When will virtual worlds become a business tool?

Reality has been cruel to virtual worlds, with most failing to live up to expectations, especially in business environments. Did analysts get that right or are they also guilty of second-degree Second Life hyping?

Reality has been cruel to virtual worlds, with most failing to live up to expectations — especially in business environments. Did analysts get that right or are they also guilty of second-degree Second Life hyping?

Currently, it's quite fashionable in technology analyst circles to be dismissive of online virtual worlds, or at least to suggest that any potential benefits to business are in the distant future.

A screenshot from the World of Warcraft

Running around in a game-inspired environment with a 3D avatar may look cool, but the prevailing view is that the effort spent in creating and maintaining a virtual presence is ultimately less useful than clearing out your inbox.

Comments from Gartner vice president David Cearley at the company's recent series of Future Directions summits are fairly typical.

"There's this thing you may have heard of called Second Life," Cearley said at the Perth event, sticking a mild virtual knife into the best-known alternate online reality right from the start.

"There's some potential for those virtual worlds to have interesting and dramatic changes on the way we use computers to interact with each other, but if and when it happens, it's going to be longer term," he said.

For now, virtual worlds aren't quite ready to meet the demands and expectations of marketers.

Brian Haven, Forrester Research

Way back when
Were market watchers always so unenthusiastic? Second Life itself only began back in 2003, and it took a couple of years to develop a major following and attract the attention of businesses.

It was certainly not the first example of a 3D online world, or even the most successful. That accolade would undoubtedly go to the role-playing game World of Warcraft, which has an estimated 10 million subscribers.

However, Second Life's open-ended environment and ability to translate online currency Linden Dollars into real-world money, creating the tantalising if tenuous promise of actual cash, means that it has attracted the bulk of enterprise attention. Major organisations such as Telstra and the ABC have experimented with a Second Life presence.

Inside Second Life
(Credit: Second Life)

Despite that, the view from market watchers has nearly always been a long-term one. In a December 2006 briefing document, a team of Gartner analysts wrote: "Networked virtual environments are maturing as compelling forms of interaction with customers, employees and partners. The business world won't be overrun for a long while yet, but early adopters should take note of this promising trend."

Enthusiasm for virtual worlds seems somewhat less prevalent in the business community at large. A survey of Asia-Pacific businesses by IDC in January, found that more than half blocked access to virtual worlds, viewing them as a waste of employee time.

Despite that negativity, companies have frequently been encouraged to consider the future possibility of these environments. "Although the embryonic nature of virtual worlds means that significant issues and obstacles are in effective use by enterprises, the upside potential is so great that no enterprise can afford to ignore the opportunity," Gartner's Stephen Prentice wrote in July 2007.

A screenshot from the World of Warcraft

Training in vain
The one potential use of Second Life and its ilk, which everyone seems to agree might have business value, is in education and training. "It's more of a focus on training today," Gartner's Cearley noted, a stance echoed by Second Life's own executive team.

In-house meetings are another possibility, with reductions in travel often held up as the justification for pursuing a virtual model.

There are persistent rumours that Google will enter the fray with its own virtual world.

Paul Jackson, Forrester Research

"We conduct a lot of company meetings in Second Life," Chris Collins, technical assistant to the CEO at Second Life developer Linden Labs, told ZDNet.com.au last year. "With us being able to hold virtual meetings, our carbon footprint is a lot lower. Every Friday, we have an internal staff meeting and about 60 to 80 people show up — people from all over the globe."

Another possibility is marketing business products to the existing virtual world communities, but even that has its problems.

"For now, virtual worlds aren't quite ready to meet the demands and expectations of marketers," Forrester Research's Brian Haven wrote in May 2007. "The Second Life environment still can't scale to accommodate large audiences at a single time without significant cost."

Inside Second Life
(Credit: Second Life)

The technology may be too immature even for those basic applications in many instances. In a briefing document earlier this year, Gartner noted that regular downtime and problems with graphics cards limited the usefulness of Second Life in a business context.

What next?
Prophecy is as ever a dangerous game, and no one wants to completely dismiss the prospect of a 3D internet in the long term, especially as Moore's Law continues to work its magic on graphics rendering and broadband speeds. But nobody wants to get too excited either.

With no clear market leader, one possibility is that a new player will help transform the environment. "Second Life might be ahead now, but with a new virtual world costing only $75 million to develop, and successful properties earning $90 million per month, new players funded by venture capital or incumbents like Sony are bound to challenge the leader," Forrester Research analyst Jaap Favier suggested in January this year.

Inside Second Life
(Credit: Second Life)

Sony's long-delayed Home environment for PS3 may well attract subscribers but its lack of a PC implementation would likely curb most business uses.

One option that might expand the virtual world concept is the involvement of Google. "There are persistent rumours that Google will enter the fray with its own virtual world — possibly tied in with its existing Google Earth and Google Maps products," said Forrester analyst Paul Jackson.

But even with the possibility of a Google invasion, Cearley is typically circumspect: "To be of general purpose impact, we've got to move from controlled proprietary environments to having 3D rendering and avatars as part of the general Web experience. We don't expect to see that in the next five years."

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