Second Life: Incredible innovator, but probably not sustainable

[...] Susan is an associate at Charles River Ventures, blogs and has heard funding pitches in a virtual world (part of the Edelman business planning comp in Second Life). She has a keen interest in the MMOG space and her recent post on Second Life is right on the mark… [...]

Susan,
Do you think that limited sustainability of Second Life is in part due to the fact that there are not clearly defined property rights? I understand that Linden allows people to own the IP on their creations, but not on the actual in game “real estate” space.

[...] Second Life: Incredible innovator, but probably not sustainable « Susan Wu - Venture Capital more Second Life skepticism, this time from Susie (tags: Wu SecondLife CRV VC business models economics) [...]

@Susan

“In fact, today’s social networking services like MySpace and Flickr already incorporate some smart game design principles, such as levelling up, collecting virtual objects, and homesteading in the form of customization.”

I agree with this somewhat, we’ve incorporated this into our design actually its pretty robust and tied to real and percieved community member benifits.

I expect that virtual items will one day become a far more legitimate asset class and that there will be much improved liquidity for these assets in the future. It sounds absurd, but there are some basic economic reasons why this concept of real money trade (RMT) makes sense, despite all of the negativity that RMT receives from the core gaming community”

Theres a great thread going over at Raph Kosters site atm.
raphkoster.com

As well as a few SL and recently a RMT thread over on Terra Nova
terranova.blogs

“I think most of the mainstream market aren’t yet sophisticated enough about content creation to really care about the property rights - what they are looking for is a fun, immersive environment. SL is immersive but IMHO, it lacks structure, cohesion, and a sense of purpose.”

Righto, I like second life, (despite my issues with registered vs actives, churn, and a badly designed interface) but theres a high barrier to entry or the non-technical that will prevent broad based adoption.

SL is immersive, there is no structure, cohesion, and sense of purpose is self derived because its a sandbox. Sandbox experiances only appeal to a particular MMO segment, the segment broadens and gains depth as more sandbox games are introduced, however the majority of participants prefer scripted, well defined game play (in MMOG’s) which getsd into the debate about if SL is a virtual world or a MMOG…thats terra nova territory….

Great blog btw

Allen

Susan: “One day, there will be an open standards based platform that makes virtual asset/world creation as easy as choosing templates and widgets for your MySpace page.”

“One day” is today! There are several projects working on exactly such a platform. I have a browser based 3D platform over at the Ogoglio project and the developers of Open Croquette are making progress on a space which runs on top of Squeak.

[...] Susan Wu, of Charles River Ventures, doesn’t think so. She mentions the standard litany of problems with Second Life: high barrier to entry (in terms of using the interface and creating anything), closed standards, and so on. When I take the dropcloth off the giant crystal ball that inhabits my living room, I see a number of big problems for SL. Keep in mind that despite my pessimism and snarkiness about Second Life, it IS growing at a healthy pace. Nothing like the pace Linden or their media fluffers trumpet of course, but it is growing. [...]

[...] Susan Wu, of Charles River Ventures, doesn’t think so. She mentions the standard litany of problems with Second Life: high barrier to entry (in terms of using the interface and creating anything), closed standards, and so on. When I take the dropcloth off the giant crystal ball that inhabits my living room, I see a number of big problems for SL. Keep in mind that despite my pessimism and snarkiness about Second Life, it is growing at a healthy pace, though it’s still not profitable as far as I know. Nothing like the pace Linden or their media fluffers trumpet of course, but it is growing. [...]

I think you are right on about the high technical barriers to participation; it requires too much an effort to lead a life there.

You should include this cartoon in your blog

http://blaugh.com/cartoons/060803_first_second_life.gif

Cheers
Zheng

Two points on your (refreshing and thoughtful) post: (1) I think you are making a common little error in your opening assessment: “I don’t like it - so it can never be a success”. This is not a bad attitude for a VC. Warren Buffet got very rich by it. Maybe not exactly with the same attitude - but it was mentioned in some bio, that he tends to invest only in companies whose products he personally likes.

But it certainly is not very objective as you mention platforms like MySpace, YouTube and Flickr, but ignore that these platforme are great successes, even though they miss “structure, cohesion, and a sense of purpose”, too.

