Shockingly, Businesses Who Set Up Shop In Second Life Because It's 'Cool' Don't Fare So Well

from the who-woulda-thunk-it? dept

Over the last year or so, it seems like the halo around Second Life has worn off, especially for all the big companies who rushed in, believing it was the next big thing. A new report now notes that approximately 90% of companies who rushed into virtual worlds saw their projects fail. Not surprisingly, most of the failed projects involved companies who got involved because they thought it was “cool” or because a competitor was there. Apparently, not having a real business purpose or strategy pretty much guarantees that you’re not going to achieve very much of either.

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Companies: linden lab

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Comments on “Shockingly, Businesses Who Set Up Shop In Second Life Because It's 'Cool' Don't Fare So Well”

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chalkboy (user link) says:

Virtual worlds are a shadow of the real world

Virtual worlds such as second life make good sense when used as meeting tool but running a virtual business seems like harder work than just doing something in the real world. We get inquiries at DigitalChalk about integration with 2nd life and typically when I ask what the objective is, the answer is “it would be cool”.

Nate (user link) says:

Huh, I never could have guessed this would happen… Honestly, anyone who ever used SL, should have realized how limited the user base is, thus limiting your customer base. What I mean is, it is a clumsy system. I myself consider myself to be a “pro” gamer, and I had difficulies navigating around in it. I don’t mean I didn’t figure it out, but considering how hard it was for me, I think most other people would spend about 3 minutes in the “world” and shut it off for good. I think most people over 40 years old have a hard enough time shopping online at a traditional webstore, not to even consider trying SL. The majority of the people in the game world are other builders/sellers and most likely aren’t shopping around. The only people to make any money here are the creators of SL. And saying all of this, I am not totally knocking SL. It is innovative and is a good idea. But, I think they need to rebuild it from the ground up and make it more user friendly, more “pretty”, etc… Second Life 2? Third Life?

Sigmund Leominster (user link) says:

SL and business strategy

The point is well made that jumping into Second Life because it is “cool” is NOT a marketing strategy. There needs to be purpose and a plane – just like in Real Life. The SL “market” is small and the demographic varied; the only generalization you can make is that the population (a) use computers and (b)are predominantly not teenagers.

Some companies do make capital from the intelligent use of the Second Life environment. GAX Technologies in Luxembourg are hosting their second Working-Worlds conference in SL on May 29th, where European employers can meet and hire prospective workers. Last year they had over 1000 visitors and 55 people ended up with real life jobs – not bad for a virtual conference!

In this situation, companies are marketing themselves via a third party, which lowers their investment costs and limits their need to set up and maintain a Second Life site (they use GAX’s simulation). GAX also used the in-world media to promote the event, via a Second Life PR firm, Wilder PR Inc., who in turn contacted the in-world media and arranged for advertising.

What this suggests is that it IS possible to market in Second Life but that the strategies need to be tweaked for that specific environment. Just like a US company might open up an office in a foreign country by working with a local partner, real life companies should consider working with Second Life partners.

Ajax 4Hire (profile) says:

History is littered with

early adoptors and 1st line offense.
People hoping to cash in on the next big thing by being 1st.

The problem in being first is that you must build entire infrastructure to support your new idea. For Example:
Google would not have been successful if they had to create the internet;
Micrsoft would not have been successful if there were no Personal Computers;
Ford would have not been successful if there was no big Steel industry;

Second Life has started to create a Virtual World suitable for business but it is in the infant stage. But in a few years (say 5 years), Second Life or some other Virtualized Interactive environment will be littered with very successful businesses.

Google was unknown 10 years ago
10 years from now the largest business will be in eWorld.

1st, I said it first.

JJ says:

Another bubble

“approximately 90% of companies who rushed into virtual worlds saw their projects fail.”

