The coming sim-com boom

We are going to have a metaverse of interconnected virtual worlds. Whether it evolves out from the current OpenSim and the hypergrid, or from the new crop of Web-based virtual platforms, or some combination, but we’re going to get there.

Folks who got their hopes up with the VRML standards, only to have them dashed, then raised again with Second Life, then dashed when Second Life failed to gain traction — well, some of those folks may be starting to lose hope.

But there will come a time in the not too distant future when we will look back and have a hard time imagining how we used to get along without the metaverse — just as our kids have a hard time imagining life without email, Google, Hulu,  and whatever is the social network of the moment.

We know it’s coming for three big reasons:

  • Immersive worlds are more engaging than other types of online interactions. That’s why the big selling video games are all immersive and three dimensional. The PacMan-style, 2D games are being given away for free, or practically free, and are being played on cell phones. When kids put down $50 in a video game store, they expect realistic environments, engaging game play, great story lines, and, more and more often, a large community of players. It starts with games, it evolves in education, it moves into business, and it goes mainstream. It happened with windows-and-mice interfaces, it happened with email, it happened with the World Wide Web, and it will happen with immersive virtual environments.
  • Our computers are steadily becoming more powerful, the Internet is becoming faster, and we’re seeing new interfaces evolving — touch, Kinect — that all combine to make virtual worlds more powerful, more realistic, more engrossing, and easier to use.
  • We are hard-wired to think three-dimensionally. We find our way around by constructing mental maps. When we see our avatars doing something, a part of our brain thinks that we are actually doing those things. Immersive virtual environments fit the way our minds work, and can expand the reach of our minds beyond anything we can imagine today.

And there is one very good reason not to be getting too impatient about delays.

Every month that passes without some kid coming out of his basement bearing the new, 3D Netscape, is another month the rest of us have to get our business plans in order.

After all, if we knew, for certain, way back when, that the dot-com boom was coming, wouldn’t we have gone out and built Yahoo! or Amazon or eBay ourselves? Or, at least, invested in those companies when we had a chance?

But no, we thought the Internet was a fad. (Go and read “The Internet? Bah!” — Newsweek, 1995 by Clifford Stoll if you haven’t yet. So funny! And the naysayers are saying the same things now about the metaverse.)

We should have bought in early, before the market spiked. And we should have bought in again, after the dot-com bust. Instead, those of us who invested, probably invested at the peak — when everybody was doing it.

No, the time to invest — to invest money, to invest effort, to invest time and imagination — is before everybody is doing it.

Right now, Hypergrid Business gets 10,000 unique readers a month. I would say that’s probably about the number of people that see the potential of virtual environments, and who are thinking about it seriously. A few thousand more are playing immersive games like World of Warcraft, or hanging out in Second Life and Eve Online, and see the potential. The rest are casual users, enjoying the platforms, but not looking beyond at the big picture.

And that’s not a bad thing.

That’s a great opportunity for those of us who can see the future.

And an opportunity to change the future. Any one of us could become key players in this transformation.

Okay, not all of us are the kinds of geniuses who could come up with the Google search algorithm. (Though, now that Google has paved the way, setting up a system to rank grids by in-bound hyperlinks is a trivial task — once there are enough grids out there for the rankings to mean anything.)

But not every Internet startup required programming geniuses. Yahoo started out as a list of interesting websites. Matt Drudge worked as a telemarker and McDonalds manager before launching the Drudge Report. Craigslist began as an email list featuring local events, sent out to Craig Newmark’s friends.

If any of us could go back in time, we could have started any of those companies. Or Amazon. Or eBay. Or we could have invested in them early, or offered our particular, individual skills in return for stock options. We could have been pioneers.

Or, I should say, I could have been a pioneer. Some of my readers actually were Internet pioneers. They did anticipate the future, and helped create it. I’m jealous of them — and don’t want to miss this new opportunity as well.

So this article isn’t for the folks who would see the Web coming and did something about it, and who can see the metaverse coming and are already working on their new startups.

This article is for the folks who can see it coming, but who haven’t decided what they’re going to do yet.

How the world will change

The metaverse isn’t going to replace the World Wide Web — just as driving randomly up and down the streets didn’t replace the telephone book. A two-dimensional representation of data is often the most useful way to convey information. Books, movies, directories, news articles, price lists — all work well when displayed on a screen.

Instead, the metaverse will change the way we interact with things and people.

Outdoor kid games like cops-and-robbers have moved into massively multiplayer online games, for example. Okay, that’s not necessarily a good thing. Instead of healthy exercise, fresh air, and sunshine they’re sitting behind a computer screen. But it’s not all bad, either — kids who don’t have friends, have physical disabilities, or are otherwise isolated can still interact with peers and learn teamwork and leadership skills. Kids in foreign countries can practice English by playing with Americans. (And Americans, of course, can practice any foreign language they’d like by playing international editions of the games.)

