TechWeb

Second Life Opens For Business

Feb 23, 2007 (07:02 PM EST)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=197008342


A penguin has been showing up at Cisco Systems' public events lately. It never causes a disturbance but sits quietly and listens to presentations on routers, optical networking, IOS software, or whatever the topic happens to be. It's the only penguin in the room--everyone else is human, although some are rather eccentrically dressed--but no one gives it a second look.Welcome to Cisco's headquarters in Second Life, Linden Lab's immersive technology platform that's the ultimate enabler of personal fantasy. Originally the stomping ground of gamers and technical hipsters, this 3-D virtual world has taken on some of the blander characteristics of the Mall of America. Adidas, Circuit City, Dell, IBM, Sears, and Toyota have all established beachheads there. And depending on your point of view, Second Life is either an exciting precursor of how we'll be conducting business in coming decades or the ultimate exercise in corporate flat-footed dunderheadedness.

"What the useful application will be for business is the million-dollar question," says Bob Moore, a member of the research staff at the Computing Science Laboratory at Xerox Palo Alto Research Center, who studies virtual worlds. "A lot of it is just plain hype. We see corporations are excited about it ... but the jury is still out about the real business value."

Circuit City's echo chamber
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Circuit City's echo chamber


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Grand Plans, Negligible Results
Second Life, an Internet-based 3-D "metaverse" launched four years ago, boasted more than 3 million registered residents by the end of January. Users create alter egos, called avatars, to represent themselves. Avatars can range from faithful representations of themselves to complete fantasies that bear no relation to the human form. They can walk, run, sit, fly--even have sex with one another. Residents can own property, build houses, open businesses, and buy and sell products and services. Although typed messages are still the prevalent mode of interacting, the emergence of VoIP is making it possible to communicate using speech. Unlike many other massive multiuser games, there's no script--players interact how, when, and with whomever they choose.

Companies that have entered Second Life have made grandiose predictions about how some of the biggest design, marketing, and sales challenges in the real world are about to be solved by the virtual one.

Having trouble understanding what your customers really want in a pair of jeans? Let them design the jeans personally. Ditto a car. Or a new kitchen. Want to increase brand awareness? Open a storefront where shoppers can virtually browse your products, "engage" with them, and become more loyal. Hope to convert browsing into real dollars? Add a link that sends them to your Web site, where they can hand over their credit cards.

It sounds good. The problem is that none of this is happening. The virtual stores are empty. The design simulations are kludgy and represent the ultimate exercise in pointless boredom for users who want to indulge their ultimate fantasies, not decide between olive green and stainless steel for a new refrigerator.

And about designing those jeans--or shoes or cars or furniture--that can then be translated into real-world products and sold: This is an unlikely prospect in a world where people aren't particularly interested in creating faithful representations of their real lives.

"It remains to be seen if boring convention will take over from escapism and whether the two can coexist, much less result in real-world results," says Gartner analyst Steve Prentice.

"It's definitely not yet a mature commercial environment," says Joel Greenberg, senior planner with advertising agency GSD&M, which handles accounts for AT&T, Chili's, Southwest Airlines, and Norwegian Cruise Line. "Your ROI isn't going to be based upon sales but on other factors." Greenberg has yet to interest any of GSD&M's major accounts in establishing Second Life sites. They're "confused and resistant," he says. Besides not knowing what Second Life is, they don't like the relatively small audience, Greenberg says. "They're used to being mass advertisers, not marketers to limited communities, and there's a fundamental difference in that approach."




Disquieting Emptiness
It's 3 o'clock Pacific time on a Saturday afternoon, and the Toyota showroom is deserted. At a time when auto dealerships in the real world are hopping, no one has bothered to show up to take a virtual Scion for a spin.

The same disquieting emptiness pervades Reebok's store. Neat stacks of shoeboxes are displayed in the center of the football field-sized room. Oversized posters that scream the Reebok brand line the walls. But aside from a horned creature who flies in for a moment, looks around, flicks his long tail, and leaves, it's devoid of activity.

Linden Lab's traffic counter--which awards points based on how residents divide their time within each 24-hour period--showed total traffic at Reebok's store, which opened in August 2006, at 741 in mid-January. The Sears store, which opened in early January in partnership with IBM, was at 964. Toyota's showroom opened in November and topped the corporate retail destinations at 1,955. By contrast, Second Life's Elements Lounge--one of the most popular sites--displayed 133,217 traffic points.

Although Second Life has nearly 3 million registered residents, the blogosphere has hotly debated the relevance of that number, as one person can create multiple avatars. Only between 10,000 to 30,000 avatars are in the world at any given time. And of all the people who sign up, only about 10% become permanent members of the community, Linden Lab says.


No mad rush to Toyota's showroom
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No mad rush to Toyota's showroom


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Compare these numbers to popular multiplayer game World of Warcraft, where between 33% to 40% of its 8 million users are online at any given time, "and you start to get a sense of how sparsely populated Second Life is," says Edward Castronova, an Indiana University professor and head of the school's Synthetic Worlds Initiative.

"It's a big space, and there aren't a lot of people there at once. It can be a very lonely experience," says Nicholas Ducheneaut, a researcher into virtual worlds at Xerox PARC. "You really have to wonder whether these big companies are putting the cart before the horse: They're hoping to get attention and perhaps even sell their products, yet their stores are empty."

But success in virtual worlds may not be as simple as measuring foot--or flight--traffic. After all, conventional Web sites benefit from the "long tail" phenomenon: They don't get a lot of traffic at any given time, but the total volume of hits eventually adds up to significant numbers.

