Virtual Worlds Open for Business

Business in the virtual world got very serious, very quickly in 2006. There have been a lot of false starts over the years. The massively multi-player gaming worlds like EverQuest and the eight-million strong World of Warcraft were always fascinating phenomena for their niche audiences, but they only made money for Sony and Blizzard/Vivendi, respectively, not for anyone else. And I covered the fledgling a number of years ago, but that 3D playground seemed to be a little too much ahead of the curve, although it is getting some traction now.

Several things changed last year, however. New collaborative tools emerged online, like the wildly innovative Lycos Cinema, which lets a network of friends chat and share links while viewing the same video from multiple locations. The ubiquity of broadband not only made accessible many stalled dreams for interactivity, but it seemed to inspire developers to get more ambitious. And then, of course, there is the poster child of virtuality, Second Life. What started early in 2006 as a niche neighborhood for about 250,000 3D avatars ended 2006 with 1.5 million registered users, half of whom were regularly active.

More than a fad, the most interesting part of virtual worlds now is the multitude of business models rushing in and the degrees of creativity involved. The highest profile new occupants of Second Life, for instance, are Reuters, Toyota, Dell, and IBM, but these companies are going much further than simply erecting billboards in virtual downtowns.

IBM isn't advertising itself so much as using the tools of Second Life to construct virtual meeting spaces for its own clients. The company announced recently it would be investing tens of millions of dollars in virtual worlds because it believes a great deal of future business will get done there. On its island in Second Life, IBM has already held scores of business meetings and hosted virtual demos with partners around the world. recently launched a voice-enabled virtual classroom experiment with the New York Law School that puts distance learning into a 3D online space.

For business publishers and educational and medical information providers, the possibilities seem endless for this kind of technology. Just imagine the lucrative webinar format in 3D where voices and words are attached to real (well, kinda real) faces and avatar bodies. Distance learning could literally be transformed if enough people became as comfortable with virtual-world engines as they are now with webcasting and instant messaging. Content providers now develop webinar and webcast environments for marketing clients via third party technology companies. Soon, they could leverage or Second Life worlds to host virtual promotional events for their advertisers.

And how 'bout the trade show and conference markets? Imagine a two-tiered pricing system, one for physical presence at a trade show and exhibit floor and another for virtual presence. Certainly, the technology is already there to demo products in 3D space as your avatar walks the floor. I'll miss those free Hershey's Kisses and vendor t-shirts, but still. (Note to self: investigate market for virtual tchotchkes.)

As media of all kinds extend themselves into virtual space, it raises countless issues of who owns what. Increasingly, content providers are going to be asset providers in a virtual realm where users appropriate and mash up the content into re-creations of their own. For instance, in virtual games like World of Warcraft, gamers can shape their own characters and work to horde piles of gold, but according to the EULA, Blizzard Entertainment maintains ownership over everything that is made by users in this world. On the other hand, Linden Labs, maker of Second Life, recently went the other way and declared that the avatar/members themselves retain all content property rights to any goods, businesses, housing, and anything else they create there.

Even before we get to 3D avatars and worlds, however, you can see the most advanced publishers already starting to redefine themselves as content hosts. Penton's was among the first to move to a full blog format years ago and to invite other IT professionals to create their own blogs within this brand's universe. Spin this model out a bit, and the content provider is an environment provider. This is a shift in roles. Your job is not to provide information but to offer tools and massage other people's messages in a way that facilitates their making good content.

Virtual worlds will be the place where media as we know it meets and mashes up with the new interactive tools and avatar/identities. See you (or someone who looks a lot like you) there.