As virtual environments get more realistic, and interfaces get more responsive, almost any physical activity will be duplicated. Dangerous activities, expensive activities, exclusive activities — and, of course, anything involving sex or violence. You might not be able to afford a million-dollar trip to a space station, but you do the same trip virtually.

And as facial expressions and gestures get more realistic, virtual socializing will become easier and more engaging. Many activities that we now do face-to-face will move online — clubs, live events, business conferences and meetings, expos, comic book conventions, speed dating, classes and training seminars, and counseling and coaching. As a result, these activities will become accessible to a much broader range of people than they are today — to people who may be geographically isolated, for example, or handicapped.

The average commute will shrink as more people telecommute or work from regional satellite offices — and people will be able to live closer to their relatives or friends.

Virtual goods already make up a large percentage of our purchases — music, movies, e-books — and there are virtual aspects to many physical goods, as well. For example, I can’t tell Diet Coke from a generic soda in a blind taste test — but I will only buy Diet Coke. If I can see the label, then nothing else tastes right. I’m paying extra for the brand name, for the idea of Diet Coke. Similarly, folks will pay thousands — even millions — for a real diamond that only professionals can tell from a man-made one. Much of the value of the iPod and iPad — and Amazon’s new Kindle tablet — is in access to Apple’s and Amazon’s online services.

As virtual environments become pervasive, virtual goods will become more important. Virtual clothing, accessories, homes and furniture and landscaping, vehicles, and things we can’t even imagine yet. And physical objects will have virtual components — though I can only think of industrial applications right now, such as virtual models of factories that demonstarte, in real time, what’s happening on all the assembly lines.

Business implications

If you can identify a trend — say, virtual worlds will transform dating as much, or more, as online dating did — the obvious business plan is to get ahead of the trend. We’ll eventually have a couple of big, general-purpose dating destinations, and a lot of smaller, niche sites. Then, there will be ancillary businesses that help people do virtual dating, and virtual personal matchmakers for folks who can’t get the hang of virtual dating, and have extra cash to spend.

Some of these businesses are scalable, meaning that as the number of customers increases, the company can add technology quickly, while adding staff slowly. For example, a virtual dating world in which customers interact just with one another can grow quickly. But a virtual dating work that requires staff — for example, club managers or speed-dating organizers, or counselors — will grow more slowly since employees are more expensive than computers.

Some companies may be able to use virtual staff, or bots, to make otherwise labor-intensive services more scalable. As a result, the use of these bots, especially for repetitive jobs, is likely to grow in the future.

The funding situation, however, is likely to be slightly different than it way during the dot-com boom. Early tech startups needed money for servers, as well as for technology, staff, and marketing. Today, companies can rent servers, adding more servers as they need them. And startups can look to the entire world for staff. These two factors can reduce startup costs.

Timing risks

The hardest part about launching a virtual environment startup is getting the timing right. Launch too early, and the customers won’t be there yet, and you might run out of money before the public is ready for your service.

Another risk of launching too early is that you might wind up using dead-end technology, and you’ll lose your entire investment as the world moves into a different direction.

The risks of launching late are even bigger. How many companies tried to sell books online after Amazon launched? After Netflix became successful at sending DVDs through the mail, Blockbuster and Walmart tried to do the same — and failed. Blockbuster eventually went bankrupt, and Walmart turned over their DVD rental business to Netflix in 2005.

Many Internet pioneers are still at the top of the game — eBay, Google, Amazon, PetMeds and GoDaddy were all among the companies founded in the mid-90s.

Of course, there are also cases like Friendster, MySpace and Facebook, where the earlier entrants were supplanted by later, better competitors. And new companies — like YouTube, Twitter and Hulu — continue to appear.

But with each new generation, the startups are increasingly complex, and the market more mature and demanding. It becomes harder and harder to break through.

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Maria Korolov

Maria Korolov is editor and publisher of Hypergrid Business. She has been a journalist for more than twenty years and has worked for the Chicago Tribune, Reuters, and Computerworld and has reported from over a dozen countries, including Russia and China. Follow me on Twitter @MariaKorolov.

10 Responses

  1.' Bristle says:

    i was one of the pre-vrml, vrml, vrml2 crowd. then in 2007 i looked at second life.

    i do think the opensim has more than vrml had and i hope it keeps going.

  2. Ener Hax says:

    nice post and the timing issue is a huge factor! i can see a point of view that would have SL as having been too early in some regards

  3. Gaga says:

    This is an interesting article, Maria but I wonder how pseudonyms are going to fit with your notion of Sim-Coms since pseudonyms are a well established feature of virtual worlds? Will the pseudonym controversy put off Business investment in the open Metaverse?

