A second life for virtual worlds?

A couple of years ago, it seemed the time had come for virtual worlds.

A couple of years ago, it seemed the time had come for virtual worlds. The poster child was Second Life. Organisations of all stripes were falling over themselves to be associated with this latest in social networking as the virtues of the next big thing were relentlessly extolled.

Lately, however, the hype seems to have died. The flurry of press releases and news stories have abated and many an enterprise has quietly withdrawn from the experiment or simply let things drop. So is it all over for virtual or 'synthetic' worlds, or is there life in the young dog yet?

Steve Prentice, vice-president at Gartner, believes the initial wave of publicity around public virtual worlds has now peaked and disillusionment is starting to set in, which is leading to a retrenchment.

"Public virtual worlds are the area where there's a general level of frustration and dissatisfaction because of difficulties in using them and issues around reliability and robustness, which has taken its toll from the enterprise perspective. This means that those not drinking the Kool-Aid are increasingly sceptical," Steve Prentice says.

While there are still pockets of people that are very keen, this comprises only a small part of the market, although sites for under-12s such as BarbieGirls, and for young teens and adults such as Habbo, are showing steady growth.

But Jonathan Yarmis, vice-president of disruptive technologies at AMR Research, points out the market is still only in the early adopter phase and that, while it was initially "way over-hyped", it is important not to ignore both short-term successes and the long-term impact of such sites.

While initiatives setting up virtual offices or showrooms to sell virtual products have tended to fail, more successful applications include using public sites for presentations or shareholder meetings.

These are usually complementary to existing telephone or web conferences, says Prentice, but they offer a richer communications environment while providing particular groups with direct access to top executives in a way that would not normally be possible.

Other success stories are based on activities that are unfeasible from a time or cost point of view in the physical world. Jonathan Yarmis cites the example of an interior designer he knows in St Louis, Missouri, who uses Second Life to demonstrate work to customers to give them an idea of what their redesigned home might look like. Some retailers use the same principle to test consumer behaviour in store layouts without going through costly physical construction projects.

"At this point, it's mainly about experimentation. Most organisations have done nothing, but those that are doing something are usually in the first or second pilot and are doing it from the perspective of 'let's experiment and see what happens'," Yarmis explains.

One organisation that has gone down this route is L'Oreal Paris (UK). It launched a virtual marketing campaign in Second Life earlier this year, with the help of consultancy K Zero. The firm partnered a range of virtual fashion stores, such as Nuclear Boutique, to promote and stock four make-up looks for avatars. These were made available for free, but interested parties had to initiate the transactions themselves rather than being handed items by teams of virtual product promoters.

The activity was underpinned by targeted advertising in fashion and clothing-related Second Life magazines and websites, but not in the physical world. During the three-month campaign, the service was accessed 34,000 times. There are believed to be 12 million subscribers to the Second Life site, of which about one million are thought to be active.

Hal Kimber, head of CRM and the internet at L'Oreal Paris (UK), explains the rationale behind the move: "We'd seen the huge growth in members of Second Life and felt it was appropriate to trial some form of activity targeted to this audience. If consumers increasingly interact online in virtual 3-D environments, then clearly we need to begin to understand if and how we can best interact with them."

The key benefits of the campaign, meanwhile, related to the positive PR generated and the lessons learned in understanding "how virtual worlds can be incorporated into our online marketing strategy", says Hal Kimber. The key challenge in this context was developing "activity that is in keeping with your brand values and proposition offline", but new initiatives are likely to follow, Kimber adds.

An organisation that has embraced the concept more widely, however, is management consultancy, PA Consulting. It set up an office in Second Life about two years ago, initially to showcase its products and services before deciding six months later to staff the site with an autobot to meet, greet and interact with visitors.

The company now operates a shift rota with six freelance staff, who are paid in virtual money and receive an alert when someone arrives. David Sumray, a managing consultant and Second Life lead at PA, explains: "The personal touch is very important as it gives someone the ability to participate actively in our world. You need interaction as the virtual world construct is about participation. Otherwise it's dull and a waste of time as there's no reason for users to engage or come back."

The office is now also used to host periodic events, run workshops with clients in side-rooms and for internal meetings to enable globally dispersed staff to brainstorm ideas and share information as a supplement to more traditional audio- and video-conferences. It even served to help recruit two graduates who visited speculatively.

While it is now possible to build a presence in about 10 days for about £100,000 using consultancies, David Sumray warns that the key pitfalls lie in trying to emulate something that exists in the real world.

"The technical issues can be dealt with fairly quickly and are pretty straightforward, but you'll need to think about things differently," he says. "Setting up a shop front on its own doesn't work - it has to be more participative than that. So it's about creating ideas for new markets, learning applications and collaboration."

This is leading some organisations to hire behavioural scientists and anthropologists to understand how people interact. But, says Prentice, it is equally important for the business to have a clear idea about what it wants to achieve and the benefits it expects to gain in taking this path.

"Nine out of ten public virtual worlds projects will fail in the next 18 months because of a lack of clear objectives. But if you ask whether a project was successful, people often can't give an answer because they never defined what success was. In today's economic climate, however, the chief financial officer is likely to say that 'if it wasn't a success, it was a failure'," he warns.

Other challenges, meanwhile, relate to managing the organisation's brand and reputation, not least because of the threat of 'griefers' intent on causing disruption in meetings and the like. Additional risks exist in the tax status of various activities and the potential for money laundering.

Kiran Sandford, a partner and head of the IT group at lawyers Mishcon de Raya, explains: "It's like the internet was 10 years ago when it was thought of as the legal wild west because people didn't know how or what laws applied. But one of the problems with a virtual world is that it's anonymous so if there's been an IP infringement or criminal activity, trying to get at an avatar to do anything about it is going to be difficult."

Gianfranco Cecconi, a manager at consultancy Deloitte's technology integration practice, believes organisations need to look at the upfront and ongoing costs of the venture, which many forget.

He likewise warns there can be an impact on the IT infrastructure in general - and the network in particular - if the latter is not properly sized, as virtual world sites tend to be bandwidth-hungry.

Prentice advises: "This is not the time to be setting up shop in a public virtual world." Instead he believes the main use of the technology over the next few years will be in so-called 'intraverses' or virtual world environments that either sit on companies' own infrastructure or their service provider's, behind the firewall. Intraverses have the advantage of being easily controllable becausee access, activities and security issues can be more easily managed than on a public site.

A good application to start with in this context is training and role-based learning because "you know the objectives and what you're going to spend. This means that you can measure the benefits and improvements and show a return on investment," Prentice says.

Stage two - which is likely to start appearing at the end of this year - will see enterprises introducing project-based collaboration environments, for example enabling virtual teams across multiple locations to sit in virtual conference rooms and talk avatar-to-avatar.

Once the validity of these initiatives have been established, it becomes possible to "recreate conversations over the water cooler", says Prentice. The goal here is to enable staff in increasingly virtual organisations to meet online to generate a stronger feeling of community.

But only in two or three years' time, when such projects have been tried and tested and virtual world technology and practices have become more mature, will enterprises be ready to venture out in any numbers onto public sites again.

"I remain confident that in 10 years time, virtual worlds will be as significant as the World Wide Web because they're an immersive environment and it's an essential part of human nature to communicate. This has the potential to be huge, but not for another five years or so as it's been over-hyped. But it's now time to get down to the hard work because this is a people issue not a technology one," concludes Prentice.

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