Monday, March 15, 2010

Linden Lab Leaping the Chasm?

cc photo courtesy: globevisions

This last week I read the Harvard Business School case study entitled: Linden Lab: Crossing the Chasm Rev. August 3, 2009.  If you'd like to follow along, the pdf will cost you $6.95 USD and if you have anything more than a passing fancy about the virtual world of Second Life and/or start ups in this space it's almost worth it.  I say almost because despite the report page count of 26, there are 14 pages of endnotes and poorly formed exhibits of incomplete data extracted from sources such as blog posts. That leaves you with about 6 pages of historical stage setting and 6 pages of useful information and insights into the new Linden leadership and their dilemma.

M is for Marketing
The phrase "crossing the chasm" in the HBS case study is in reference to the marketing strategy set forth by Geoffrey Moore in his book "Crossing the Chasm" published in 1991Moore's strategy is closely tied to a technology adoption model wherein a chasm appears as a discontinuity in adoption between the early adopters (visionaries) and the early majority (pragmatists) on the way to mainstream.  

This is the same chasm that Mitch Kapor described in his 2006 SLCC address when he said:
“In particular, in the short term, right now there’s still a chasm between the power users and the clueless newbies. Those are slightly provcative terms, they’re not the best, it is just a fact, there’s still a significant number of people who come in, try it and leave. It’s not ready for prime time. I don’t believe it’s going to change overnight. It’s going to change in stages. It’s hard to know how long it’s going to take, and how long before it’s mainstream. It’s not tomorrow, it’s not next year, but it’s coming.”
This chasm as described by Mitch is the point of departure for the case study.  I decided to see if I could use it to develop a better understanding of what Linden Lab might be doing under the leadership of a long standing member of the digital marketing industry Mark Kingdon, aka M Linden.

M is for Markets
Let's go back to Moore for a minute and his marketing strategy. Moore lays out a prescribed formula for crossing the chasm that is relatively straightforward:

  1. Target a specific niche market within the early majority
  2. Develop a whole-product solution that addresses that market segment's specific needs 
  3. Flood the market segment with an intensive marketing campaign

So the challenge for the Lab was/is to find that target market and hit them with everything, or they could at most hit two markets if they managed resources and priorities religiously. According to the HBS case study, the markets available to Linden Lab are: enterprise customers, educators, adult consumers or teens.

The release of Second Life Viewer 2.0 seems to fit the Moore model - it's being sold as an entirely new solution and we are certainly in the midst of a wholesale marketing campaign.  The question is, which niche target market(s) have they selected?

In mid 2009, Kingdon sounded convinced that Second Life was the killer app for business meetings, and in May the Lab rolled out Second Life Enterprise Beta, a full service behind the firewall solution for enterprise customers.  As a market segment, it's clear that a hand full of large companies have sufficient discretionary funding (solutions start at $55,000 USD) to at least sample, but I don't have details on the success of the SL Enterprise Beta to date.  The initial release was undoubtedly crippled by the lack of Shared Media recently introduced in Viewer 2.0. As an "embedded practitioner" I know first hand how difficult it is to get people to download and install simple plugins for WebEx or AdobeConnect, much less go through the standard Second Life download and orientation so it's really hard for me to imagine that this is the "beachhead" Moore suggested.

I ruled out the educators, even after the VWPBE conference and the collective "hooray" about Shared Media. I'm convinced the education market is saturated (a @fleep tweet indicated there were currently over 600 institutions in world), and the introduction of land pricing model changes combined the recent departure of John Lester / Pathfinder Linden seem to indicate that the Lab's past love affair with the edurati is in that "old married couple" stage - safe, secure, not really growing wildly and with a lot less sex.

Speaking of sex, the Lab has bent over backwards (so to speak) to isolate, cordon off and squelch any inferences that Second Life is "all about the sex" so I'm confident that the "adult -adult" niche market is out of the question.

That leaves the non- adult adult market, and teens.  I think, for now, we can rule out teens.  When asked about merging the teen grid at the VWBPE conference M Linden confirmed that a combined adult/teen was a distant future dream, but would emerge slowly through "thoughtful evolution".

We've ruled out three of the four, leaving us this ill-formed "adult market" at which Viewer 2.0 is aimed. Who, then, is that?  I like the process of elimination, so let's go there again.

The new viewer does not appear optimized for anyone wanting to host, perform or attend events of any kind.  Part of this is tied to the delay(s) of improving the overall Search experience, but that aside there is nothing in the shape of Viewer 2.0 that lends itself to finding or promoting things to do.

Viewer 2.0 brings nothing to the revenue support base, land owners and the new Linden Homes are a shot in the arm to the rental owners. Currently, land sales and ownership contributes 79% of the LL revenue - which is enormously unbalanced, ripe with risk and likely the largest motivation to find new markets.

An opportunity for growth might be the $L conversion which means new content but the new viewer does not appear to be for content creators, arguably the second most important Second Life resident behind land owners. Content creators are feeling particularly unloved these days due to continuing challenges with copyright and content theft.  Perhaps that's why we saw the heavy promotion of the SL Pro conference, with backing from Linden Lab that far exceeded any previously expressed interest in SLCC.

Is 3D Chat and Shopping Our Future?
So if Viewer 2.0 is not for finding things to do and it's not for content creators or land owners, then what's left?  Maybe I'm using the Moore model too rigidly, but is there a niche adult market out there that would serve as a suitable beachhead and give the Lab a leg up for the next wave?

My best guess is what a friend of mine likes to call "playing house with paper dolls".

This is the 3D chat or IMVU model of virtual worlds (at this moment, IMVU has 83,819 people online).  IMVU is nothing to scoff at - according to a Virtual World News post IMVU has over 35 million registered users and 100,000 registered developers - so about twice the size of Second Life and a comparable concurrency.  I even noticed the strange similarities between the IMVU and Second Life landing pages, and oddly enough the viewers.

Could "3D chat with super easy shopping" be the new beachhead to serve adult and teen markets?  If you've tried Viewer 2.0, what's your guess?

If so, it's a far cry from “connect everyone to an online world that advances the human condition.”
Share Some Grace:

blog comments powered by Disqus