[MUD-Dev] The business of avatar worlds (was MMORPG Cancellations: The sky is falling?)

[F. Randall Farmer]

It's great to have such a great range of folks on this list. This is
especially true on this thread (a branch about about the interesting
differences between the "simulation" vs. "social world" vs. "game"
motivations for players/business.)

My most recent blog entry to Habitat Chronicles may have something
to contribute to this discussion, and I'd love your feedback here on
the list or on the blog or over at TerraNova.

From:

   http://www.fudco.com/habitat/archives/000020.html

(It is long and a bit easier to read on Habitat Chronicles)

-------------------------------------------------------

The Business of Social Avatar Virtual Worlds
Or, why I really like Second Life, even if their business is most
likely doomed.

There, Inc. recently announced that they are winding down their
consumer service to focus on external contracts (read: Government
simulation and ramping up their platform business). This sort of
repositioning is all-too-familiar to Chip and me. Radical shifts
like these usually signal the beginning of the end.

Here's a riddle:

  What do you get when you combine three failed dotcoms?

Answer:

  A really, really big crater.

Electric Communities (a.k.a. Communities.com) made similar business
strategy shifts when we abandoned our too-big-too-slow-
too-soon-solution-without-an-acknowledged-problem secure distributed
world EC Habitats/Microcosm in favor of leveraging assets then
recently acquired in a 3-way merger with OnLive! and The Palace,
Inc. After our attempt to capitalize on delivering advertisements to
Palace users failed, we then repositioned once again as a multi-user
interactive media production company.  Those are pretty big shifts,
and the people working at EC didn't possess the needed skills to
succeed at a complete transformation of two different businesses.

We'll see if There can weather a shift of this magnitude.  Though,
history doesn't bode well:

A history of the business of social avatar worlds

  World Business          Disposition
  Habitat/Club Caribe     Succeeded
                          (when services charged $.06/minute)
  WorldsAway              Business failed
                          (after services went flat-rate)
  ECHabitats/Microcosm    Never shipped, abandoned
  The Palace              Business failed. Twice.
  There                   First Business (social) failed,
                          platform business TBD
  Second Life             TBD

Many other miserable failures were omitted from this table for
brevity.

These products all had avatars with animated gestures, virtual
economies with scarcity and real-estate, the last three had
user-uploaded textures, two even had user-programmable objects.For
the first four projects, Chip and I had a significant hand in their
development, repositioning, and/or deployment, so we've been down
this road many time before. I've done some UI consulting work for
Second Life.

Lessons applied

In the Lessons of Lucasfilm's Habitat, we prescribed certain lessons
about virtual worlds. During the 90's, we followed our own advice on
several projects. The architects of many other virtual worlds took
our words to heart as well. The Palace founders (later acquired by
Communities.com) and Second Life architects made a point to tell us
so.

In fact, Second Life embodies several of the original lessons almost
to a fault, specifically:

  - Communications bandwidth is a scarce resource.

  - The implementation platform is relatively unimportant.

  - Detailed central planning is impossible; don't even try.  And
  especially our Future Directions section which said to

  - Let the users create the content - both the world and objects.

Communications bandwidth is a scarce resource.

A future post will detail why this is true as much as ever, but I
find it interesting how There and Second Life each applied this
lesson: There ignored it (in the sense of client graphic bandwidth)
and selected a rendering design that required a high-powered
graphics card, processor, and a fairly beefy Internet connection. Of
the 5 machines I own, exactly 0 are officially compatible (I have to
hack my way around the hardware check.) This choked off their
customer base from the start.

Second Life was designed to run on a broader range of graphic
hardware, but used streaming technology (the Founder was a RealAudio
engineer) to attempt to combat the bandwidth issues. On the graphics
side, they decided to use the minimum set of features they could get
away with from an open standard: Open GL. This allowed them to apply
another lesson like no one had before...

