Is Google’s Lively A Second Life-Killer?

It’s almost a year to the date since I decided not to move forward with my virtual world startup Yoick. We were building what many fervently hoped would be a Second Life killer.

But our approach had been more focused on creating cosy spaces that were interoperable between 2 and 3d. The vision also involved an open-architectured platform with a closed commerce engine so users could buy and sell virtual and other digital goods through our system (Facebook‘s F8 Platform launched some months after we had constructed the blue print for this architecture and has become a great proof of principle for this model).

It was a hard decision to make, but considering the trends and the trajectory we were on I knew we would intersect the timeline at a point that wasn’t sufficiently ahead of the market to be a winner.

You see, many of the big corporates were diving into the virtual world arena, many with the wrong approach, but a few, the few that really mattered were chasing the same space we were.

Today we would have been venture backed, have built up a head of steam and burn rate that required refuelling and yet still have been too early to have released enough of a product to ensure sufficient traction to see us through a true gorilla entering the market moment.

Stage right: enter Google with their cosy spaces,
virtual world product – Lively.

The LA Times has a good write up:

Unlike popular virtual worlds such as Second Life, Lively doesn’t require you to download new software. All you need is a browser plug-in. The service is also more distributed than Second Life: Its rooms will live on Web pages on Facebook and other sites, so you might stumble across them when browsing the Internet. Rooms can be private spaces, with entry by invitation only, or open-topic rooms, where you can meet people interested in discussing topics you love, like Angelina Jolie, Jennifer Aniston or Google. It also ties into other Google services. You can stream YouTube videos into your virtual living room or post your Picasa pictures on your walls.

It’s definitely not a Second Life-killer. Sorry Michael Arrington, I totally disagree that this sucks for Second Life. It is a completely different genre — for one this is not a single, charded or otherwise, virtual world and for two it is targeted more at a mass market audience.

It does suck however for the other startups who were targeting this space. Many of them will have to totally rethink their go to market strategy. The glass half full view is that Google’s entry legitimizes the genre, but this will not be sufficient to assuage follow on investors…

User Generated Games: Group Intelligence Rocks

One of the key points to come out of the User Generated Games Panel at the Social Gaming Summit in San Francisco is that users never cease to amaze. Core to this space is the concept of group intelligence: users watch what others are doing and then build upon it to create and do things that the game designers would not have thought of themselves.

Forums are a key enabler for this group intelligence. The panel pointed to Gaia Online’s successful growth of a 5 million strong user base – growth that can be attributed to having robust forums.

It’s also worth noting that this group intelligence does not necessarily mean a compounding of complication. As Daniel James from Three Rings pointed out it is often the simpler things that people enjoy the most. Constrained environments trounce multiple features.

Cary Rosenzweig of IMVU noted that they have 1.6 million items in their virtual goods catalogue. This is leading to real monetization with the top developer making $1M in revenue last year.

Cary did make one total non compute for me. He mentioned that IMVU has been in stealth mode for the past four years. When questioned on this he said that they hadn’t issued a press release, in like…eva.

OK cool, but this does not equate to being in stealth mode. Anyone not seen an IMVU ad on the web? If we follow his logic every social media company that has moved beyond the press release is in perpetual stealth!

Mobile Virtual Worlds: Android Takes Over Second Life

Tokyo-based Eitarosoft has developed a 3D virtual world service running on Google’s mobile platform Android.

Called Lamity, this virtual world can be accessed via any Android-mounted mobile device. In addition, up to 400 users can simultaneously access the same space on Lamity. This is more than ten times the number who can hang out together in the same place in Second Life.

Eitarosoft’s shareholders include tier one Japanese investment groups such as Japan Asia Investment, JAFCO, Mitsubishi UFJ Capital and Nomura Securities.

They have a strong background in mobile 3D, having developed the first i-mode application to display 3D graphics in 2002.

Lamity includes multiple and dual chat features. It also allows for web pages to be viewed simultaneously and stream video through a built-in movie function. A trailer for the movie “Vantage Point” was distributed through this feature ahead of its February premier.

