 companies that had spent a $1 billion in one year. As I noted for the now-closed Metaversed.com, "At the first VW 2007 conference in the spring, the volume of deals was estimated at $5 million -- later this was revised to $7.5 million with more contracts following as a result of connections made at the meeting. Now the figure estimated conservatively for VW Fall was $20 million, a mixture of investment directly in worlds themselves, in metaversal development agencies, and tools to make the worlds." CBS alone spent $7 million on Electric Sheep Company's development of CSI:NY.

But now, it is difficult to estimate what exactly this "industry" consists of, or whether you can even speak of an industry at all. What happens when the future doesn't stay up the road but arrives in part, or in a way not anticipated ("unevenly distributed"), is that suddenly you cannot speak of virtuality as a separate thing or place. Just as everything got digitalized and wound up on the Internet, so, the theory goes, and the actuality indicates, many things will be virtualized, too -- although, it's pretty thin gruel at this stage.

Why is it even important to figure out whether there is an industry? An obvious reason is that people look to the spending and the deals of other people to see if they will get in on the act, and the growth matters in terms of attracting others. People want to know if there will be jobs available, if the worlds themselves in fact will be shut down because the VCs will grow tired of them. There's also the question of how united this industry will be on certain key themes about public safety and morals (yes, morals), whether it will self-regulate, whether it has the capacities and structures to self-govern; whether such self-governance is sufficient.

There's no question that what we have so far is only 1) one world, that is robust, with 3-D video streaming, interactive, persistent, and with user-generated content that is open to the general public and not just developers -- Second Life. Linden Lab, the makers, are a private company, so we can't tell how much they are making (though they always talk about how they are making lots of cash). Next then, 2) lots of others getting started with all kinds of alphas, betas, and NDAs, like Multiverse, Twinity, VastPark, so we can't really see what they've got -- only devs are allowed or capable of accessing them so that the dev FIC is built right in, 3) then there's another group of games/worlds like Metaplace going over to 2-D or 2.5-D and browser-based flash games, with multiplayer action like Whirld or with only solo creation and sharing like Scenecrafter, 4) and then all these proprietary web-based flash pet and kid games, like Neopia and Barbie. What does that add up to, and how long will some of it survive the harsh test of user capriciousness or indifference?

The toy industry generates $22 billion a year; something like a launch of a Barbie world is just one more aspect of an already very busy and chock-fulled website. Some accounts indicate that the toy industry has lost some small percentage of its revenue in recent year due to recalls, and due to kids moving over to the Internet. You can see that with a $30 million payout, such as Thomas & Friends had to pay in a class-action lawsuit for the wooden trains found to have lead paint, such companies would be highly motivated to move away from manufacturing RL things to virtuality. Then there's the movies industry ($20 billion) or music industry ($30 billion) and offline games ($20 billion). So sure, a $100 billion "industry of other things" like entertainment, movies, video games (maybe kids' books adds a little more?) is now poisoned to virtualize, with other mash-ups like MySpace recently making a deal with three record labels, Sony, Warner, and Universal due to falling CD sales and song swiping off the Internet. They are trying to sell the 360 degree deal with all aspects of the band, records, performances, t-shirts -- and if you have 360 degree deals, you would think that the perfect place to put them is in a virtual world where you can turn around 360 degrees. Do we imagine that something we could identify, called "the virtual worlds industry" that had $1 billion *expenditure, will now join other stuff that "isn't the virtual worlds industry" has $100 billion revenue and will...make more money? Does anybody know how these formulas work? When it's all one big thing, what are we going to call it?

The virtual worlds industry or virtualization of the entertainment, toy, and music industries looks the way it does because there are few other sectors available to spend the kind of money needed to develop the worlds, which many developers have traditionally characterized as needing $100-130 million to develop. Of course, this is getting cheaper, if you call a world a flash game, but Metaversatility is also working on making even cheaper standalone virtual worlds for $40-60,000. Still, who will pay even for that less costly version?

The U.S. government spends not much more than $1-2 million on virtual worlds right now, in grants like the Dept. of Labour's grant to Ohio State for game design and the State Dept's international diplomacy work done with USC Annenberg -- if you don't count the Dept. of Defense, whose budget is not known (though journalists should dig for it through FOIA). Of course, that's not counting that ARG and LARP they have going over in Iraq, which has already lost more than 4300 developers, 100,000 premium accounts, and led to a 2-3 million churn in sign-ups going to other regions!

