Archives for July 2010

Opportunity cost: not to be underestimated

Here’s a true story: Like a lot of players, I have a Level 2 character in World of Warcraft that exists purely as a banking / auction house conduit (bank alt). I have another character that is leveling one of their professions and they needed a particular item sold for a measly one silver, 18 copper from one of the vendors right across from the auction house where my bank alt hangs out. 42 virtual steps in fact (yes I counted). It occurred to me to check the auction house to see if anyone was entrepreneurial enough to be selling that same item on the auction house for a mark-up. Sure enough, someone was, at 200 times its cost if bought from the vendor (around 2 gold). Not to be outdone, since that time I’ve sold a couple of the items each day for the same 20,000% markup. I’ve also started selling other items from the vendor at 1000-2000% markups.

For the regular MMO player, this is nothing new, and there’s screeds of research and opinion on MMO economies and player behaviour. I just hadn’t realised how endemic the issue of laziness is. Laziness is probably too negative a term in some respects, as for some people it’s probably just time efficient to buy everything from the auction house. If you’ve got 20,000 gold sitting in your bag and the item is 2 gold, then even at a huge markup it’s a no-brainer compared to trying to remember which vendor has it, let alone the time spent getting to them. It’s a simple example of the concept of opportunity cost (here’s one gamers perspective on it).

This issue has some obvious applicability to virtual worlds more broadly. In Second Life, I will quite often just go browsing at clothing stores that I’ve landmarked rather than try to find something new via the search function – few will argue that the Second Life viewer’s search function is a time sink. Social virtual worlds from Habbo to Frontierville have this concept down pat, making it as easy as possible to provide variety without excessive time expense. It’s a lesson that the more mature worlds are absorbing – it’s the speed of learning that will determine who succeeds and who doesn’t. At this stage, platforms like Second Life, Twinity and Blue Mars are walking the fine line between innovation and an opportunity cost too big for a critical mass of people to bear.

Over to you: what aspects of virtual worlds do you avoid because the time / expense isn’t worth it for you?

The Watch – virtual worlds in the news

1. LiveScience (USA) – Virtual Government (vGov) Aims to Improve National Security. “The federal government is launching a cyberspace initiative this summer that sponsors say has the potential to enhance national security, improve government collaboration and save taxpayer dollars to boot. Called vGov, it is a virtual world that will function much like a secure “Second Life” for government agencies. “Second Life” is a virtual world where users, or “residents,” can interact with each other and participate in individual and group activities online. It has nearly one million active users, including 1,400 businesses such as IBM, according to Linden Labs, the creator of the virtual world. Launched under the aegis of the Department of Agriculture (USDA), vGov will initially serve as a digital sandbox for the USDA, the Air Force, Department of Homeland Security and the National Defense University (NDU).”

2. Virtual Worlds News (USA) – Pillsbury IP Practice Adds Virtual World Counsel. “Pillsbury Winthrop Shaw Pittman LLC’s Intellectual Property practice is adding a new counsel, Sean F. Kane, who will focus on issues involving virtual worlds and online games. Kane is a member of the American Bar Association and co-chairman of the board’s Computer Games and Virtual Worlds Committee, co-chair of the Section of Science & Technology Law’s Virtual Worlds and Multiuser Online Games Committee, and a member of Board of Editors of the LJN publication Internet Law & Strategy. ”

3. CNET (USA) – Groups push feds for video game age restrictions. “Video game aficionados might have to enter a credit card or find another way to verify their age before playing a networked game, thanks to a new push from advocacy groups who say they want to protect minors from in-game advertising messages. In-game marketing has become so advanced that it “allows advertisers to track game users” and detect if people who are exposed to certain ads eventually use or buy the advertised product, a coalition including the Campaign for a Commercial-Free Childhood, the Center for Digital Democracy, the American Academy of Pediatrics, and U.S. PIRG told federal regulators this week.
They say that because “mobile devices, instant messaging, social networks, virtual reality, avatars, interactive games, and online video” have become so pervasive, the Federal Trade Commission must enact new regulations to protect minors from electronic advertisements and other marketing messages. Not only young children are at risk, but the FTC “should seek ways to provide protections to teens,” the coalition recommends.”

4. MSNBC (USA) – Second Life: Reality Intrudes on Virtual Reality. “While you were worrying about keeping your home, you may have missed the popping of the virtual-reality real estate bubble. In Second Life — Linden Lab’s immersive, 3D game that allows players to trade real dollars for virtual dollars — a nice stretch of mainland coastal property that would have fetched around $65 in 2007 today goes for $16.
That’s partly because the financial crisis crimped spending for the 1.38 million users, known as residents, who have logged into Second Life in the past 60 days. “The real real estate crisis had a direct effect on the real estate” in virtual worlds, says Guntram Graef, a business partner at Anshe Chung Studios, which sells “land” in Second Life. It’s also because the pell-mell growth of Second Life has slowed dramatically since four years ago, when BusinessWeek put Anshe Chung — the avatar for Ailin Graef, Guntram’s wife — on its cover.”

