Home for the Holidays in Sony’s Virtual World

Sony’s virtual world for PlayStation 3 gamers (called “Home”) is currently in beta status.  While I’m not “Home for the holidays” (I don’t own a PS3), I’ve been reading about the early returns with the service.  Ryan Kim of the San Francisco Chronicle had a Sunday article titled “Sony struggles with creation of its virtual world“.  While there have been numerous challenges during the beta period, one analyst encourages patience:

Ted Pollak, a market analyst at Jon Peddie Research and portfolio manager for the Electronic Entertainment Fund, said users need to be patient with Home, which is bound to have numerous kinks in the beginning. He said it took other virtual worlds and online games like Second Life and World of Warcraft a while to get a handle on problems and address them.

I suspect that Sony’s foray into virtual worlds is based on the following objectives:

1. Increase sales of PS3 consoles (e.g. if Home proves to be successful and popular, users may buy PS3 consoles to interact with friends – connect with them socially and participate in multi-user games)
2. Differentiation from the competition – make the PS3 stand out from the Xbox 360 and Nintendo Wii
3. Spur commerce – generate revenue (eventually) via transactions and advertising within Home

To me, a key factor in the success of Home will be the manner in which Sony integrates it into the gaming experience.  It needs to be designed and presented in a way to encourage gamers to participate and be valuable enough that they want to return.  I wonder if gamers will have the motivation (or interest) to put their favorite game aside to enter a virtual world.

On the other hand, if Sony were to unveil exclusive features (only available in Home) that could change things.  Maybe it’s new release games that are initially exclusive witin Home.  Or, it’s virtual goods or real-world prizes to encourage users to enter.  Suffice it to say, it will be interesting to watch user adoption and growth.

Finally, here’s a nice overview/review on Home by Dean Takahasi of Venture Beat: 

http://venturebeat.com/2008/12/10/sony-to-launch-home-virtual-world-for-playstation-3-on-dec-11/

Real Growth in The Virtual World

With a recession stifling business activity across the globe, what economy is expected to generate growth in 2009?  The virtual world economy, of course!  I believe that with consumers affording less these days, they’ll naturally spend an increasing amount of time online (in social networks and virtual worlds) and in video games.  Consider the following chart from Linden Lab:

Monthly User Hours from Second Life residents is at an all-time high.  Linden Labs’ data also shows that User to User Transactions had strong growth in 2H 2008 totalling over $100MM in Q3 2008 alone.  Strong growth should continue through 2009 for Second Life and other virtual worlds.  The virtual world platforms will benefit both from new member sign-ups, as well as increased activity from existing members.  We should see a network effect take place, where new users sign up via encouragement from their in-world friends.

Sale of virtual goods will also see strong growth.  Jeremy Liew of Lightspeed Venture Partners estimates that Facebook is generating virtual goods sales at a clip of $35MM per year.  That’s pretty good – and I expect that virtual worlds platforms can benefit from similar volume/revenue.  After all, virtual worlds are a natural venue to exchange virtual goods.  Linden Labs tracks user to user transactions and I think a trend in 2009 will be user to merchant transactions, in Second Life and elsewhere.

Another area of interest is in video games, where in-game advertising and commerce seem to be a natural fit.  I believe that gamers are more engaged in their activity compared to virtual worlds users or social networkers.  And while that may result in sensitivity to advertising, I think that relevant and useful ads can receive significant response rates and that in-game commerce can be huge.  We’ll want to watch this area in 2009 and beyond.

Interview with Ian Hughes, Metaverse Evangelist (part 1 of 2)

Ian Hughes is a Metaverse Evangelist (at IBM) and blogger at eightbar (http://eightbar.co.uk/).  Ian and I connected to discuss virtual worlds and I posed a few questions to him.  In the first of a two-part series, I’ve posted the first five questions, along with Ian’s answers.

1. So tell us a little bit about yourself? I am 41 year old forever tech geek. I started programming around 14. I grew up in a seaside town and watched the explosion in video games in the arcades. I wanted to know how they worked – I loved playing but was intrigued by the workings of them too. This led me to understand programming, my first Eureka moment. Oh! that’s how it works. I also look at the various combinations of tech and usage including coding as an art form, relying on intuition and flowing patterns as much as running it by the numbers. I joined IBM in 1990 as a full timer and have been here ever since, though explored lots of emerging technologies in various places, the arrival of the PC to a green screen world, client server models, web in the early days and into dot com, then that has led through web 2.0 (before it was called that) to where I am now with virtual worlds and metaverses.
2. So you’re a Metaverse Evangelist – can you explain what that entails? An evangelist attitude is one that is not always obvious to people. Seeing and feeling a use for something, embedding it into your life and work and helping others see why they should do the same is tricky. It is a mix of sales, pr, marketing and in my case tech, delivery and understanding. By its very nature an evangelist is of no need to people who don’t know what the the evangelist is explaining, once explained, as it is so obvious the evangelist is again of no need.  Metaverse is the generic term for virtual worlds from the book Snowcrash. A few years ago I would have been a web 2.0 evangelist.
3. What are virtual worlds platforms doing right? In my personal opinion virtual worlds are helping people understand that there is more to communicating electronically at distance than just email or telephones. They all tend to tap into the human patterns of understanding of space, proximity, visual and audio feedback. Most of the important things in understanding one another from non verbal communication. Virtual worlds can be a much richer version of a smiley in a piece of text.
4. Where can virtual worlds platforms improve? It tends to be people refer to usability and those first experiences people have in any virtual world, which applies to any software product, or hardware product. The experience will of course evolve, the ways of interacting will evolve, our tolerance and understanding of how to interact, the social language of virtual worlds will also evolve. So evolution is the main improvement. Also, as with the web we need to try and solve the interoperability problems, both technical, social and legal. There are clearly opportunities to explore ways to interact with various environments, this is not about a Warcraft character turning up in Second Life, it is really about people having the things they need where they need them at the time, in a suitable form.
5. What do you see as the biggest opportunity for virtual worlds platforms? The opportunities span all human communication needs. Clearly gaming has been the growth, a multiplayer console game is as much a virtual world as a the current crop of non gaming environments. The mode of operation, of people gathering together to achieve and objective, communicating live, seeing the results, acting to deal with problems is as valid in a quest in WoW as it is in dealing with an order for a stack of goods from a customer in an enterprise. Clearly the toolset may differ, but to be able to manipulate business models, see what is going on the in the enterprise, bring the right people in to help visualize and solve the problem, live. Is a massive opportunity. It needs to be smooth for business, but its already smooth for gamers. Most gamers wont play a game if its bad, if they cant quickly do what they need to do, if they cant connect to servers etc. The same applies for business. So a combination of the needs of the gaming world, with the business world, with the social media world and we have some really interesting opportunities.