Heh… of course, just a few years ago 90% of companies who rushed into the REAL world saw their projects fail, too. We called the “dot-com bubble,” remember? The fact that the other 10% of these companies on Second Life actually succeeded (or at least haven’t failed yet) makes me wonder if perhaps it really is the next big thing.

Grumpelstiltskin says:

SL as cheap marketing testbed?

Seems like SL may be a good place for companies to try out new ideas – clothing like Anonymous Coward mentions – or perhaps promotions and the like. This could save companies a lot of money and perhaps provide them feedback similar to what they’d expect out of an interactive users’ group experiment. Curious what SLers think about this.

michael says:

Second life still sucks.

These so called “business” men must be really stupid. Second life is about the lamest fad on the net, its basically a bunch of tech struck idiots that think its cool because its “virtual” Its not worth a dime to wander around and chat with a bunch of fake avatars and its far from being any kind of tech breakthrough, I think there must be a large number of mentally deficients around if they make any money at all… seriously people get a 1st life before considering a second one…

Trevor Meister says:

Second Life Gartner Report

Unfortunately the title is somewhat misleading and judging from the majority of the comments, tended to bring out comments that were on the negative side. The “report” refered to was from Gartner and when read in its entirety, paints a very different picture. A few quotes from the article:
“The vast majority of virtual world projects launched by businesses fail within 18 months, but the impact of the collaboration technology on organizations could eventually be as big as the Internet”

“Fully 90% of business forays into virtual worlds fail because organizations focus on the technology rather than on understanding the needs of the employees using it.”

“A benefit of virtual worlds is the rich collaboration experience, which includes a real-time visual dimension through the use of avatars and the ability to include emotional information in the online conversations between individuals. These attributes separate virtual worlds from other forms of Web-based interactions.”

All of this is fairly obvious to anyone who has spent enough time in any virtual world to become part of a “community” who share similar interests and begin to work together sharing “real” information and discussing “real” problems. Other “reports” by firms such as Forrester, McKinsey & Company, and KPMG have come out in the last couple of months essentially saying the same thing. VW’s will become important when viewed as another way to interface to existing enterprise information to enable richer interaction among employees, clients and business partners, and new ways to view, visualize and interact with various types of data businesses are being flooded with.

csven (user link) says:

Don't be mainstream media's lemmings

@JJ who said “just a few years ago 90% of companies who rushed into the REAL world saw their projects fail, too. We called the “dot-com bubble,” remember?”

Please do not mindlessly perpetuate a myth.

For those who failed to learn that the over-hyped dot-com “bust” was as much a product of the mainstream media as was its early success, I’d suggest reading a research paper by David Kirsch and Brent Goldfarb which contradicts this widely held belief ( and sheds some important light on what actually seems to have happened. Or if you just want someone’s take on it, read this – – and then go read that research paper.

Funny thing is, the same pattern repeats with Second Life. Those of us who were following SL were well aware of MSM’s hype and were telling marketers to keep things in perspective, to no avail. I’d say the same thing now to the detractors who aren’t speaking with first-hand knowledge but merely jumping on another bandwagon.

Anonymous Coward says:

QUOTE: I think most people over 40 years old have a hard enough time shopping online at a traditional webstore… You’re a complete fucking idiot, and that statement proves it.

Notice, I didn’t say all… I said most. And maybe that was an overstatement. I just mean that there is a large percent of the population that has no desire to shop online. Be it because of a lack of computer skills or just a preference to shopping in “real” stores. This leaves a large market that you will never see. And my point is that the way you interface with SL, most normal consumers would look at it for a minute and never look back. It is really a poor piece of software, from the aspect of ease of use and in general how it looks. And I was just making a generalization on the age thing. Older generations are most likely less computer adept than the younger generations. I can guarantee you that my parents, which are over 40, would never use SL as a place to shop. They have a hard enough time feeling comfortable on traditional webstores.

So, I am unsure why you think that was a stupid comment. If you are going to argue something, with such strength behind your words, at least explain yourself.

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