I’ve joined the unemployed, now part of the 10.5% and growing in California. I knew it was a risk to join any start-up last year, especially one in the virtual world space like Vivaty. I would still do it all over again as I learned more than I would have guessed about a field that has captured my attention the last 2 years – virtual worlds. However we all know the industry isn’t doing well, even removed from the larger economy. The Virtual Worlds Conference encapsulates the most recent chapter in virtual worlds – Virtual Worlds 1.0.

The latest chapter

The first Virtual Worlds Conference took place in New York (March 28-29, 2007). The hype around Second Life was probably at its pinnacle. The second conference in San Jose (October 10-11, 2007) was probably the pinnacle for the conference. It looked like a real conference, with all the big players sporting huge booths – The Electronic Sheep Company, Millions of Us, IBM, etc. But more than that the keynote was from the creator of CSI, Anthony Zuiker, who announced the integration of the show and Second Life. It was as if virtual worlds had arrived. But that was merely exuberance. The integration was a total failure. Over the next few months the buzz around Second Life faded. A year later the Virtual Worlds Conference would move to LA and many of the booths were gone. Then the conference changed it’s name to Engage! to seemingly escape the virtual worlds label and to expand its audience. It did little help, word from the latest Engage! conference in New York (March 10-11, 2009) was that organizers nearly canceled it for lack of attendance.

The excitement around virtual worlds is gone, it’s left the building. Of course it will be back, but this tour (one of many) is over.

Virtual Worlds 1.0

Working at Vivaty I become convinced that virtual worlds are a context play or at least they will be going forward. Virtual worlds simply don’t work as social networks – they add little if any value over 2D. I was at Yahoo! when we introduced 2D customizable avatars, they were great but users found they had little use for them. Virtual worlds 1.0 is now defined and it’s potential known – outside of little kids worlds and MMOGs there is little upside. Sally Schmidt of Circle 1 Network laid it out the five keys to virtual worlds 1.0.

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.

Virtual worlds are inevitable

Eventually 3D will be pervasive as it is in the video game market today, but that transition took years. This all reminds me of a question I heard years ago – Why do grown up men read comic books in Japan? Because they grew up on manga and the medium grew with them. It could have happened here in America too if it wasn’t for something called the Comics Code.

Virtual worlds 2.0 will be less about the technology

So we can wait for the kids of today playing with Club Penguin to grow up and expect the characteristics of virtual worlds in everything or we can continue to try and find that thing that one thing that jump starts the growth in virtual worlds – what makes them 2.0. My guess that whatever that is, it will not be pure technology. Certainly it will require new leaps in technology but won’t be a technology play.

Movies did not flourish until the engineers lost control to artists – or more precisely, to the communications craftsmen. The same thing is happening now with personal computers.

- Paul Heckel from The Elements of Friendly Software Design

Games industry can crush us

Virtual worlds are worlds, not simply spaces. What’s your theme, what’s the story here? Those are the questions users are asking; they think the 3D is nifty but what story are you offering? It’s the difference between Six Flags and Disneyland. Six Flags has to keep up with the arms race in ever bigger and more extreme rides, where Disneyland has created a story world. For the last few years Six Flags has been trying to become more like Disneyland.

Six Flags also acquired Dick Clark Productions, which produces the Golden Globes and American Music Awards, and Mr. Shapiro positioned the company as a mini-Walt Disney that offered families a similar experience, but at lower cost.

- Six Flags in Negotiations to Stave Off Chapter 11

For the virtual worlds industry it’s even more dangerous to play in the arms race, our competition is the games industry and they  can crush us in an instance. If people just want pure entertainment they’ll play a game. And as we’ve seen with Arcadia, they don’t need game worlds either. Virtual worlds are different, they’re about story or at least they will be.

As for me

I’m going to regroup and try to find my next job in something more entertainment focused, but hopefully still in the virtual world space. I should also have ample time to finish that screenplay.