I don’t usually blog specifically about ESC here, but I’ve had a number of people recently ask what ESC is focussed on these days, and today we’ve made an announcement about one of our initiatives. You can follow ESC news and its thinking on virtual worlds at the aggregate Sheep blogs here.

The Electric Sheep Company has for 3.5 years now been a company dedicated to bringing about the mass adoption of the metaverse through building virtual world applications. We’ve built considerable expertise through building applications for consumer entertainment, marketing, enterprise communication, recruiting, R&D, and other purposes. We’ve learned how to design the right experience for a particular audience through the use of interactive tools available, and keep learning with every project.

Creating new technology has always been a key part of that process. Because virtual world software is generally in its early stages, we often find ourselves extending it to attempt to accomplish what we need to. Second Life in particular is a fantastic platform for experimentation; our very first consulting project was building a search tool for Linden Lab, and in the last 3 years we built quite a bit of software connected to Second Life.

Last year we made a major first attempt at overcoming usability barriers in Second Life by creating our own downloadable viewer and launching it as a part of the CSI:NY in Second Life project. While that viewer was only a first step, it caused us to conclude that without more access to the server side of that platform, we weren’t going to get the feature set to a point where it was complete for any specific mass market virtual world application that we believed could have near term success.

That thinking extends across the virtual world technology landscape, as I’ve written here - considerable amounts of technology have been built over 20 years, some of it great, but from my point of view we remain without the feature sets needed for most applications that are likely to quickly obtain ten million regular users outside of the under 13 year old demographic.

With that in mind, one of the things ESC has been working on is software designed to fulfill some light-weight virtual world applications on the Web. We’ve announced today our WebFlock application; a tool set for embedding flash-based virtual spaces within Web sites and integrating those into any existing Web applications.

This isn’t a consumer virtual world play by ESC; rather we’re adding to the roster of virtual world tools available for anyone creating a consumer experience, and we think this tool will be a great fit for a set of use cases that isn’t currently well served. Primarily we see it as enabling virtual spaces for casual audiences who are already coming to a given Web site. WebFlock allows for taking a community of interest, whether around a movie, TV show, sport, pop culture, etc. or around an activity, like dating, and adding the core value of virtual worlds - synchronous experiences where users feel like they are in a space together. We’ve announced that we’re using WebFlock to create an experience for Showtime’s The L Word, and we have other projects underway as well, from simple promotional spaces to entire new virtual worlds that are based on WebFlock.

ESC is continuing to perform projects on any virtual world platform. We typically are hired in part to help organizations choose what technology stack makes the most sense for them to use. I certainly continue to believe in the power of 3D, for example, that would lead certain use cases toward the downloaded virtual worlds, including the new crop of 3D Web plug-ins.

For many of the potential projects we encounter, though, we are excited to now have what we see as an optimal tool for creating an entirely white labeled (no 3rd party network users have to sign up for), and no download/install/plug-in virtual experience that can be highly customized and woven throughout a Web application. We believe this will quickly help spread virtual spaces around the Web. As we’ve watched and been a part of the latest spurt of growth in virtual worlds, it seems to us that one of the most important ways to move the industry forward is through bringing large audiences into virtual worlds one step at a time, which means no barrier to entry, clear relevance to something they already are engaged in, extremely easy interfaces, and clear value for their time. Those have been the goals driving the WebFlock feature set.

ESC looks forward to not only using WebFlock to create such virtual world applications, but also in making the software available for other companies and studios to use and customize themselves.

Of course if you want to know more about WebFlock or ESC’s services across any virtual world technology, please contact us.

The NYTimes [link] had an article today, echoing similar recent reports, that Microsoft is embracing virtual world elements for the Xbox.  It is another example of gaming and social activity meeting in the middle to appeal to the mainstream.

Here is an excerpt from the article and a quote from David Hufford, Microsoft’s director for Xbox product management:

“And what really is appealing to that mainstream consumer is that social experience, in the living room or online,” he said. “Whether it’s the older consumer or the Facebook generation, they see games not as a solitary experience but as something you do with friends and family, and that’s what we want to deliver this fall.”

At the core of Microsoft’s initiative is a new interface for the Xbox 360 that incorporates humanlike “avatars” representing players. Users will be able to customize their avatars and socialize with other players, even outside a particular game. Nintendo has successfully used a similar approach with its Wii, in which each person creates a more cartoony figure called a Mii. Sony is also working on such a system with a new service for its PlayStation 3 called Home.

