Yoick - Hightechwire

Sramana Mitra has penned an insightful post on the pre-teen market: what their activities are online, which sites they find popular etc. You can read it here, or view Read/WriteWeb’s take on it here.

Given that pre-teens are Yoick’s sweetspot, we particularly like these excerpts from Sramana’s report:

Websites targeted at pre-teens earn majority of their revenue from subscription, e-commerce and content provided by the websites. Other sources of revenue for these websites are advertisements placed either on their websites or in the games, downloading of music and games, licensing of content, syndication and partnerships for developing content and gaming…

and this:

Immersive gaming model used by NeoPets and other gaming websites could well be the business model of tomorrow as it allows advertisers to place creative advertisements in games without disrupting the flow of the game and thus generating interest in the product, which creates brand awareness.

Social networking and social destination sites by and for social networking alone just don’t cut it. People get bored with networking  for networking’s sake: there needs to be a focus point or focal points beyond simply socnet.

Om Malik has glommed onto this thought I had way back in the mists of time, circa August 2005 and now asks: Are Social Networks Just a Feature?

In Yoick’s view, successful web communities have at their core, a set of pursuits or strange attractors - these pursuits work best if they deliver some benefit from interactions between members of a community…the higher the usefulness factor, the more compelling an attractor.

To sum up, I agree with Om. Yoick is essentially building an “integrated community entertainment platform”, a term borrowed from Andrew Littlefiled, CEO of Doppelganger. Within this ICEP, the social networking aspects are critical as part of the community journey, but they are not the sole destination.

Doppelganger, a San Francisco-based virtual world company has raised a Series C funding round of $5 million from Greycroft Partners.

CEO, Andrew Littlefield, prefers to call them a community entertainment company that builds virtual environments for the rest of us, aka non hardcore gamers.

Doppelganger initially raised a Series A of $2.5 m from Draper Fisher Jurvetson and a Series B of $8.5 m from Trident Capital, DFJ and Draper Richards. That’s a lot of dough for a virtual world play - but when you consider it costs them up to $250k to build one of their inworld characters you understand where the money is going. Hey guys, ever heard of user-generated content…

Andrew sees the market for 3D environment vendors to be akin to the nascent cable market. He sees Second Life as focusing on the older sci-fi demographic whereas they are angling to be the 3D MTV, with Habbo Hotel the Nickolodeon. Neat analogy.

At Yoick we agree that these interactive spaces will act mostly as a connection manager (the first C in CICS), at least initially, and we also agree that they will reach similar sizes as MySpace.

Venture guy, serial entrepreneur and chairman of Second Life, Mitch Kapor said in an interview at the World Economic Forum in Davos that he sees virtual worlds as being a $100 billion opportunity.

When the PC was invented, nobody anticipated the spreadsheet, which I was very involved with, when the Internet became commercial nobody anticipated Amazon.com or eBay, and I have the same conviction that these virtual worlds are going to have killer applications that will just make it a huge industry.

Right on, Mitch.

It doesn’t take a rocket scientist to note that Second Life is vastly different from World of Warcraft. But Clay Shirky has stated the obvious — the one is a platform with fascinating in-world effects, the other is a multi-player game.

Clay believes that we shouldn’t be comparing the two. With this point I agree. Games are games, they involve quests, levelling, the magic circle metaphor and in some instances, the thing that has given rise to their popularity - guilds (the ability to work as a team). They also include a range of negatives - shards and lag.

Second Life is a 3D persistent environment - it does not per se have games or quests and is more focused on allowing its residents to achieve status through the acquisition of status symbols — land being the primary one, but stuff in general. It is very individualistic, but contains social elements - residents can communicate amongst each other, albeit currently on a rudimentary level, and they can collaborate on building items, again at a rudimentary level.

Similarly to games, Second Life has downsides such as lag and severe limitations on the number of residents that can visit an inworld place at any one time.

In terms of comparitors, Second Life should be compared to other forms of online social media such as MySpace and Cyworld. These social media plays have had massive adoption - why: they pander to our innate desire for CICS (Connect, Interact, Create and Share), they are easy to use, are extremely viral and, in particular in the case of MySpace, have an open architecture - I can visit your MySpace page and watch a YouTube video.

Second Life doesn’t rate as a social media play. Linden Labs may have open sourced the SL viewer, but their product is far from open or viral. It is not intuitive to navigate inworld and creating and sharing are hard things to do. Just as a newb user gets comfortable she starts to experience massive client/server induced lag and SL crashes. Oh well, she sighs, I tried that…now back to social networking.

I agree with Clay that games are not going away any time soon, in fact as a form of pure entertainment…they rock. 3D persistent spaces, however, are categorised in the virtual world arena for now, but should be compared to other forms of social media.

