Top 10 Challenges Facing Second Life

We love the idea of the metaverse, we think virtual worlds are really cool and have a lot of potential. Good news is that so do many other people including a wave of new virtual world platform companies that are starting to target Second Life directly. This certainly means that there will be more, better choices for where to create inworld content and deliver meaningful user experiences. In fact we are working now on some very exciting virtual world content for mainstream online users.

In general, we still think SL is currently the best virtual world platform—but the future for SL is unclear and really Linden Lab faces many serious challenges. As content developers, owners and area operators, actually we are more interested in the future for 2009/2010 than where platforms are right now. While the technical capabilities and graphics are still top level, the overall marketing and customer relationship effort from SL is very, very weak. Is Linden Labs one of the few companies in Silicon Valley to have worse marketing than technology?

Noobility by Seifert Surface and Art Laxness at Black Swan: How would the giganoob respond the challenges facing Linden Labs?

The recent blog post from LL CEO Mark Kingdon seems to be more spin and blah blah blah. Says Kingdon: “All are indications that Second Life is becoming more relevant, more usable and more reliable.” Was SL irrelevant before M showed up? Active users are more or less the same, so what exactly is more relevant about the SL community? A few students messing around on discounted priced sims?

Anyway, we have been talking to some of the new players in the market, and as LL hardly seems to listen to us, we though maybe we could share our comments for these potentially interested readers.

Top 10 Challenges Facing Second Life (or the harsh realities of virtuality)

How SL and their competitors take action is what will define the metaverse landscape

10. Linden Labs is making lots of money

LL is raking in the dough from selling land and collecting monthly fees—so where is the problem? Is current success leading LL off a cliff? Sure there are bunch of grousing users, but all software companies have those. Money, er...lots of money means the company should continue to follow it's vision and not get distracted by looking at the marketplace or dealing with customers. And also maybe LL knows that there will be an end to making dough off selling virtual land, so grab it while you can.

9. Land Bubble

SL land mass has grown significantly faster in the last 6 months than active users. Who is buying the new land? We think (although LL doesn't disclose) that a large portion of new islands are conversions of full sims to void sims (1:4). This is because people like to have virtual land near virtual seafront—go figure that one out. And...SL still is pumping their own Mainland and other virtual land developments. Why? Doesn't seem to make any sense for SL to run retail parcels—it is hangover from their early days and they don't seem to want to let go. But it is a distraction and is being hugely cross-subsidized by LL. Anyway, the land market is going to tank soon as the rental market continues to weaken in the face of massive land growth—or maybe LL will start offering mortgages? Expect to see a lot of surprised resident when their sim is gone. This will generate enormous amounts of disappointment. Why doesn't LL learn from current world events and be ready to stabilize the land market in SL? Guarantee parcel conversions to LL owned/serviced land? Oh, right because LL is making money and it is someone else's land bubble actually. And how does LL make money without robust land sales?

8. SL Feature Overload

SL is a large and complex environment—but why? Actually there are tons of client and server functions that are extraneous. And so much code is hard to manage and the key features are not getting enough attention. LL should map their tech work more directly against user requirements to streamline work and create a--(cue music: dah dah dah dah.)--LL should have a roadmap and customer groups to help prioritize?—they haven't done this because they feel no obligation to make commitments to SL residents, users and/or land owners (and see point 10).

7. Damaged Brand

The Second Life brand is well-known for sure, but for what? Weird sex, weird role play? Now there is a push on academic usage which is great, but where is the brand message for mainstream users? How is SL gonna open the virtual world the way Netscape opened the web? Further, many, many, many people do not want a second life inworld, they want an extension of their real-world identities, so the “getting a second life” backfires into some kind of a real life failure message. I was surprised that LL didn't wake up (ok, not really surprised) and use the “the Grid” concept as a way to create a new brand and ditch Second Life or leave it behind for the early adopters currently inworld. Instead LL called it the “Second Life Grid” and now carries all the baggage from SL over to an enterprise offering (which it has no idea about how to deliver btw). Face it, the SL brand is a liability if LL wants mainstream users.

6. Low Reach / Limited Shared Experience

SL land mass is growing, but the reach for how many people visit a specific place over a specific period of time is not. I suppose as the grid becomes increasingly less dense both in terms of prims and people, reach will get worse. Shared experience potential is also very limited. The actual number of people that can do something together inworld is practically just a few at a time. Even fixing IM to reduce chat lag would be a big help. So if that continues, why carry the limitations of a internet connected world when you could just buy a console game with better graphics and physics while chatting to your pals on skype?

5. Market Position and Competition

SL is trapped on one side by the tween worlds (largely 2.5D but getting scale and better graphics) and the consoles (limited internet socialization but growing). Now add a bunch of direct virtual world competitors and the landscape looks very tough. Further, without compelling content, the virtual world space will get squeezed out all together. So—looks like LL sells to Google or AOL or Microsoft within 18 months (if there is a market).

4. Bloated Management

Sure there is a lot of good stuff coming out of LL, but also a huge amount of noise and busy, busy, busy talk. (Like someone stop the lattes after 5pm at their office or something). We hear they have like 300 people at LL—is a lot for an internet company? Is selling virtual land so labour intensive? It is surely a lot of people without a strong management team? It is another example of LL lack of focus and lack of urgency. Er..actually they are agressively hiring (Kingdon posted on 29Nov2008: To support the strategic initiatives we’ve identified, we’ll be hiring 60-70 more people over the next several quarters. This is all part of our commitment to ensure Second Life remains the largest and most successful virtual world.)

3. Estate Management Tools / Sales Management Tools Weak

You would think that selling more than 25,000 islands would merit some useful tools to manage them. We scrape by with inworld tools to manage our sims, but in the last 2 years there have been no meaningful improvements to what is in effect the SL core product. We cannot for example control who can access a sim by pushing a list of names to SL somehow. It is all manual and via shakey scripting hacks. We cannot trigger the lighting settings on a sim to improve the user experience. We had to make our own traffic and statistics metrics. On the other hand, the SL economy is also a core feature and no improvements on managing inworld sales either. We cannot get an automated feed of inworld sales for example. Sales vendors are still very basic and require a lot of scripting to make productive. Oh, and nothing to sell via the web and guarantee delivery inworld.

2. Second Life economy is not profitable to most participants

Sure there is turnover, but the actual profit for making and selling stuff inworld is not very attractive to most participants (porno of course seems ok). So all this talk about UGC and people making stuff is more about people donating stuff or donating their time. Well, the sugar rush is over and the donaters are moving off. Now LL faces the problem of a lot of UGC is various states of completion and all ranges of quality. The first wave of professional developers that had some interest in working in SL exclusively have all moved on as well. Net net, without a profitable reason to make content on the grid what kind of content will people log-on to visit?

...And the Number 1 Challenge Facing Linden Labs is...

1. Who are the SL Customers?

I really do not think LL has any idea on who their customers are. I imagine weird conversations in their office about their “stakeholders” and how important dealing with the “residents” is, but at the end of the day any service organization should know who their customers are. LL had a history of playing favourites with some developers (all of whom left SL) and using their splash pages to promote things like CSI (which flopped). If the customers are the land owners, then why does LL compete with them? As a company that pays LL enuff money (although less and less), we would expect to at least have some kind of service agreement (or even get an invoice actually). Is the air so thin at LL HQ that the old fashion notion of taking care of your customers is laughable?

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My view is that LL is facing a real moment of truth on it's future. Is this plateau leading to a cliff or inflection point? The challenges this organization is facing now are way beyond anything it has achieved in the past. On the other hand they are in good position to take serious action.