In Microsoft’s system, users will be able to share photographs with one another across the Xbox Live network and also watch movies together in real time, even if they are thousands of miles apart.

I’ll be speaking at a conference this Sunday at the Asia Society here in New York City. It’s part of the Asian American International Film Festival. I’m not an Asian person myself, but I do strive to be more like one.

Here’s the blurb on the panel:

Over the past two decades, video games have occupied an integral share of our visual media vocabulary. From simple moving dots (Pong) to visceral melodrama (Metal Gear Solid series), games are evolving to incorporate highly sophisticated film-like narratives. Films created through game engines and real-time graphics, known as Machinima, have emerged as an inexpensive, readily accessible way to tell stories. Likewise, popular films such as PAN’S LABRYINTH and SPEED RACER use the rapid-fire action and puzzle solving conventions so typical of video games. The panel will explore the intersections of film and video games, popular examples of their convergence, and what it means for the future of both media.

And the link: http://aaiff.org/2008/program/extra-lives-intersections-video-games-and-film

The festival looks really interesting, more info and tickets here:

http://aaiff.org/2008/

I’m thrilled to see Google announce their long-rumored virtual world technology. This will cause all the more companies to look into virtual worlds seriously, and the platform, with no license costs or hosting fees will be great for experimentation.

What causes me to be skeptical about the likely success of Lively is that I can’t tell from the outside that there was a “Roadmap”-like logical exercise behind its design. Was there a need for particular applications identified that would have a competitive advantage by using virtual world technology and then product design and featured decisions made based on the use cases for those applications?

It may be that there was, although the typical characterization that Google acts as highly talented engineers creating interesting and innovative solutions but without business direction would predict otherwise. ESC is a company always in search of better tools for any virtual world job; therefore we would love technology that opens up new use cases.  Here’s the results of my thinking on the case for using Google Lively.

• By far the most active part of the virtual world industry is in entertainment for tweens. My understanding of the Google Lively terms of service as well as the feature set and structure is that this demographic is not supported and likely won’t be soon.

• Significant experimentation, at least in the form of many small scale projects, is being done by companies looking to use virtual worlds inside the enterprise for meetings and training applications. These companies all tell us that they want to host the virtual world inside their firewall and in many cases customize the software; those actions are not supported by Google Lively.

• Large media companies who are publishers of virtual worlds, including efforts to expand beyond the tween demographic, have told me directly that they are not interested in having their work in a new medium hosted by Google; they fear that they’ll lose more advertising models to Google down the road.

• Advertisers thinking of using virtual worlds want one of two things:  either a) execute a great marketing effort in a virtual world that already has a lot of eyeballs that they can easily get in front of, or b) an experience they can easily drive their own traffic to that adds to the effectiveness of their other marketing expenditures.  On a) Lively doesn’t yet have users (obviously they just announced, so give it some time and we’ll see), and on b) Lively requires the installation of a plug-in, which even the most enticing ad just won’t get that many mainstream users to install in order to interact with a brand on-line.

• There are indeed many Web sites that have large communities, but all but the very most tech savvy and fanatical communities (MLB comes to mind as a very rare counterexample) also see huge drop off for any activity that involves installing a plug-in or registering for a 3rd party registration system.

• A significant portion of virtual world efforts currently underway are built around the ability to sell virtual goods as their primary business model.  This doesn’t seem to be supported currently in Lively - of all the shortcomings listed here, I’d assume that this one will be over come soon, but still may take a while to set up since the Google Warehouse doesn’t currently seem to support virtual good sales.

All of this would seem to indicate to me that Google Lively might end up being another Google Video, at least in its current direction.
That said, it should be noted that Google executed very well on what they chose to pursue, and the unpredicted could happen.  One of the best things for innovation is to have free tools to play with, and this is a pretty major addition to what aspiring publishers or entrepreneurs can easily use.  Second Life was a major innovation in its ease of 3D content creation and scripting; that certainly got more of the latest virtual world party started.  Google Lively is a major step forward in having a space on the Web with free hosting, industry-standard content formats, and lots of available content via the warehouse.

