Metaverse Technology & Demand Limitations

It’s apparent that many people in Second Life join to try and make money in-world. “What can I do to make some money?”, is a very popular question by these reward-seekers. If you’re familiar with the Second Life life style, then a list of jobs pops into your head immediately. Dancer, host, DJ are usually at the top of the list. Look at these three jobs however, what does that say about the environment which you’ve entered? It says, “This is a very social place,” and your job, and your success at these positions is based on people paying you tips for your service. Compare this to the real world now. The answer to, “What can I do to make money?”, has a much broader answer; hardly able to nail it down to just three common tasks. This exposes two facts about this contrast. The first is that the virtual world is very limited to what new products or services you can create. The second is more reflective of real-life; consumers ultimately determine what is hot and what is not.

Limited Product Range
The first thing that grabbed me about doing business in Second Life, was the realization I had that all my ideas about being a business person in-world were thrown out of the window, and somehow simplified (or less kindly, severely limited in scope) because of the resulting technological environment. I hinted at this as a business constraint in an earlier post. In the real world, business people must operate in an environment shaped by political, economical, social, and technological factors. In Second Life, businesses are shaped primarily by technological factors alone.

Regret and penniless follows the person entering the business metaverse thinking he or she is going to make the next alternative fuel to power the world. For those of you Second Lifers, this is an obvious admission. But to those still trying to understand what these new virtual worlds offer, it should be eye-opening. About as far as any real world “green” organization could come to finding value in virtual worlds, is dissemination of message and awareness, and possibly giving out for free a cool gadget with clever branding. The technology of virtual worlds is by far the most influential determinant of its business possibilities.

As I thought about the most common attribute that businesses might find valuable in virtual worlds, I arrived at the following supposition. Second Life and other virtual worlds are a more immerse extension to the Web 2.0 phenomenon. It adds greater interactivity, real-time social and behavioral components, and another communication platform for businesses to consider besides the most popular Web 2.0 sites currently. Besides that, I can’t find overwhelming examples of companies that have found success within the metaverse (other than the ones owning the rights and technologies). Look to years 2005-2007 when notable companies opened up their own virtual spaces within Second Life. Try to find them in-world today or anything but subjective opinion on the ROI.

To be fair, companies that sell products might have failed trying to create awareness or an “experience” in Second Life. But companies that offer services, or market new ideas might be better aligned with what this technology offers. I think it explains in plain English why there’s a push by Linden Labs to promote the technology to NGO’s, educators, and non-profits.

Consumer Demand
How valuable would be the marketing and segmentation data on Second Life users? I don’t mean that sarcastically as in, enormously valuable. I mean it as in, is there any real value to having segmentation data on hand of Second Life users, for real life companies? The most common way to segment markets was by race, sex, age, religion, economic status, region, etc. But segmenting consumer markets by behaviors is rapidly gaining popularity in the digital age. Just check out how Amazon serves you product suggestions based on previous purchases. I’m sure you can think of many other examples now where marketing is based on behavior versus age group or some other socio-economic indicator. Since behavior is now linked with consumer preferences, and ultimately we are trying to answer the business question, “What makes a buyer spend money?”, let’s take a stab at understanding how consumer demand influences business opportunities in Second Life. Play along with your preferred metaverse.

The idea of a new online social interaction site intrigues only so many people in the real world. I’m willing to bet my Lindens that the majority of Second Life’s users are there for fun and social entertainment than to take classes or read a notecard on how a company is going to save the trees. The two favorite past times within Second Life are shopping and socializing at clubs. In fact, I wouldn’t consider these two activities “past times” because they are more like “primary times”. To see this in action, just look on the map to where clusters of people are, or use the Events calendar to display how many clubs are hosting an event versus how many art studios are inviting everyone to come see the fantastic displays.

Second Lifers have a “let’s party” attitude while in-world. Their behavior then creates demand for products and services around entertainment experiences. This is consumer demand then; limited in interest, and bound by the constraints the technology provides. Many club owners have said to me, “If I could only create the virtual equivalent to alcohol, I’d be rich!” But of course, we are back to our first limitation, the technology.

Opportunities & Risks

Opportunities:

  • May exist for organizations that appeal to social settings, rely heavily on finding dedicated interest groups and consumer advocates through social mediums.
  • Capital investment is minimal, project is considered a test-bed rather than a full-blown project.
  • Volunteers are generally agreeable to, or familiar with the Second Life environment and its residents
  • An example might be Red Bull, the energy drink owning a night club with interactive wall media highlighting videos from the web site, or recreating its “Flugtag” events in-world for builders and spectators. A quick online search brought up a page where Red Bull was an in-world sponsor at the DropZone, a mix of skydiving, amphitheater, night club, and other features. Unfortunately, I could not find this area within Second Life and the advertised website doesn’t exist. Sounds like this project ran out of funding.

Risks:

  • Due diligence for those companies wishing to bring product “experiences” into Second Life is a must. Look to past performers and their track record.
  • The audience may be too limited to spread your message or product awareness with measurable returns, for the investment.
  • Technology constraints may prove a deterrent to satisfactorily providing a positive product experience.