October 30, 2006

Virtual Realty

Posted in SecondLife, Uncategorized, virtual worlds at 1:34 pm by jayfresh

There was an article in the FT today about real-world rights to assets in virtual worlds, such as Second Life.

I was just talking about this last night and earlier this week. It makes a lot of sense that in our increasingly virtual world, abstract entities on the web are equally valuable and important as those things we can actually touch. In fact, we’ve been used to this for years and years – as soon as you put money in a bank and monitor it, move it and spend it online or over the telephone, you’re dealing with virtual entities. The stockmarket is another example, and investments such as FTSE trackers take their worth from observing the index – they never even own any shares!

Clearly, we are completely used to dealing with abstract representations of worth, so what is the big problem with putting value on, say, property in virtual worlds? There are people making their living buying and selling on Second Life, and GigaOM’s Om Malik even thinks that eBay should set up retail outlets on Second Life. As hinted in the FT article linked above, the big problem is probably the fact that worlds like Second Life were set up as games, and the mainstream is not going to be comfortable with putting their cash into investments that could arbitrarily disappear at the whim of games publishers or other users – what good is a virtual villa if it can be destroyed tomorrow by a wizard’s whirlwind?

My feeling is that there is a lot of potential here – the world is going online, and there will be increasing numbers of investors who will see the appeal. Two things strike me as significant: First, if a games publisher codifies the rights of individuals in a virtual world as equivalent to those without, although there are obivous legal hurdles to get over. Until this happens, the risks of investing in these worlds are likely going to be inflated. Second, when virtual worlds, which are essentially closed, start integrating as Om suggests, with the rest of the Internet. There is already a massive eCommerce intrastructure on the web, and if these worlds can leverage what already exists in terms of user-base, brand, and popularity, there could be whole new trading channels appearing. Less commerce-focussed, the concept behind virtual worlds seems like a natural extension of social networks, with each user’s place in a community taking on a more geographic meaning.

If you’re thinking of getting into this whole virtual eBusiness thing, you might want to give these guys a call – MillionsOfUs – the world’s first virtual management consultants?


There is a hell of a lot of stuff in today’s paidcontent bulletin about online gaming, including a mention of gaming company OGPlanet launching an Asian game, Albatross18, in the US, where it is free to play but you pay real money for virtual items such as clothes and accessories.

Don’t miss the large report on Second Life…

“We think the reason [for all the press interest] is that Second Life is perceived as having moved from being a game to a virtual development platform. This is what we thought the internet was going to be 10-15 years ago – a collaborative space that’s both social and creative.” – Justin Bovington (Founder, Second Life)