Paradoxically, the very entity in the position to regulate virtual worlds spends the least on them, and surely more could be done in the area of education, health, labor, and governance.

Who is going to spend on VWs and how? Virtual Worlds Management, the VW08 organizer provides an excellent forum to study the phenomenon, although even the early-bird conference fee of $695 is too steep for many smaller devs. Media passes are still given out fairly freely, with not only your humble correspondent but even Hiro Pendragon managing to get a press pass for Second Tense (!) rather than his "MDC". The registration was very much streamlined and the navigation and signage much improved, and many more exhibits to see fit in. At one point the expo was blocked by police tape, a measure that could have been designed to get more people into sit in the keynotes, which weren't always so well attended, although this could have been related to union regulations, which hobble events like this with very strict break-down rules that force everyone to leave immediately after the event instead of hanging around socializing. Cisco sponsored the lounges to hang out during the event.

The pre-party wasn't packed, nor did any of the principals stay for long -- clearly everybody had their own deal-making dinners, and even the official bar central at the New Yorker Hotel was filled mainly with Lindens and Metaverse Meet-up types like sheered Sheep. A manic, half-shaven Corey Bridges (try friending him on Facebook and vote yes/no for the bear) was the man of the hour, replacing the energy void left by Philip and the Hair, but he was always rocketing away on an invisible plasma jet led by VCs and developers, and he had honed to a fine edge a crowd management tool that went like this, if you went up to talk to him: "Oh, *hi*! Great to see you! Oh, but don't let me sidetrack you, I'm just talking to these people here" or "Well, great seeing your but I've got to talk to this gentleman here" whose badge usually consisted of a string of firm names. I declared on Twitter that Corey had "won VW08" with most secret meetings, most talked-about world still to come out of beta, coolest demo (the website will have both an instant flash version to get right into, then a download with 3-D worlds, and a number of developers are making worlds that companies will then run from their platform). But from where we sit, Multiverse is not a place that will have as its default user-generated content and an economy. You cannot walk in, click on something, see what it is, or make it, or buy it. My understanding is that currently, there are not developers who are taking on this challenge, which many learned about from the Lindens' grand experiment.

All year, attendees of past events could have a chance to socialize and post links and pictures and jobs at www.virtualworldsconnect.com, but now an additional "Metaverse Passport" (see, there's a Metaverse, but just not for you!) club was created online that only the paying customers could enter, as it was closed to press.) The real deals aren't made at such conferences or social media venues where there's no firewall for data protection however : )

A key service provided by the conference organizers that maybe even they aren't aware of, is bringing together people even from the same organization, or competing companies, or enemies, or estranged ones. Where else can Cory Ondrejka walk around and talk to his fellow colleagues? Or Multiversians be forced to break bread with Lindens. Or the OpenSim team and various devs have a round-table with Philip and Prokofy sitting in? Or any of us get to ask questions of Mattel or MTV about just how they plan to scrape all our children's data, and then sell stuff to them -- and us? And with what kind of experience, culture, governance...and shaping of a future generation? It's a very strange embryo, this future management of virtual worlds, because a lot of it has the potential to fall by the wayside and be forgotten as the failed experiments of the early part of the century, and the remainder -- and things we can't even see yet -- have the capacity to change the shape of life as we know it, replacing "real life". Yet so much of what was being offered wasn't ready yet but by the time the next one rolls around, will be unveiled and tested.

I've gone off to test a bunch of the worlds, like Scenecrafter, which isn't multiplayer, so may not qualify as a world, yet it makes a social network with Facebook and is planning an arrangement with SL where you will be able to start a Scencrafter store on Facebook or your website to display your SL goods for sale. I've also gone on the worlds of Barbie, Whirled, Neopets, Habbo. They all seem to run on the premise that what users want are games, so you can endlessly sit and play addictive little games, by yourself or others. Since that isn't what I come to SL for, or what I really want in a virtual world, none of these will likely appeal to my demographic, although some of my cohorts like the gaming and collection activity.