Virtual founder seeks Second Life

Philip Rosedale is stepping down as CEO of Linden Lab. Faced with the classic founders dilemma of continuing to evangelise and innovate versus running a business, the man behind Second Life has elected to find a replacement. This is often one of the hardest decisions for a founding CEO to make, and hats off to Philip for doing so in a considered way. Reading between the lines in this piece it is clear that he was supported in his decision by his board.

It is an interesting transition phase for the company, what with the CTO having moved on only a few months back. One can only hope they find someone of the right calibre to get the business firing again.

Twofish: Plugging in Gameplay Economics


Redwood City-based Twofish has announced a solution to one of the major headaches facing game developers: building an economic engine into their games.

Commerce engines have been around for a while now, but it is still no trivial matter to plug the following elements into a game:- microtransactions, asset tracking, account management, multicurrency systems, transaction flexibility and robust trust and security modules to name but a few.

Lee Crawford, CEO of Twofish, explains the value proposition of his product:

“Microtransactions are here and now. But they require a whole new level of sophistication for the games industry.”

“Developers understand storytelling and character development, but most lack experience with financial markets and retail optimization. Twofish Elements fills in the knowledge gap, giving developers a robust solution that they can implement in weeks, rather than spending a year and millions of dollars to develop a partial solution on their own.”

It will be interesting to track how the Twofish Economic Engine is deployed. While they’ve provided the tools, it is still very much up to individual game developers to determine the economic algorithm they want to introduce into their titles. Over time I am sure that a wealth of economic gameplay data will emerge.

Empire of Sports Goes Giant for Greater China


Empire of Sports, the sports-based MMORPG, is being spearheaded into China by Giant Interactive Group.

Developed in Switzerland, Empire of Sports is a virtual sports world. In it players assume the role of a single character throughout the game. They are able to compete in virtual international events as part of a team and currently they can play basketball and tennis, go skiing and participate in  a series of fitness and training games.

Wei Liu, Giant’s President believes that, “With the 2008 Beijing Olympic Games nearing, interest in sports-related games is poised to increase.”

Giant has signed an exclusive license that expires in September 2011.

Second Life Self-Regulates Virtual Financial Services


Benjamin Duranske, the founder of the Second Life Bar Association, has only one criticism of Linden Lab’s move to self-regulate financial services within their virtual world, “It has been too long in coming.”

Calls were made for regulation to be imposed on banks and other financial institutions within Second Life way back in August 2007. This was a reaction to the failure of Ginko Financial, which Wired comprehensively covered.

Benjamin is otherwise extremely positive about Linden Lab’s announcement that:

As of January 22, 2008, it will be prohibited to offer interest or any direct return on an investment (whether in L$ or other currency) from any object, such as an ATM, located in Second Life, without proof of an applicable government registration statement or financial institution charter. We’re implementing this policy after reviewing Resident complaints, banking activities, and the law, and we’re doing it to protect our Residents and the integrity of our economy.

Since the collapse of Ginko Financial in August 2007, Linden Lab has received complaints about several in-world “banks” defaulting on their promises. These banks often promise unusually high rates of L$ return, reaching 20, 40, or even 60 percent annualized.

Usually, we don’t step in the middle of Resident-to-Resident conduct – letting Residents decide how to act, live, or play in Second Life.

But these “banks” have brought unique and substantial risks to Second Life, and we feel it’s our duty to step in. Offering unsustainably high interest rates, they are in most cases doomed to collapse – leaving upset “depositors” with nothing to show for their investments. As these activities grow, they become more likely to lead to destabilization of the virtual economy.

Benjamin’s view is that policies like this one not only acknowledge the obligations that should be imposed on all companies who choose to enable others to make real money in virtual worlds, but also serve to keep the collective virtual world grid healthy and free from externally imposed regulation.

He believes this will lead to the shutting down of “dozens of largely insolvent self-styled ‘banks’ in Second Life.” He does, however, fear that some legitimate operations may be caught in the net.


One such legitimate operation is First Meta, a Singapore-based start up, which offers a full range of financial services focusing on credit products such as the MetaCard. This credit card does not offer interest or a rate of return on L$ invested or deposited.

I spoke with First Meta’s CEO, Douglas Abrams, and he fully supports the regulation of financial services activity in the virtual economy.

