Second Life learnings for Metaverse enthusiasts today
Corporate participants must go beyond merely marking their presence in a buzzy new virtual world
PremiumIt seems that interest in the metaverse has reached fever pitch. Everyone has a different angle on it, from Microsoft’s enterprise Metaverse that focuses on digital twins and mixed reality, to Nvidia’s Omniverse platform designed to help creators build this new immersive reality. But it was not until Facebook rebranded itself as Meta that everyone realized that what was once a literary device from cyberpunk science-fiction was going to become a reality.
Today, Metaverse mania appears to have afflicted everyone. From sports brands like Nike and Adidas to fashion brands like Balenciaga and Gucci, just about everyone has a major Metaverse project being promoted. As a result, we are seeing a plethora of brand-aligned non-fungible tokens (NFTs), promotional drops and a sudden spike in the cost of virtual real estate on platforms like Decentraland and Sandbox, where everyone from global accounting firms and big banks to international law firms are looking to set up offices.
As I watched traditional businesses and strait-laced consultants rush headlong into virtual worlds they barely understand, I couldn’t help but recall a similar frenzy that I’d witnessed nearly a decade-and-a-half ago. In 2003, San Francisco-based Linden Labs launched Second Life, an online virtual world in which users could create customizable ‘avatars’ that they could then use to interact with others. Unlike other massively multiplayer games, this game had no real objective other than to build things and share experiences limited only by one’s own creativity. And still, Second Life was remarkably successful. At its height, it had over 21 million users and supported a flourishing creator ecosystem. In 2009, the total size of the ‘Second Life economy’ was in the region of $560 million; in 2013, Linden Labs announced that $3.2 billion worth of virtual goods had been exchanged between Second Life residents over the past decade at a daily average of 1.2 million transactions.
So exciting was the buzz around Second Life that real world businesses and brands fell over themselves trying to get in on the action. BBC set up a studio in Second Life from which it recorded shows that it broadcast in the real world. 20th Century Fox organized in-game promotions, including for one of its X-Men films, and bands like Duran Duran even performed live within it. As for the legal industry, there was a time when you couldn’t attend a legal conference without tripping over law firms showing off their new offices in this virtual world.
But that excitement soon petered out as regular businesses realized that there was more to success in a virtual world than buying a place from which to hand out your shingle. Today, none of these businesses is present in Second Life; all you will find are a bunch of entrepreneurs who make a living online creating fashion paraphernalia and hanging out with virtual friends.
Do the parallels between Second Life and the Metaverse mean the latter is doomed to a similar fate once the hype cycle goes full circle?
Of the many issues that Linden Labs had to address while managing Second Life, the most challenging was probably ‘maintaining law and order’. The anonymity that comes from using avatars for social engagement resulted in various corners of the virtual world turning into hotbeds of illegal activity, ranging from relatively innocuous trademark infringements and petty fraud to far more serious cases of sexual harassment, gambling and simulated child pornography. While it is still early days, there is every reason to believe that the Metaverse is going down a similar path.
There have already been complaints of sexual harassment on the Horizons and Quivr virtual reality environments, and despite technological measures that have been put in place to address this, there will doubtless be many more. Given that so many more people are online today than there were when Second Life was in its heyday, unless extraordinary measures are taken to tackle this problem head on, the ensuing harms could be an order of magnitude more severe.
Most businesses flocked to Second Life with a view to cornering what they believed was a new and lucrative market. All they thought they needed to do was set up a virtual office and visitors would come flocking. Brands had no specific plans beyond releasing digital versions of their real-world catalogues in the belief that this was what customers wanted. None of them seemed to fully appreciate how much engagement and community matters in virtual worlds and most failed to invest the sort of time and attention required to generate that.
I am seeing signs of a similar lack of nuance in the current Metaverse gold rush. While brands are making a splash with NFT projects and expensive real estate purchases, few are doing more than putting a stake in the virtual ground. Unless they understand that virtual reality plays by different rules from the real world, they too, like the corporate pioneers in Second Life before them, will end up being badly burned.
That said, for those who truly got it, Second Life was more than just a source of income. It became a community in the true sense of the word. Recently, when Ukraine came under attack, this community quickly mobilized itself and created a list of Ukrainian creators so that all well-wishers could provide them financial support through in-game purchases. If the Metaverse metamorphoses into something like this, there is still hope.
Rahul Matthan is a partner at Trilegal and also has a podcast by the name Ex Machina. His Twitter handle is @matthan
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