The completely critical factor in Lively’s potential success is adoption of the plug-in.  Google Earth and the Google Toolbar have taken years and in the latter’s case a lot of marketing dollars to get to modest usage (the installed base is large but the use doesn’t seem to indicate truly mass adoption, from my point of view).  It may be that with ties to social networks and significant effort Google can work its way up over the next 3 years to mass adoption of its plug-in - that would be a HUGE step forward for virtual worlds.  I’d love to see it happen.

But given the points above, I don’t think that will be an easy path; publishers aren’t going to throw all their users at it any time soon.  My bet: other companies come up with the perfect virtual world applications, and Google eventually acquires some of them.
If you have any insight into great applications for Google Lively, I would very much love to hear it!

During my lunch blog-browse, I ran across two posts that hit on different sides of the same issue: are social media marketing projects falling short because they take a build-and-ship approach?  Today projects need to focus on near-term ROI, which ostensibly is a good thing, but this is leading to risk averse behavior from CMOs. One point of consensus at the Advertising 2.0 conference was that the short average tenure for CMO’s is leading to short term thinking, not unlike public companies hamstrung by the pressures of quarterly numbers.

Over at Hyperempowered, Marc Schiller asks whether brand “build and ship it” thinking can ever compete with startup “alway in beta” thinking, where services and experiences are constantly updated and improved in an iterative fashion.

At Experience Matters, David Armano writes, “one of the biggest challenges agencies face is that marketing initiatives are often focused on short term gain vs. fostering long term relationships. This results in a churn and burn which can become difficult for us to sustain.” This points to the reality that a relationship and “conversation” is not built overnight, but also highlights the need for longer-term, iterative thinking.

The software industry learned the hard way that “build it, ship it” was a pretty awful approach, and thus agile development was born.  A key step was the ability to move away from shipping physical media.  The Web makes it easy to update software whether desktop apps or, even easier, purely online applications.

When one is creating a TV spot or a radio ad, one faces the same issue: one must create and ship because once it is out there, it is out there and cannot be changed — you have to start again with a new campaign piece.  Now that agencies and their clients are moving online, they need to learn the same lesson that the software industry learned: iterative is the way to be.

Don’t spend all your budget guessing user behavior, but rather put your best foot forward with a first release, monitor closely, and save some budget for constant improvement.

There have been a number of articles recently about the challenges big social networking sites have faced in monetizing their audiences. I think that there are two issues going on here:

1. the type of ad interaction needs to improve, and

2. advertisers and their agencies need to come up to speed and get comfortable with these new mediums.

The latter is requiring some real change to businesses as organizational structures and titles that fit the processes of old school media buying struggle with the dynamics and complexities of online.

The New York Times has an extensive article today on this topic [link here]. As the author writes, “In the last few months, the bloom has come off social networking’s rose” and “the balloon of unrealistic prospects is losing air.”

I happen to believe that the social networking sites will figure this out, but they will have to evolve just as the advertisers. The article states, “there are concerns that social network users do not view ads, no matter how carefully the ads are placed.” So much of advertising success depends on the method. Simple case in point: in virtual worlds, we have seen very effective engagement levels (see Pepsi and vMTV’s example), but not by sticking the 3D equivalent of a billboard on the wall.

I very much agree with this statement from eMarketer, quoted in the NYT article: “‘The challenge is that all these new forms of advertising are more difficult to plan, measure and quantify than advertisers are used to, and that has impacted spending growth,’ Debra Aho Williamson, an eMarketer analyst, wrote in April.”

I have not yet had time to write up my notes from the Advertising 2.0 conference the other week, but it was clear that agencies are struggling with the variety, complexity, and newness of social media advertising. It is considerably easier to stick to traditional media buying. We are in a transitional period where advertisers are not happy with the cost/benefit equation from traditional media buying, but still need to get comfortable with these new methods and metrics.

Neither business nor culture changes overnight, and Chris DeWolfe is right to ask everyone (including the media) to take a deep breath.

Sadly, I was too busy to attend the Social Gaming Summit, but hope to make it through some of the blog coverage.  I’m storing up my links to browse through below:

• Jeremy Liew, one of the key organizers, has a good roundup here
• Joey Seiler of Virtual Worlds News, and a moderator on one of the panels, blogged
• Monetization and Business Models
• User Generated Games in Social Networks
• Worlds in Motion’s Simon Carliss covered Joey’s panel on Casual MMOs and Immersive Worlds
• Inside Social Games covers Asynchronous Games on Social Networks
• Mashable’s coverage
• Andrew Chen’s thoughts