Second Life and Missed Opportunities

One thing that tends to happen in the software business is that the existing players define the market, and define for people the market potential. I guess that happens in any business.

For example, I continue to believe that good home design software - stuff that lets you select and position furniture, and try out design ideas inside a 3D model of your house - is a huge opportunity, because nobody's done a good job of it yet. The existing software is awkward to use, and just doesn't work very well.

But anyone considering getting into this market and actually doing a good job of it looks at the state of the market today and comes away with the conclusion that software in this category doesn't sell very well. The category doesn't thrive because people assume it's not viable, whether or not it actually is.

Second Life is doing that to what I think is one of the most promising future technologies, that being user-generated online virtual worlds.

What we need is a game-changing player to show up with a high quality client, good content creation tools, and some incentive scheme for users to create their own experiences within this world. I think Second Life might actually be scaring away this potential innovator.

Part of Second Life's problem is that it requires a client, and users just aren't into downloading and installing client software to try out an online service. They do it for World of Warcraft because of the expected payoff - that it's a fun game to play. But SL's payoff isn't that well defined: There is no "game", there's a virtual world to explore. Sounds like fun, but does it sound like something you'd pay to do?

Here's what I think the virtual world "Perfect Storm" would be:

  • Great content creation tools. Second Life's tools are primitive.
  • Free. Sorry, but I think this needs to be supported by some other model. Maybe it's in-world ads. That's what worked for the rest of the Web.
  • A browser-based client. Flash or Silverlight or some other very-easy-to-install plug-in. Maybe it's not as rich as a separate downloadable client, but users need to be able to get a feel for the service in a minute or two.
  • In-world streaming video. It's not technically that hard to stream video onto a polygon, and that's where some of the ad potential comes in. It's also an easy way for people to add richness to their environments.
  • Entertainment-oriented content and creation tools. Not just a world you can explore, but a place where experiences can be created. You want people to be telling other people to check out Zork Seventeen, which just happens to be in this new world. It's not all entertainment, but I think a lot of it should be focused around that. Think about the quest system in World of Warcraft, and how to enable anyone to create those sorts of quests.
  • Hyperlinkable. For something to spread virally, you need the ability for folks to say "check this out" and paste in a link.

Sure, everyone wants better products for free - but something like this, in my opinion, has the potential to be bigger than Second Life, and even things like World of Warcraft and YouTube, because it can combine the best elements of all of them.

This is a big bet to make. It depends not only on new technology, but on access to significant resources for hosting and bandwidth and the like, especially while it's initially growing and not bringing in a lot of revenue. And it depends on people thinking in new ways about generating revenue online. I think Google could swing it. Anyone else?