Do businesses need to get a Second Life?

31-08-2007

by Emmet Ryan

Second Life offers a new market to businesses, but many firms remain unconvinced of its merits.

On paper Second Life's growth has been phenomenal. With 8.5 million users registered, the vast majority of whom have signed on the last 18 months, the virtual world has grown at a rate comparable with sites such as YouTube and Facebook.

Numbers can be misleading however, and as the rapper Chuck D would say, 'don't believe the hype'. According to analyst firm Gartner the real number of users is closer to a tenth of that figure.

"Clearly there are not 8.5 million users. If you look at the number of unique visitors Second Life receives, the number of active users is closers to 750,000," said Steve Prentice, chief of research at Gartner. "It's still a reasonable number but if you look at some online games, such as World of Warcraft and RuneScape, they have several million active users," said Prentice.

World of Warcraft, like Second Life, claims to have over 8 million subscribers but unlike Second Life it has received subscription fees from all of them.

In a straight comparison it doesn't look good for Linden Lab's creation, yet such a measure does not accurately project the potential of this virtual world.

"In the overall scheme of things Second Life is not big in terms of numbers but give them their due. The amount of hype and press coverage they have generated has been amazing," said Prentice.

He said the type of visitor Second Life attracted was different to those of online games. "A common complaint from newcomers to Second Life is that there's nothing to do, but that's not necessarily true," said Prentice.

The type of activities available on Second Life are suited to an older demographic than online games and even other virtual worlds, such as There.com, meaning the experience is designed to be different to what many younger users expect.

"The average age of visitors to Second Life is 33 while the average for There.com is 22. The younger visitor is looking for more instant gratification while users of Second Life tend to enjoy the process of building the world around them," said Prentice.

While residents of Second Life are patient, businesses operating in the virtual world have been far more anxious.

Prentice said the mistakes being made by firms entering Second Life are similar to those made in the early days of the internet and the early failure should not sour their taste for virtual commerce.

"In the early days of the web companies piled in and made mistakes. They are doing the same thing in virtual worlds," he said.

The key to being successful in a virtual world is pretty much the same as in real life: businesses need to understand the market.

"The difficulty for organisations is in understanding what the community [of Second Life] wants. It's not just about creating a virtual version of an online store," said Prentice.

Such are the similarities Prentice sees between the development of environments such as Second Life and the internet itself that he expects virtual worlds to be as big as the web within 10 years.

With such potential for growth the USD64,000 question for most firms is what does the virtual community of Second Life want from them.

Dublin-based firm Thinkhouse PR has set up an office in Second Life and is still trying to solve this puzzle. "We are very much still at the toe-in-the-water stage, we are still finding our feet," said Jane McDaid, managing director of Thinkhouse.

So far though, the move to the virtual world has seen Thinkhouse benefit, giving it an edge over its international contemporaries in promoting events.

"One of the brands that we represent is launching in Second Life on a global scale. Having a presence there has given us a head start on the other firms who represent them across the globe," explained McDaid.

While Thinkhouse has enjoyed early success in the virtual world McDaid said the firm still faced challenges in Second Life.

"We had planned on getting Second Life clients, but not without Second Life-based staff," according to McDaid, who said the quest to find staff to manage virtual clients has proven cumbersome.

"Recruitment is one of the most challenging jobs of any managing director and it's 10 times harder in a virtual world," said McDaid.

Vetting prospective staff has proven difficult for the firm but McDaid is undeterred by these setbacks as she believes the potential of the virtual world makes it worth the time invested.

"We can't ignore that [Second Life] has continued to grow," she said. "It's like any society, you just have to understand how it works."

Rather appropriately Thinkhouse's offices in Second Life are based in its virtual representation of Dublin. The virtual city's owner and mayor, John Mahon, said businesses will find a way to adapt to this new market due to the way in which it has developed.

"All the major players, such as Google and Microsoft, are looking at ways to get into a 3D environment. Second Life has an advantage in that its development is being driven by the residents, not by the businesses. This will secure its future in the long run," said Mahon.