Facebook ‘likes’ Second Life, High Fidelity and buys both

We should have seen this coming. High Fidelity’s “secret ops” were misleading — we had no clear idea what Philip was doing, except wasting funding money, but we all predicted that either High Fidelity would provide a migration plan for Second Life’s content, or any “new” virtual world would be doomed to disappear — like Blue Mars, Cloud Party, and so forth. At this stage, it’s highly unlikely that any “new” virtual world would have a chance to beat Linden Lab at their own game. Philip’s company, from the very start, had Linden Lab as its investor, and even though Philip resigned from LL’s board, it was a bit unlikely that the Lab was unaware of Philip’s plans, or that Philip was completely “out of the loop” from the company he still owned. Clearly the whole setup was a convenient façade for Philip to be able to develop a “second generation virtual world”, free from the constraints of Second Life, and making sure none of SL’s users got anxious about what would happen with their beloved virtual world. But the recent announcements by HF looked seriously like Philip was waving the “Buy me!” flag, loud and clear, and Zuckerberg’s knowledge of Philip’s involvement both in LL and HF, as well as his former relationship with Cory, caught his attention.

Linden Lab, on their side, has been toying with Facebook integration and, lately, with a way to put Second Life on a tablet. Speculation about a possible sale to Facebook is not new. The choice of a new CEO who has expert know-how about social environments should have provided a more smooth transition path (Zuckerberg and Altberg speak the same language of social media). It’s also interesting to note that the change of CEO at Linden Lab was so shortly before this announcement; it looks to me now as if Facebook had been in touch with Linden Lab before, but saw Rod Humble’s “creative gaming” vision incompatible with their own. Linden Lab replied by exchanging CEOs for someone who knows what social media is about, and re-cast their product — Second Life — as the next.-generation social hub, one that uses immersion in 3D environments. This was probably what Zuckerberg wanted to hear to make his bid. And although we all know that Zuckerberg might have despised Second Life in the past (we remember the drama about cancelling SL avatar accounts, like my own) but that was while he was still drooling over Zynga. As Zynga’s revenues stagnated and started to diminish, it was clear he needed a completely different kind of environment to capture his users’ attention.

The Oculus gang is another story. I would have expected that they’d recommend Zuckerberg to buy Valve instead. This might still be the case, but Zuckerberg is after social engagement, revenues from virtual goods (and sure, why not, also from ads), and users who are familiar with social relationships in the “new” stage of immersive social media. Valve is essentially a game tech company — one that has a wonderful business culture, but probably too alien to Facebook. In fact, thanks to Zuckerberg’s experience with Zynga (good and bad), he already knows how to get people to play games and pay for them — he already has a game distribution platform (Facebook!), he doesn’t need another one. Also, Valve’s users are “fragmented” — they play immersive 3D games, yes, but these are not connected between each other. Zynga attempted a 2D “connection” with their games, and that was how their games became initially so popular, but we all know that the novelty didn’t last. By contrast, Second Life’s “novelty value” has lasted a whole decade and more. So, at this juncture, Oculus VR just provides hype around a Facebook-branded gadget (or at least “Facebook-blessed”) which will drive people to test it out, even not fully knowing what they should do with it. Zuckerberg just suggests that social-savvy Facebook users should experiment with social-rich virtual world environments — like Second Life.

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