Phillip Rosedale is returning as a strategic investor and advisor to Second Life, a company he founded 19 years ago, but it is unlikely that Second Life is going to change much given the tough company culture, closed nature of the platform, and the fact that High Fidelity is itself more of a failed project.As part of the agreement, High Fidelity’s team will join Linden Lab, which will also gain access to High Fidelity’s patent portfolio.
Rosedale’s return could also mean a rejuvenation to Second Life’s vision for better in-world e-commerce and virtual shopping once held by Rosedale’s team, and this could accelerate the development of their metaverse, said CEO of Captjur Bob Bilbruck.
“Today’s Metaverse and the plans that groups like Facebook have for it are like Second Life on steroids,” he told Hypergrid Business. “We need as many bright minds and visionaries as possible developing in the Metaverse, so I welcome back Philip to the party.
But many experts have doubts about whether Rosedale’s return will make much of a difference.
Second Life has already stamped its role in originating the metaverse.Â It has a strong economy based on digital shopping and virtual land selling, and a working platform with millions of users and transactions.
Rosedale said in an interview with WiredÂ that although he is only back as a strategic advisor, Second Life will likely concentrate on making expressive avatars, getting more people in one place, and improving mobile performance.
He said that Second Life got digital currency pretty right. People can make money in-world, the currency doesn’t have an ecological load, and it strikes a balance between being centralized and decentralized, he said.
However, to compete with metaverses developed by big tech platforms like Meta, Second Life will need to change its company mindset, culture, and strategy to open the platform to other players, said Jonathan Teplitsky, CEO of Pipeline Marketing.
“Second Life will have an uphill battle joining the metaverse because of entrenched company culture,” he told Hypergrid Business. “They currently employ 165 people who are accustomed to decades of running a closed system run rather than an open one like Decentraland or Sandbox. In interviews with Phillip, he never mentions opening the platform and granting access to outside brands or developers.”
Second Life is fundamentally different from modern-day metaverses like Sandbox and Decentraland, he said. The latter are built on blockchain and are decentralized to facilitate faster and less costly peer-to-peer transactions such as buying and selling land and to improve on content monetization for instance through non-fungible tokens and other forms of creativity, Teplitsky said.
But that’s not necessarily a disadvantage.
Second Life does not use a blockchain because it uses a database that has a time and ownership stamp on created content, Rosedale told Wired. It keeps track of who created and owns the content, whether it’s for sale, the cost, and what’ll you’ll be able to do with it once you buy it.
A lot of the things that supposedly need a blockchain just need a database, said Rosedale.
“I think his return will have ripple effects across the AR and VR industries as concepts such as blockchain and non-fungible tokens or non-fungible tokens are adopted to fit into this overarching metaverse theme,” Eric Chen, CEO and co-founder of Injective LabsÂ told Hypergrid Business. “So overall it serves as a strong positive signal for the industry as a whole.”
However, Second Life’s market share — like that of other smaller entities coming to metaverse — will remain small while big tech like Meta enjoys an outsized market share given their sheer size and manpower, said Chen.
Second Life will not be changing its business model to monetize user behavior and interests to increase revenue the way YouTube or Facebook operates, said Rosedale.
He said Second Life — whose basic access is free — still has higher revenues per user than YouTube or Facebook and it generates this revenue from selling virtual land and transactions, as well as small fees on transactions, such as when somebody sells digital goods to somebody else.
“Platforms in which users pay for access instead of treating the users as the product have fewer user privacy violations,” said Ilan Tochner, CEO of Kitely. “A company that pursues this strategy will not be compelled to monetize its users’ behavior and interests or limit their ability to decide what they can see or do in exchange for free access.”
“Billions of people around the world pay for mobile phone plans,” he told Hypergrid Business. “Hundreds of millions of people pay for various streaming services. The concept of paying for access to a network is not foreign to people.”Â
That said, pay-for-access to the metaverse platform can come in many forms including the sale of virtual goods, subscription to services, and sale of tickets for in-world events.
Companies developing metaverses can also explore freemium business models. They can make services free to leverage ad revenues and increase user base while still charging for other services, Tochner said.
Kitely is also working on a new system that leverages their experience from running Kitely Market to provide a crucial component for a non-dystopian metaverse.
Tochner did not give details on their plans for this new offering but said that they guarantee a privacy-respecting offering for the foreseeable future. Although he said Meta can still succeed in building their augmented and virtual reality platforms on the same centralized ad-driven business model that made Facebook financially successful, he is rooting for a more privacy-respecting open metaverse.