Since an essential aspect of Second Life is the interactivity both with objects and with other users, simply recording how many avatars show up for a look is meaningless, says Giff Constable, VP of Electric Sheep, which developed the Reuters and Starwood Hotels virtual properties. Traffic would have to include how long people spent there, what they do, what they look at, and whom they interact with. Some measure of the community aspect of the experience is needed as well, he says. "The Web is a solo experience. Second Life is a shared one, and the metrics have to reflect that," Constable says.




Let's Just Talk
Echoing virtual retail halls notwithstanding, initial attempts to use Second Life as a communication and collaboration platform look promising.

Cisco entered Second Life in December, testing it out by doing executive briefings, technical support, and product training in its virtual campus. "We're basically extending our use of existing technologies for interacting with customers into Second Life," says Christian Renaud, senior manager of business development for the Cisco Tech Center, the company's technology scouting and incubator research group. "We're finding it extremely useful for communicating and collaborating in a way that you simply couldn't do over the telephone, or using the Web, or through a combination of the two."

A case in point: Renaud, who's based in rural Iowa, went for an early-morning walk in the Cisco Second Life campus one day in January, when an ice storm had shut down the region one day. Recognizing him by the oversized name tag that hangs above the head of all Second Life avatars, two customers stopped him and quizzed him about a recent Cisco announcement. "We had a very productive serendipitous chat, just as you would around a real water cooler," Renaud says. "If I were walking across our San Jose campus, they wouldn't have known who I was," he says. "And we would have missed an opportunity to get some valuable feedback."

For Sun Microsystems, Second Life does something critical that's missing from other communication platforms: It puts information in context. "If I enter a Web chat room, I know that there are 45 people there, and I can read what they're saying and try to get a sense of what's going on," says Chris Melisinos, CTO and chief gaming officer. "In Second Life, I can immediately see that there are three people at one end of the room, and 42 engrossed in conversation around an object at the other end. This gives me a great deal more information."

Companies putting up virtual replicas of real-world stores are missing the point, Melisinos says.

Cisco plays host to penguins and others in its pavilion
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Cisco plays host to penguins and others in its pavilion


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Brave New World
One thing that won't be resolved for some time: how to manage the relationship between the fantastic elements of virtual worlds and conventional business behavior, strategies, and goals. Melisinos' official Sun avatar is dressed like a character from Firefly, a Western-themed sci-fi television show (now canceled). His costume comes complete with cowboy hat and gun holster. Is this a problem for his employer? Not one bit. "If I had a blue dress suit and tie on, I wouldn't be viewed very favorably by the Second Life community," says Melisinos. "If you try and paint on that corporate face, you devalue your message, and basically announce that you are just using the space for PR. And the community doesn't like that."

But some companies simply don't want to get mixed up in an anything-goes culture, preferring to establish their virtual presences in safer environs. There.com is designed for a younger audience than Second Life's; nearly 70% of its 600,000 users are between the ages of 13 and 26. The creator of the site, Makena Technologies, screens all content before it's allowed into the world, says CEO Michael Wilson. "We're looking for two things: whether the content passes our 'fig leaf' test and whether it infringes on anyone's intellectual property," Wilson says.

This more structured approach to a fantasy world appealed to MTV, which established virtual versions of its popular Laguna Beach and The Hills TV shows on There.com. "For many mainstream brands, it's very important that they not show up next to flying appendages," Wilson says.

Many think that codes of behavior will develop naturally, where you will see communities forming just like in the real world--some safe and others more risqué. "I was trained as a biologist, and most of what we're seeing behaviorally in Second Life is exactly what you would see in a closed isolated environment in real life," says Gartner's Prentice. "As the virtual world develops, there will be cultural stresses and strains and battles over resources, and the society will have to come to terms with how to regulate itself."




Community Spirit
On one point, everyone agrees: Real-world businesses wanting to see any measure of success in Second Life are going to have to become part of-- and give freely to--the community.

"Companies need to investigate before they jump in ... try to understand what the community values, and how to give it to them," says Garrett French, a partner with Bold Interactive, a community marketing incubator. The first thing businesses must do is give up control, he says.

"You have to think of yourself as providing a kind of brand play dough, giving users the ability to manipulate your products and services according to how they fit within the community," French says. This idea can be frightening for major brands used to tightly controlling their message, he says.


Eerily quiet between presentations
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Eerily quiet between presentations


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Companies must ask what utility they're giving users that they can't get from a conventional Web site, says Greg Lastowka, a professor at the Rutgers School of Law, who studies the legal and cultural relationships between virtual worlds and real life. "I don't see anything wrong with putting up virtual billboards or opening a virtual store in Second Life, but it comes down to ... how do you want to spend your overall marketing and advertising dollars, and what's the payoff? If the Second Life community simply ignores your billboards or your store, what's the point?"

One of the most disconcerting aspects of wandering through the beautiful but vacant commercial spaces of Second Life is that none of the major companies has bothered to "staff" its virtual space. The social part of the shopping experience is completely lacking.

Hiring and training employees to act as avatars to greet and guide visitors is a logical next step for businesses, says PARC's Ducheneaut, but a major change of mind-set is involved, and it will be labor-intensive. "You need these spaces to be warm and welcoming," he says. "This means there have to be avatars there at all times, and real human beings behind those avatars. This will require a tremendous commitment of resources."

Back to that penguin. As it turns out, it's a prominent Second Life blogger who goes by the name of Nobody Fugazi. In real life, he's a programmer, hence his genuine interest in Cisco products. "He's very cool, very funny, and we welcome him to our events," Renaud says.

In spite of the uncertainty Cisco and other companies face in Second Life, the risk of not getting in now is much greater than the risk of jumping into it too soon, he says. "We need to identify the hurdles as well as the opportunities," Renaud says, "and start working on them now."

Illustration by Ryan Etter

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