Parmy Olson: With the plunge in Meta Platforms Inc.’s stock this week, shareholders are focusing scrutiny on Facebook’s decision to re-brand itself and stake its future on the metaverse: a 3D, immersive world where we talk and do things as avatars.
Second Life had all this when it launched nearly 20 years ago, as a virtual world developed by San Francisco-based Linden Lab. You were one of the first people to document what it was like to live in Second Life and now write a blog on the metaverse, https://nwn.blogs.com/nwn/. What do you make of the comparisons people are drawing now between Second Life and the metaverse that the big tech companies are trying to build?
Wagner James Au, author, “The Making of Second Life: Notes from the New World: ” For any story I’ve seen about the metaverse now, there’s an analogue to what happened in Second Life. This talk of a metaverse real estate boom? Yes, that definitely happened. Talk of big companies opening up virtual headquarters? There were a lot of other Fortune 500 companies that opened up a site in Second Life.
PO: Even so, Second Life’s active user numbers never managed to go above 1 million, despite lots of fanfare and publicity. Why did it never achieve the mainstream success so many hoped for?
WJA: First of all, it wasn’t a mainstream product. When it started, you really needed a desktop computer and a dedicated broadband line and that only applied to about 10% of the population at the time.
PO: Wow, that’s a surprisingly low number.
WJA: Back then, only gamers had that kind of equipment. Even as Second Life got more and more mainstream [attention], the technology requirements were not mainstream. Then there was the user experience which, even today, looks like it was created by engineers versus designers.
PO: Right, doing simple things like moving around or putting clothes on your avatar could be unwieldy and complicated and required going into the editing function to move things around.
WJA: And yet at the same time, the virtual fashion industry is massive. Even today, there are more content creators in Second Life making $10,000 a year than content creators on [virtual-reality platform] Roblox, even though Roblox Corporation has a much larger user base. One woman showed me her business plan and she had been grossing upwards of $7 million in the last few years.
PO: Just from selling virtual fashion on Second Life?
WJA: Yes. And this all could have been much, much bigger if the creators of Second Life didn’t make some really bad decisions early on. It was intended to be used by hundreds of millions of people and its creators had aspirations to build the metaverse. But Second Life couldn’t run on a laptop. And then there was a shift to smartphones. There is still no official Second Life app, which is just mind-boggling.
PO: Why was it so hard to make these shifts?
WJA: Partly it’s about company culture. [Linden Lab] was afraid of doing anything drastic that angered the existing user community because they were very profitable. For instance, they could have made a mobile app, but a lot of older content might not display. And they were afraid of enraging the existing users.
PO: Is this a very loyal user base?
WJA: Yeah, I still see users from 15 years ago coming in from time to time. There’s about 500,000 monthly active users on Second Life. A philosophical decision the company made very early on was to stop calling Second Life a game. It used to be a social game with a ratings systems where users could rank each other.
PO: Sounds a lot like social media today.
WJA: There was a leaderboard, and in 2005 they got rid of that. The company was trying to get IBM and other big companies to use it. So they did this rebranding and stuck with it. They never went back to create a game structure, which could have kept people coming back to say, level up a character or earn some points. But they don’t have any of that.
What’s interesting is that Facebook’s metaverse strategy was, until recently, driven by people who’d left Linden Lab, including [former Linden Lab CTO] Cory Ondrejka, who went on spearhead Facebook’s acquisition of Oculus.
PO: What do you make of the metaverse worlds being created today by Facebook and Microsoft?
WJA: Well, Facebook’s [social virtual-reality app Horizon Venues] is not very impressive so far. And I’ve talked to people who’ve worked on it and there’s apparently a lot of churn, people coming and going. There’s not much design focus. It seems like they’re still struggling to get it into a mass market product. The great irony is that Oculus is selling pretty well, but there are other [social] platforms that are more popular, like Rec Room and VRChat, which have way more active users. VRChat hit almost 90,000 concurrent users on the platform at the same time last New Year, which is getting higher than Second Life.
PO: Overall, what do you think of the offhand comparisons people are making between the current iteration of the metaverse and Second Life?
WJA: I see the same kinds of assumptions and mistakes being made all over again. For example, that people are going to want to go shopping in the same way that they go shopping in real life, like going into a [virtual] mall. That really hasn’t panned out. For most metaverse platforms, creative freedom is much more limited, with VRChat being an exception. Facebook especially wants to control the experience at the expense of creative freedom.
PO: Any thoughts on who might be a winner here, or will the metaverse remain a niche activity for people?
WJA: There’s a very good chance that metaverse platforms will not grow further. If you consider Roblox a metaverse platform, which I do, it has 200 million active users. But since its IPO, Roblox has not grown. Its website traffic is not growing. And my theory, I call it the Metaverse Age Cliff, is that metaverse platforms are really popular with kids into their teens or early 20s. But usage drops really quickly around 24 or so. We can infer a lot of reasons for that. People start becoming adults, going out on dates, hanging out with friends, getting jobs and families and they have less time. They’ll still use metaverse platforms but it’ll be for an hour.
PO: But many people in their 30s and 40s and beyond spend all day on the Internet. Why not the metaverse?
WJA: I know a lot of metaverse evangelists who promote it as the next big thing. But what’s notable is that very few of them actually use the metaverse with the degree of frequency that they say we’re all going to be using it. Using the metaverse takes time — being able to log on and just the amount of focus you have to spend. You have to be very aware of your surroundings in the immersive space, including audio cues. It takes a lot of time and attention.
PO: So it’ll be more like Netflix Inc., something you go on in your free time.
WJA: Yeah. I’m very, very skeptical people will conduct work and socialize in the metaverse. It’s not just the bulkiness of the headset. It’s that you are literally blind to the world around you when you have these headsets on. Still, to me, even if it only becomes a more creative, more democratic alternative to traditional movies, TV and even games, I think that’s a big win for humanity.
Bloomberg
