Attendance or Transactions

Recently, we’ve been debating about virtual world technology trends here at the University of Washington. In a recent BBC article,, there is an argument about the ebb and flow of virtual technologies and whether the attendance and allure is still there. Trends come and go. But, some things remain forever even wrapped around modern technology. Virtual world evaluation depends on what you think is really shiny: communities of people chatting, or communities of people transacting.

My response to the BBC article is that it basically represents classical skepticism about social networking, not virtual worlds. Virtual worlds, as they mature into useful technologies, are more about business engaging in business rather than people engaging with people.  The reason for this of course is sustainability.  How do social networking sites stay relevant. On one hand through illustrious content; but, on the other hand, through economic self-sustaining. We are just getting to know how to use 3D virtual technologies, and the point about virtual worlds in the first place is that you can see others.  And, the salient feature to emerge with this visibility is to identify new ways to conduct business in a global world where we can’t see each other so easily, but must work together.

In the University of Washington’s Certificate Program, we come together to work together every Thursday night, quarter after quarter. We have merged the business of the education outreach for profit, and the research capabilities of the iSchool. We do it on the virtual world platform, and use Second Life to collaborate and integrate many of the technologies that enhance our mission. We do this to conduct the business of education, rather than social networking. After all, our programs must begat other programs.

One of our recent speakers, Chuck Hamilton from IBM’s innovation center supported the notion of using virtual worlds (be they their 40 islands in Second Life, or OpenSim, and or Active Worlds), saying IBM has to look at virtual worlds seriously in order to provide global collaboration in international languages supporting over 400,000 employees. They leverage the 3D environment to create co-located workplaces that represent multiple cultures and enable people to envision their experience working together. And, Hamilton says they have to get it right first before offering it as a service to their millions of customers. I would conclude for BBC that this is going on in many different organizations, ie., building on the virtual intranet before launching out to the extranet. That was the true lesson of the World Wide Web. If you don’t experiment and try out these environments inside the firewall where BBC can’t see all the work place networking going on, then you’ll never see how large enterprises are going to scale, or how their innovation will be enhanced by co-creation, and how they leverage  inevitable 3d interfaces to remain relevant and lucrative. Social networking isn’t necessarily set up to manage competition. So, a lot of what you don’t see is because lots of companies don’t want you to see it. Yet.

The real question is what are virtual worlds doing that is impacting the way business is being done and how do we capture and measure that. The ability to make money and provide better services and products to customers is what comes to mind. In short, technology to make money, not technology for social activity takes time to mature and time to emerge. Linden Lab, like it’s predecesor Netscape, has chosen just to get it out there and let people get inspired. So it is they who are poised first to make money and help others make money. Whether it’s them or not is to be seen.

But, I’d pay attention more closely to the individuals in the environment who are already succeeding at that. The old stories of American Apparel coming in and out of Second Life is so old news, I wonder where BBC is spending their research dollars. My advice is take a deeper look at how the federal government is using virtual worlds, at emerging health care solutions in virtual worlds, at universities innovating in every department.  Yes, there is a generation perdue, but there is a shimmer on the horizon that looks more like an enterprise than a water cooler.

Chuck says, “I wondered what BBC might call success anyway”.

  • The equivalent of more than USD1 billion has been transacted between Residents in Second Life, who purchase virtual goods and services from one another. The in-world economy grew 94% year-over-year from Q2 2008 to Q2 2009. Now at nearly USD50 million each month in user-to-user transactions, the Second Life economy is on an annual run rate of more than a half billion US dollars, making Second Life the largest virtual economy in the industry.
  • WOW is larger. The estimate of the value of Virtual labor, that is the teaming and hours spend collaborating and working in these spaces is even larger.
  • World Bank ranks at least 22 countries in the world with equal to or smaller economies than this.

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