The implementation platform is relatively unimportant

In Habitat Redux, we basically recant this lesson, indicating that
there now is a standard platform - MS-Windows + The Internet + The
Web browser. It seemed to us that a universe of protocol-only
compatible virtual world clients could be built, but the compromises
required (lowest common denominator graphics and sound no common UI
conventions, etc.) and the extra development time would mean that no
one would make the investment to implement that for a stand-alone
application. Certainly not for a social virtual world. With EC
Habitats we tried (using Java as our core for the client), but it
only made the application too slow to use. But, lo and behold! 5
years later - here comes Second Life: a proof of concept for this
principle.

Detailed central planning is impossible; don't even try.  and the
corollary Future Directions: Let the users build it, all of it.

In Chip's most recent post he writes about how we discovered
significant hidden costs related to user generated content. Let's
call the sample instance of the context problem: "Oh! There's a
penis on your sweater!"

Fortunately, There saw this problem coming and decided to charge
people a fee to moderate their uploaded content, a move that seemed
to make complete sense. We still don't know if this portion of the
business was break-even, so the jury is out on the viability of this
solution. It certainly wasn't enough to make the company profitable.

Second Life instead decided to make their service adult-only to
dodge the problem of kids being exposed to uncontrolled
content. They also let users create arbitrary 3D objects out of
primitives, add scripts, provide communications conduits to off-site
services, provide virtual real state with user landscaping, and run
it all on top of a physics simulator.

OMG! Second Life is the system the original Lessons of Habitat
described. The Graphical Mud Xanadu. How could it do anything but
succeed?

Second life has the smallest active population of any virtual world
platform on my list even though they continue to innovate and enable
more and more sophisticated user-created-content.

[Image from Blade Runner of the giant airship over the city.]

I loved it when I was unemployed. It was nothing but fun and
intellectual challenge to produce an invisible teleporting
100-round-per-minute auto-cannon that ripped havoc throughout the
WWII online community that settled there. Creating a Blade Runner
blimp that traveled the world and handed out teleport cards to the
city of Little Tokyo meanwhile playing a custom Japanese audio track
was the highlight of my citizenship.

But, as soon as I got a job, I stopped creating, and then I stopped
playing.

This wasn't a big surprise to me. I mentioned above that I did some
UI consulting work for Second Life. Linden knew that the 1.0
platform was content-producer-centric and they needed to reorient
their interface to accommodate content consumers: Those who would
come in and enjoy all the wonderful content generated by folks like
their early adopters (and me). I helped them design a new UI, which
has been implemented over the last 8 months or so. It does almost
everything I recommended and a lot of other great stuff, like maps
of the most popular locations, events, and objects and land for
sale.

But where are the consumers? Where are the folks who will pay to
participate in all this great (and not so great) user produced
content? We built it, why aren't they coming?

Because available online time is a limited resource and ...

... users who are gamers play MMORPGs, and web-games
     and need that structure.
... user who aren't gamers are used to either...
    ... visual entertainment being delivered to them and/or
    ... chat-like interaction being low-overhead, mostly IM.

Loading a large a client, traveling a virtual geography with an
awkward avatar, looking at a map to find and interact with people,
and experimenting with a bunch of user-generated experiences of
varying quality is just too heavyweight for people who are used to
Television, Instant Messaging and Email.

It's like comparing cell phones and video phones: We've had the
capability for home video phones for over a decade but we don't use
them because we don't need them. They only add very little
incremental value and introduce a bunch of overhead and
complication.  On the other hand, cell phones took over in a shorter
time because they significantly increased the utility of what a
phone was already good at: Connecting people for immediate
conversation. Interestingly enough, camera/cel phones can now send
movies using the same technology that the picture-phones had. The
big difference is that the camera is movies (pictures) are recorded
separately from the conversation, which is a model that has much
greater utility.

Where does that leave us? Are social/avatar virtual worlds doomed to
business extinction? Is there any way services like Second Life can
make it?

Perhaps.

Focusing on the problems at hand:

  Consumers want to be fed content, they may even pay for it and a
  good platform can enable many talented people to create content,
  it seems that the main missing components are a way to identify
  and promote the content the consumers want and a way to deliver it
  to them with the least possible burden on the consumer's part.

If Second Life can accomplish this, they will be the first.  I wish
them the best of luck!

See my earlier post about a different path that avatars have taken.

Randy
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