Could we have found the 5 simple steps to a successful virtual world? We just might have. Sally Schmidt of Circle 1 Network laid it out.

She then broke down the five key strategic points into the 5 Cs: Creativity (dressing up avatars, decorating homes, designing clothes), Collection (free goods, paid goods, points), Caring (feeding a virtual pet, charity), Community (chat, events, message boards), and last but not least Competition (levels, comparing points wit other players). Her conclusion was that each of the big sites encompass all five key points, but only strongly emphasize a few. For instance, on Stardoll the draw is obviously in the creativity of designing your own clothes and styling your avatar. On Neopets, your role as pet owner promotes caring.

The 5 Cs seem pretty obvious and nearly all of us in the industry know them. However seeing them laid out may leave some of us wishing there was more. Second Life could have nailed these 5 points years ago, but they want more. What attracted many of us to the virtual world industry is most likely not contained in the 5 Cs. But the same could be said for us who joined Yahoo! in late 1999. We had our head in the clouds and business was booming. Nothing seemed out of reach. Then came the crash and reality set in. It was mail, community, news, etc. All great stuff but most likely not what we had glimpses of in 1999. What we envisioned was something like Google Earth, YouTube, Hulu, iPhone. But all of these came in the second wave, the second generation of Internet products.

That analogy begs the question – what will be the tenants of virtual worlds 2.0?

One trend I predict will play out over the next year is that virtual worlds will gravitate back to being about entertainment – entertainment platforms. Many virtual worlds have adopted social network features however I think this is quintessential virtual world 1.0. Another likely 1.0 tenant is being a games platform -where you enter a virtual world to run from one casual game to another. Unless these games evolve into more social game play I think this form of entertainment will be better met by purely game based services. One tenant I’m sure will be part of 2.0 is real time story. It’s just beginning to claw its way into existence but should evolve quickly once there’s an easy to use platform.

As for other possible tenants I’m not sure yet. Do you know of any? Any wild guesses?