    Or will the Googles and Facebooks of tomorrow’s 3D Web come to terms with it in new ways rather than treating the masses as moronic consumers having their online activity collected and used without their expressed consent?

    Personally, I have no problem with anyone knowing who I am but I claim it as a human right to be the one to decide that on a case by case basis when dealing with business. I don’t expect to avoid the law if I were to break it by hiding behind anonymity but I can enter Second Life under a pseudonym and do business. Virtual currency makes that possible and, as we have seen, even Ron Hubble of Second Life says he is committed to pseudonyms.

    Sim-Com implies reaching out to a mass market but could it be that the wide spread use of fake avatar names will keep virtual worlds as a bunch of interconnected niche markets?

    • Gaga — I predict that virtual worlds — like websites — will take different approaches to identity. Some — like dating sites, for example, or role playing gaming grids — will bend over backwards to allow pseudonyms or some other form of anonymity. Others, like business networking groups, might tends towards a different approach.

      Personally, I would like to see develop an identity service similar to what Facebook has, but which allows people to determine how much information to release to the individual grids — just a first name, for example, or a nickname, or all information, or something in between.

      Another possibility is that we will have multiple avatars — one for work, one for dating, one for the “Vampire Lust” game I predict we’ll all get addicted to. (If “Vampire Lust” isn’t already taken — I had the idea first!)

      We already do this for our email accounts — I have my work email. I have my personal email for friends and family. And I have an anonymous email for subscribing to disreputable websites. (Not that I subscribe to a lot of these, but if I did…)

      — Maria

  4. Will Burns says:

    The greater Metaverse will be likely comprised of many different systems all sharing common heritage and protocols for interoperability. A collective of virtual environments working together as a total seamless Metaverse. Whether that is SecondLife, OpenSim, Kaneva, Bluemars, ActiveWorlds, and many others – the underlying fundamentals will be that common interoperability standard.

    The new age of Hyper-Media that we experience will likely come together as a conglomeration of related services – from graphics, identity, social networks, et al in order to comprise a very complex standardized infrastructure when taken together.

  5. Yes I need to know what are the positives and negatives about Hypergrid Travel. My first impression is that a visitor in a grid that offers a currency cannot buy anything unless he or she registers on that grid.
    The visitor will be bound to only being able to buy freebies?
    How does a grid manages a visitors account if that visitor has no account? If that visitor commits a TOS offence how does the grid handles that situation?
    The creators need to feel confident that if someone uses COPY BOT on their objects that the grid can act on that individuals account and even take the illegal copy out of that offenders inventory. If the offender is a visitor how does the grid handle that?

    Many questions….

    • There are two ways to enable hypergrid shopping — the hypergrid-enabled OMC currency, and PayPal. 

      For blocking visitors — how do you currently block folks who steal content? If anyone can create an account, do you block them by IP address? Or do you require proof of identity, such as a PayPal account? If by IP address, then you can also block inbound hypergrid teleports from that IP address. If all your residents have identities verified, however, then you’re probably best off keeping your grid closed or say, just setting aside a welcome area for hypergrid visitors so that they can learn about the grid — maybe pick up a free grid T-shirt — and register for membership.

  6.' Larry Rosenthal says:

    what youre really talking about is a realtime 3d OS that has built in my 3Cs. Until an OS and a delivery platform are in SYNC via a planned ROI or by an accident, all other “vr bubbles” will only just repeat the ones since 1990.

  7.' Anonymous says:

    What really kills me is when I got online in 1995, fresh and new and all paranoid The Internet would pounce down into my real life and cause unimaginable horrors – see, I can’t even write that statement because it’s so absurd, but suffice it to say, I was one who was scared of The Internet and Computers and figured they had some inherent power to become my Overlords (facepalm)…but I got heavily into web design from the get go and my desire was a 3D virtual reality website to engage visitors, a place to rent movies, chat, move around and interact…

    I had this fabulous idea to upload movies and have a membership site where people could rent movies for a small fee per month. I saw the writing on the wall but back then, with dial up, it would take what, a week and a half to upload/download about a meg of data ;-p The technology just wasn’t there.

    Then came Netflix…I knew they had a good idea but wanted to wait and see if it would catch on. Least I know I had a billion dollar idea, just didn’t have the expertise to do it.

    I won’t be making that mistake with 3D virtual worlds…I know nada squat right now, and can barely get Open Sim running, but that’s okay…baby steps. 

    I’m among that 10k who sees the future and I want to be part of it. I love 3D, and one day I will have my 3D virtual reality website, basically Second Life regions accessed by a simple 3D style browser…sooner, finally, rather than not at all ;-p