(2) Where I absolutely agree with you is, that Second Life could have a much flatter learnung curve, a much better newbie experience and that it is totally irrelevant for the current marketing, business, educational and other experiments in Second Life, if this platform survives or not. The ideas of Second Life will live on and finally lead to an open Metaverse. And the lessons learned here and now will give you a valuable head start.

Susan, please forgive me, when I misunderstood you. I tend to do that. But maybe, drawing the line from your personal dissatisfaction to some of the other “minuses” you mention later was not too farfetched. But I certainly don’t want to insist on this interpretation of your post.

Regarding your point (2): I totally aggree with you that there are (dis-)similarities along the lines Internet / Metaverse and Open HTML / Second Life, which you imply when mentioning AOL and Prodigy. Maybe Second Life is doomed because it is not open. Who knows. It is certainly more “open” (when you don’t equate “open” with “open source” than AOL and Prodigy were in the 90s.

Regarding your other points: I guess comparisons are always hard and often don’t make much sense to the “other side” in an argument. What is comparable and what is not usually is part of the argument in many discussions. Comparisons of Second Life to other platforms on the market are especially hard as there IS NO similar platform. Maybe you can compare SL to There but certainly not to WoW or similar offerings.

When I mentioned MySpace, YouTube or Flickr I did not want to imply that they are virtual worlds or can be compared to Second Life in many aspects. All I wanted to say is, that these platforms don’t show much of a clearly defined “structure or purpose” (at least to me personally) and still are considered successful.

And if your replace “structure and purpose” with “building blocks” or “patterns of behavior” (maybe that is what you mean with “rythm for how to participate”?) there are a lot of similarities between MySpace and Second Life.

A Second Life resident buying some land, building a house, decorating it, installing an audio and video stream and inviting all the people for which he has collected cards so far to his house warming party is not THAT much different from a user creating a MySpace page. It is all a matter of self expression and making connections. And there are very well established rythms for how to do that. You are just using different mataphors and have a lot more freedom in Second Life.

It takes a lot more effort, too and this does reduce the mass appeal significantly. I totally aggree with you on that.

But - making the admittedly shaky comparison between the Internet and the Metaverse again - I am not sure if we already have reached the point in the development of the Metaverse where MySpace-like applications make a lot sense. In the early years of the Internet, building your personal homepage was a lot harder, too. There were not many easy to use tools. And there were not many established patterns on how to structure and “use” it.

Just know, Second Life is an open-ended platform like the Internet of 1995 - on which you could slap on a customized front end to build a kind of MySpace-like “virtual home builder”. If there is a market for that, it will certainly be done; maybe based on Second Life, maybe based on some other platform.

And, no, I am not saying that SL IS “sustainable”. Nothing is - in the long run. No disaggreement there. I guess we only disaggree a bit on what lessons can be learned from the past and what comparisons make sense…

I agree that ‘flow’ will be a key aspect of how Second Life will become truly world-changing, and that it doesn’t have it today! So many things that you do in SL are clunky. Where I would disagree with Susan is that I think it is quite possible that we (Linden) will be able to make some those changes, and that really brilliant content designers in SL will find others.

“Yes, they get a lot of publicity and their logins are growing at a fast clip - but I suspect there is a significant amount of churn.”

You need not suspect a significant amount of churn — you can estimate the churn rate directly from Linden’s publicly-released login numbers.

I’ve been tracking the 7, 14, 30, and 60 day unique login numbers since they were first reported, and can say with a high degree of confidence that

a) the number of unique logins over the past 30/60 days is less that the number of new accounts registered in each of those time windows,

suggesting,

b) at least 1 out of every 5 accounts registered will not log in to Second Life even once,

and,

c) somewhere between 85 - 95% of accounts that existed two months ago have not logged in over the past 60 days.

These numbers suggest a modestly-sized core (probably ~60-80k) of consistent users, and a larger number of “one-off” visits (griefers, media-hyped events) facilitated by the ease with which throwaway accounts can be registered. These estimates are obviously unofficial, but I have a high degree of confidence that they’re not too far off the mark.

After a recent and (probably excessive) immersion in SL I drew a few conclusions.

You either get it immediately or you drop out.

If you get it, it’s a giant Skinner box that sucks you in until the pellets just don’t taste good anymore. Until then you eat them by the millions. That seems to take people about two months.

My anecdotal experience supports Tom’s conclusions above.