In fact, at Yoick we strongly believe that as social media the right combination will lead to massive Skype-like adoption. Stay tuned for our persistent 3D environment - we are on the cusp of emerging from stealth…

Second Life sees voice as an important tool for its residents. According to the virtual world’s creator, Linden Labs, their development path is focused onhaving both voice-enabled avatars so you can simply walk up to someone and engage in a conversation and allow for spatially aware multiple voices so that you can walk through an area and hear people speaking with their voices emanating from where they are in that space.

In an interview with IDG News, Joe Miller, Linden Lab’s VP of platform and technology development also noted that they have a significant initiative under way to make inworld search more natural and visual.

Joe also mentioned they have created an API which will allow their business customers to create their own front porches into SL. Not my favorite analogy, but this is an important development. In fact all three initiatives are important as SL has copped a lot of flack for its clunkiness. Marketing and hype is one thing, but happy users is a whole other ball game.

Let’s end with a great quote, which we strongly agree with…We believe that multiple-user virtual environments are just in the beginning stages of their existence…to create communities, commerce and a permanent place for ourselves.

According to Associated Press, Sweden-based MindArk is going to release five banking licenses within Entropia Universe, their 3d persistent world.

The licenses will be valid for two years and the holders will be entitled to set up bank buildings on the planet of Calypso. Once set up they will be able to charge interest on loans and advertise on in-game billboards.

Entropia Universe has its own virtual currency, the Project Entropia Dollar, which is fixed to the US dollar at 10:1.

Linden Labs has gone and open sourced their Second Life client software. Michael Arrington asks whether they’ve gone far enough -

At current growth trends, SL could be a real economic force in a few years. When things really start to hop, SL will look more like it’s own private Internet. Or a privately held virtual nation. At the point that millions of people spend most or all of their waking hours within the SL world, we’ll know this has happened.I think people (and governments) will start to get a little nervous at that point. It will be impossible for SL to put both its shareholders and users first, and history suggests that users will get the shaft. I can image the most bizarre anti-trust lawsuits in history being fought in courtrooms around the world.What might make more sense in the long run is more of a Wikipedia-like approach to Second Life. A non profit organization running open source software where people can add their own island just by plugging in a server in their living room or the hosting provider of their choice. Whoever builds that and provides a serious alternative to the SL experience could help the world at least as much as Wikipedia has.An interesting take, Michael. Certainly one to be taken seriously.

What we need to be cognizant of is the fact that SL is not about to upset the status quo and allow anyone to plug in a server and create their own real estate in world. This would cause a major issue with SL residents who have invested time and money to build up a real estate portfolio.

So SL has only open sourced its client software, not the actual grid. This means that their viewer is now open source under the GNU Public License, but their underlying infrastructure remains proprietary.

Joanne Colan of Rocketboom faciliated a forum on the virtual Capitol Hill within Second Life this week. The forum was spearheaded by the avatar of George Miller, Chairman of the Demoratic Policy Committee and it was the opening event of the vHill.

Commenting on the event, Philip Rosedale, CEO of Linden Lab, said, “This is just the kind of thing that makes us proud to be involved in the development of technology that allows for this type of interactivity.”

We’ve covered the froth about Second Life’s numbers before, but thanks to Tristan Louis, we now have more data to sift thro.

Tristan began tracking the number of users and financial data (caveat - listed on the SL site, not independently verified) from October 2006 thro to January this year. The outcome of this analysis -

On average, the number of logins over a 60 day period seems to be about 35 to 40 percent of the total population reported. The people who log in, however, seem to spend a fair amount of money ($50-60 a week) within the Second Life economy.

Wagner James Au sheds some light on what this means comparatively… this would mean that some 200,000-230,000 active Second Life users are on average currently spending more on their in-world experience than any existing online world by far. (For comparison, a World of Warcraft subscription is but $15 a month, and that’s money paid to the Blizzard/Vivendi, not user to user.)

So summing up Tristan’s analysis: Second Life is people light (relatively), but cash heavy (absolutely.)

Tristan goes on to extrapolate user growth on SL and figures that on a conservative calculation by the end of April 3.5 million users will have registered with over 600,000 using the service.

The original debate instigator, Clay Shirky, has responded by noting the dichotomy between what SL defines as ‘registered users” and “residents” -

But there is no published metric of “Registered Users” — the Residents figure includes people who signed up but never logged in, as well as alts. “Residents” represents a 50% inflation over actual people, and most of them bail after the first month.

David Kirkpatrick of Fortune just got some real figures out of Linden, and only 1.5M people have ever logged in (the gap between 2.3M Residents and 1.5M people is from the alts and sign up/no login people), and of that figure, only 250K have logged in more than 30 days later.

In other words, the highest possible figure for active users is 250K — the actual number is lower, but we don’t know how much lower. It also means that only a minority of the Last 60 Days logins are active users.

David Kirkpatrick’s response is embedded in a comment to a CNN Money article - scroll down to find it.

Bottom line — active new SL users are growing at a very healthy 23%.