5. VentureBeat (USA) – 3D maps: you’ll be able to walk around in them like in a virtual world. “Online maps are extremely useful, but not very innovative in their present form, as most maps we use today merely mirror paper maps. The road map serves most of our everyday needs, but as more and more data with a location component to it is accumulated – geo-tagged photos, videos, or information from social networks like Facebook and Twitter – we’ll need to represent that data in a way that adds value without overwhelming users. And as mobile devices gain more processing power, they’ll be able to access raw data stored in a server and display it in whole new ways. Mapping technology specialists say that these two developments — the increase of geo-tagged elements and the increased power of mobile devices — mean that browsing a map will increasingly mean moving around in a virtual, three-dimensional world like in the state-of-the-art video games seen on consoles like the PlayStation 3 or Xbox 360.”

6. MIT Technology Review (USA) – Treating Cockroach Phobia With Augmented Reality. “Augmented reality–overlaying the virtual world on top of the real world–has been used in everything from neurosurgery to iPhone apps. But until researchers at the Spanish Universitat Jaume got the bright idea to simulate hoards of cockroaches swarming over insect-phobic volunteers, no one had thought to use it as part of what’s known as exposure therapy.”

7. CTV News (Canada) – Feds head to virtual world to find workers. “If the heroes of the recent science fiction film Avatar showed up at a career fair, their blue skin might elicit a few stares. But at the federal government’s next fair, avatars are welcome. The Public Service Commission is going virtual to recruit new people to join Canada’s rapidly aging ranks of civil servants. In September, they’ll open an island on Second Life, an online universe that sees about 830,000 people wander hundreds of virtual communities each month. The PSC’s island will have information booths, presentations on jobs and a chance to interact live with current federal bureaucrats and ask questions. “Yes, we’re doing what we can do in the real world but there’s an additional dimension we can add to this,” said Marvin Bedward, director of project planning and innovation with the Public Service Commission of Canada.”

8. BNET (Australia) – Second Life Needs to Stop Having a Separate Life from Other Social Nets. “If you’re like most people in social media, you don’t spend much time anymore thinking about — let alone playing in — Second Life, the virtual 3D world that, a few years ago, had “it” social networking status. But with the news on Friday that Mark Kingdon, the current CEO, was stepping down, it’s time to think about it again — and wonder if its reputation for being a geeky hangout for people with no real-world life has proven somehow self-fulfilling. Other social nets, such as Facebook, Twitter and Foursquare, have a degree of interoperability — people can broadcast their location using Foursquare, for instance, and also have it sent to their Twitter followers. But not so with Second Life.”

9. The Malaysian Star (Malaysia) – Risk failure to succeed, says technopreneur. “Societies must encourage innovation by creating a culture that tolerates risk, said famed San Francisco-based technopreneur Mitch Kapor. “Risk involves failure and failure isn’t so shameful. People assume that if you’re a failure, you’re finished. This is not true,” he said at the Innovation and Entre preneurship: Lessons Learned From Silicon Valley talk here on Friday. Kapor explained that failure was part of the risk culture needed to raise a breed of able technopreneurs in the country. He said that besides having a risk culture, there needed to be other practical considerations, such as investing in affordable broadband and having a well-trained IT workforce.”

10. Escapist Magazine (USA) – The Escapist’s Publisher Speaking on Interactive Storytelling via Second Life. “If you’ve ever wondered about the function of storytelling in an interactive environment (i.e., videogames), pop in to Second Life this afternoon to hear Escapist publisher Alex Macris enlighten you. Linden Labs’ Second Life has quite a few uses outside of its (in)famous depth of user-generated content. Some tech-savvy teachers use it to hold classes in the virtual world, and then there’s Metanomics. A “passionate community” of people who are interested in exploring “the serious uses of virtual worlds” – that is, videogames and places like Second Life – Metanomics is perhaps best known for its weekly web show Wednesdays at 3PM EST (12PM PST), in which speakers discuss the nature of the virtual worlds surrounding us.”

Weekend Whimsy

1. Paulette Oldrich Second Life Jazz Singer

2. Second Life Role Play | 2. szerverünk bemutatása | 1. rész

3. High Elf Dance in Second Life

The history of Second Life

Over the past two months I’ve been pretty immersed in virtual worlds history in regards to health innovations (for this book), and it’s certainly been an illuminating experience. That said, this post from Tateru Nino over the weekend is the most illuminating piece of virtual worlds history I’ve read in a long time.

Coinciding with Second Life’s 7th birthday celebrations, the first part of the history covers 1999-2002 – do yourself a favour and have a read. There is of course further parts on the way and I’ll add them here as they are published. If you end up on a history binge, don’t forget the Virtual Worlds Timeline site either.

The full history of Second Life as seen by Tateru Nino:

Part 1: 1999-2004
Part 2: 2005-2007
Part 3: 2008-2010 and beyond

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