- Many people never come back after their first dismal experience at help island.
- Those that make it past that hurdle are consumed by it with a half life of about 3 weeks. However, unlike a half-life the decay isn’t asymptotic, people just sort of disappear when they’ve had enough. Sort of a binary half-life.
- A small group of hard core users buy land and stay for the long haul.

These days there about 1.7M total accounts with average concurrent users running about 15K. The system certainly wouldn’t support more than 20K concurrent users today. When you meet people in world they have usually been there less than a month. Occasionally you meet someone who has been there more than three.

I posted a more complete comment on this topic here.

Not to beat this to death… but this corollary discussion might be interesting to those of you following this discussion.

“For example, the exercise of deciding what parts of a ‘user homepage’ should be customizable vs rigid has an analogue in the MMO world - how much of the storyline or the world environment should be fixed, where should we allow for player creation in a way that fosters a sense of ownership without disrupting the ethos we’ve created?”

Gosh, we struggled with this quite a bit in our design, what it came down to for me was real and percived benifits of our service as well as guiding principles:

1. Site performance, lag, and optimization vs user customization

If I’m going to bottleneck a members customization (to maintain overall performance) of thier space in our community then there should be a equal benifit, either real or percived.

If you look at Myspace, its a very ugly UI, but it allows for maximum customization.

The remedy:

A beautiful UI with customization based on a reward structure, that reinforces thier status in the community, that also allows for unintrusive customization.

Amy Jo Kims book should be everyones guide to building community. I took almost 75 pages of notes related to the development of our site based on her books principles.

[...] 5 Linktipps: - Was ist Second Life? - A new world order: Virtualität trifft Realität - Die Figuren verlassen die virtuelle Welt - adidas: Wie bringt man eine Marke in die virtuelle Welt - SL: Incredible innovator but probably not sustainable [...]

Re: VentureBeat » Susan Wu, the first virtual venture capitalist, blogs

she’s sceptical, as indicated in her blog but isn’t the only one, , Clay Shirky writes in Valleyway: A story too good to check Second Life, the much-hyped virtual world backed by Benchmark Capital, is heading towards two million users. …

[...] I’m still not sure what to make of cause-related avatars myself. I have particular concerns about their sustainability. I identify with Susan Wu’s comments about Second Life: Second Life is interesting to me - I truly respect the service, but I don’t love it. That is, I have a lot of intellectual respect for the way they’ve run their business - they’ve been bold, innovative, and relentlessly experimental. But the service doesn’t grab me emotionally. I also think that their high technical barriers to participation and the fact that SL is a closed standards system ultimately deters them from reaching mass market adoption. Yes, they get a lot of publicity and their logins are growing at a fast clip - but I suspect there is a significant amount of churn. I spend a lot of time in the area of virtual worlds - because I think we’re just at the tip of the iceberg here. [...]

On your point about SL being a closed standards system, I was interested to read the press release by the Free Software Foundation that announced support for the Free Ryzom campaign which plans to rescue the online game and universe from the bankruptcy and release it as free software. Maybe I’m getting the wrong end of the stick, but this sounds like it could be a step on the way to an open version of Second Life.

[...] Second Life: Incredible innovator, but probably not sustainable: Susan Wu - Venture Capital they’ve been bold, innovative, and relentlessly experimental. But the service doesn’t grab me emotionally. (tags: business secondlife virtualworlds models gaming metaverse economics venturecapital) [...]

[...] 9th, 2007 in open source, second life, virtual worlds In a previous post, I talked about how I respected Second Life but felt that it was probably unsustainable, primarily due to the fact that the system isn’t more open. Virtual worlds and social [...]

[...] and some of the “i don’t like it, therefore it’s doomed” school, who, while reflecting personal preferences, might have a large following. A huge problem is the coverage in the “professional” [...]

[...] agree with venture capitalist Susan Wu: Linden Lab’s Second Life is an incredibly innovative platform, but is probably not sustainable. I have noted, as Wu does, that the closed system has a high barrier to entry and doesn’t [...]

[...] halten. Die Meinung des Vortragenden ist, dass alles was von Firmen in Second Life betrieben wird nicht nachhaltig ist, sondern nur zur Erprobung neuer Marketingstrategien dient. Die Kosten für die eigene Online [...]

[...] was an early skeptic about Second Life, because it didn’t offer these [...]