All of these browser-type worlds will make more money than the Lindens, however, because they all seem willing to sign deals for product placement, to merge with music or entertainment industries to make various offerings, to place ads on splash screens or have inworld clickable ads.

The Lindens, who have a highly sensitive allergy to commerce display, refuse to allow advertising on their website, splash screen, sign-ups, or inworld that they sell. As a result of their refusal to welcome it and therefore regulate it, we have it all over biting us in the ass and blighting our world -- the Lindens' policy of "no advertising," which they adopt supposedly due to their own hippie sensibilities and those of their core early adapters and best new anti-commerce friends, is in fact the very means by which a horde of really ugly, rapacious small-time adsters invade Second Life and make life miserable for all of us. This is one of the tragedies of Second Life.

One of the most aggressive displays at VW08 was of a company called SlippCat, which is Ancient Shriner and Christian Fassbinder all over again with a new injection of cash (they're the ones with the big ugly ad towers in SL; they aren't for sale, so you can't even buy back the view). Ancient Shriner (Jared at Code4Software) assured me he was minimizing or even removing the ad towers, but I went inworld and saw all the ones I knew about as bad and as ugly as ever before, and more of them per sim -- he claims he will reduce them one per sim. Ugh. Go see his handiwork in Tupi, for example, where he has utterly destroyed the view throughout a gorgeous Old World Sim, which people have tried to mitigate with trees or wooden trellises, but to no avail.

Mr. Lee's Hong Kong indeed...

Comments

[larryr]

"this has all happened before, and will happen again---"

- the cylon hybrid

[Forseti]

Yes, the industry is going to go through a wave of private virtual worlds before there is any broad standardization. The number of platforms vying to be the foundation for these private worlds is enormous. These are not all going to be huge worlds, but rather more interactive extensions to websites, and obviously very different from Second Life.

Correction: CBS invested in ESC as part of a $7M venture round that also included Gladwyne; that was not the price tag for the CSI:NY project in SL.

[Prokofy Neva]

Interactive extensions to websites aren't worlds. See the discussion on the Linden land Bolshevism.

Thanks for the correction. It would be good to know the price tag on the CSI:NY venture and the complete list of sign-ups and their 30 and 90 day uniques : )

[Agnetha Vuckovic]

I think it much more likely that what will emerge is a proliferation of genuine virtual 'worlds' as opposed to the chaos and disconnectedness of places (?) like SL.

I must say I would love to see the Oblivion ( Elder Scrolls ) world put online. Clearly, such theme related worlds impose restrictions whereby one must live within the world meme. Equally as true is that such worlds will ( and already do )appeal more to immersionists.

But that is the way I see things going. SL will become....er...what it always was. Just a glorified dating agency/social interaction network. Please don't use the word 'world'.

[Prokofy Neva]

Agnetha, you have a very skewed notion of SL that is based on your situating of yourself in some sort of seat of the vanguard elite, and situating everybody else as the mass, crass taste that is merely about sex and shopping.

Real life happens to be filled with sex, too, because it is needed for procreation of the species.

But real life has many dimensions of activity, from education to non-profit to socializing not premised on coupling, business, entertainment, etc. And SL has all of that, it isn't just a dating service.

[Lydia]

Great point about the possibility of a united moral standard within VW's....will it ever happen tho...

[Lydia]

Great point about the possibility of a united moral standard within VW's....will it ever happen tho...

[Prokofy Neva]

I fail to see where I've called for a "united moral standard" in VWs which is an impossiblity.

I do think you can get those who are custodians of these worlds to set a moral tone higher than they have, and that agreeement about a few basics of community morals is not as endlessly subjective and elusive as some thing. That said, you cannot legislate morality.

[Danton Sideways]

>if you don't count the Dept. of Defense, whose budget is not known (though journalists should dig for it through FOIA). Of course, that's not counting that ARG and LARP they have going over in Iraq, which has already lost more than 4300 developers, 100,000 premium accounts, and led to a 2-3 million churn in sign-ups going to other regions!

The Department of Defense does have quite some Alternate Reality Game and Live Action Role Play going on in Iraq. Calling Raph Koster and Jane McGonigal to the rescue. Ready to try *anything* that might fix that broken reality, at this point...