Douglas says, “We agree with the statement by Linden Lab that in-world banks…offering unsustainably high interest rates…are in most cases doomed to collapse – leaving upset ‘depositors’ with nothing to show for their investments.

“We believe that the removal of non-credible players from the financial services sector of Second Life’s economy will benefit all of its participants.”

Others remain on the fence about Linden Labs decision. CNet’s Daniel Terdiman comments:

Whether the move will stabilize the economy, or at least perception of the economy remains to be seen. But it’s pretty clear Linden Lab had to do something to stave off criticism related to banks that have folded, taking residents’ money with them.

But only time will tell whether the decision will have any meaningful impact. And for those residents who have used the banks for various financial purposes, it will be very interesting to see what alternatives they have available in the months to come.

Mashable’s Kristen Nicole has an interesting social media take:

Just as Facebook’s open platform lent itself to a flurry of advertising networks specific to the application train, Second Life’s money-making opportunities have made it more attractive to a wider array of people. More people means more diverse behavior, and that’s not always good. Second Life’s parent company Linden Lab insists that it’s not acting as a banking regulator, but it is a very important step to take for the legal securities of Second Life itself.

Personally, I second the views put forward by Douglas and tip my hat to Linden Lab for a good move.


Social game mechanics and alternate reality gaming


Anyone interested in the social aspects of game mechanics would do well to read this excellent piece on ZT Online, Giant Interactive’s flagship MMO.

This game has taken China by storm with huge user growth and real revenue generation. Thanks to Jeremy Liew for bringing it to my attention.

You might also want to take a read through Giant’s prospectus – the pic above is an extract from it. A key take away for me is this line:

We believe that our success is largely attributable to our ability to internally develop, operate and market a high quality MMO game tailored to China’s core game player audience.

While ZT Online may have a psychological and economic effect on its players, it is also fascinating to consider the effect of alternate reality game arena – where immersive games are played out in part online and in part in the real world.

Wired has a fun piece on some of the more well known arg protagonists.

At what point do these worlds cross over? At what point would a gamer be able to open a treasure box in game and win a real life luxury item – a Ferrari logo’d box that delivers a real  life 612 P4/5 to the player’s front door?

Game developers should start to consider such mechanisms for synchronicity – such actions would go a long way to making players feel less used by the ‘system’ as Lu Yang eventually felt in the ZT Online article.

Welcome to Virtu8!


All things are pointing to 2008 being the year that virtual worlds really come into their own and hence I’ve named it Virtu8 (virtual world meets 2008 + rapid uptake = virtu8…pronounced “virtuate”).

The New York Times has a comprehensive article supporting my thesis, particularly with respect to the pre-teen kids demographic. In this piece Brooks Barnes points out that Disney is spending circa $100m to create a portfolio of virtual world plays. Following on from their successful proof of principle through the acquisition of Club Penguin in 2007, Paul Yanover and the team at Disney Online are set to create a suite of worlds tied to major entertainment titles this year – per example, Pixie Hollow which is tied to the movie Tinker Bell (screen shot above from the Disney site).

Time Warner’s Nickelodeon is targeting a similar quantum and portfolio approach and Lego and Mattel are hot on their heels.

The plethora of virtual worlds these companies will bring out in 2008 will expose a lot more people to the entertainment value they can deliver. In fact, entertainment will be a key driver for virtu8 – the rapid uptake of virtual worlds. This is a key point postulated by Ted Castranova in his new book, Exodus to the Virtual World. He says:

Virtual worlds are societies where fun matters. The designers of virtual worlds have made a grab for attention…and the weapon they have developed, the mechanism of play, is powerful and well-suited to the task.

I’m still reading it so will reserve comment until I’ve had time to ruminate on it, but so far it supports the point of this post.

While many new avatars will be created this year, it will also be most interesting to watch others mature. What awaits current Runescapers in 2008, for example.

Virtual worlds may themselves mature into an entertainment genre in their own right in 2008, but it is also important for them not to be viewed in isolation. In fact they will be an integral part of general Internet upside delivered this year. In this regard check out JP Morgan’s Nothing But Net report – which TechCrunch covers here.

All up, the scene is set for an interesting year of virtu8ing!