The Virtual Worlds Hype Cycle for 2009

We are well into 2009 and there is a lot of news popping about the likely growth of social virtual worlds and their adoption. As a tangent game based virtual worlds are also still in relative growth as covered in SMH’s post Video games thrash movies and DVD, referring to the shift in Australia and reflected in the rest of the world, of more money spent on interactive vs passive entertainment ” video games industry is now double the size of the box office and more than 40 per cent larger than the movie disc industry in Australia”.

But back to social virtual worlds and I have quickly mapped some dates and SVW events (most are recent) onto a slightly modified Gartner ‘hype cycle’ curve. For the uninitiated here is a brief wikipedia definition.

Since 1995, Gartner has used hype cycles to characterize the over-enthusiasm or “hype” and subsequent disappointment that typically happens with the introduction of new technologies. Hype cycles also show how and when technologies move beyond the hype, offer practical benefits and become widely accepted.

Gartner Hype Cycle SVW

Of course in reality we have really been through a sine wave quite a few times since 1987 through 2005 but since the relative maturity of services like Second Life, There and others true and robust applications are emerging, beyond the traditional ‘gamer/entertainment’ use. MUVED created a post a few weeks ago showing widespread investment in a range of niche virtual worlds and this trend is seemingly continuuing apace. Raymond de Villiers, CEO of Wisdom Games is very bullish about the use of these worlds for business communication in a post entitled Growth of Virtual Environment Expected in 2009…

Throughout 2008 the corporate world was exposed to the reality of virtual worlds, which has seen a growing influence on how companies train, market, advertise and communicate. This is a trend that is expected to continue into 2009 as organisations begin to recognise the merits of incorporating gaming into their basket of communication tools.

Raymond makes some mature philosophical points about how the corporate world is now host to a new generation of employee who don’t see these spaces as for geeks and timewasters

For those who have never played a computer game in their lives, virtual worlds look foreign, sinister, scary, and like a waste of valuable corporate resources. However, for those who grew up in a world where they played virtually, their expectation of being able to apply the consequent life lessons will be expressed in their expectations of the work environment. Computer gaming, and the associated virtual worlds, will, as a result, be seen as an increasingly important infrastructural consideration.

Virtual Worlds News puts more of a realistic spin as regards raw investment (tracked over at VirtualWorldsManagement also) into new ventures with a decline (albeit way ahead of the global recession) of venture capital put into worlds – around $101m in q4 2008. In its item $101M Invested in 13 Virtual Worlds-Related Companies in Q4 2008 VWNews believes that there is a move into older generation worlds and those with much more of a niche focus.

With the harsh economy looming larger than ever, it seems like more and more focus is being put on unique niches and markets, established business opportunities, and quick-to-market strategies.

Around the world there are major government and state agency investments looking at the efficiencies and cost savings of using Virtual Worlds. Close to home (Australia) we have the MDA in Singapore committing overall around $70 million to project and services in the virtual world education space, creating around 300 jobs in the process too. I could go on with many examples of global investment in the public sector but we are also seeing expansion of existing services in the private sector a good example being Linden Lab buying two Virtual Goods companies XStreet SL and OnRez. As reported by Venture Beat the micro economy around Second Life is still in growth and Linden Lab will need a slice of that pie (in small rev share of the user to user transaction) to continue its own growth. This is long overdue by the Second Life creators and Venture Beat were keen to state the obvious also

Virtual goods have expanded to become a $1.5 billion market, but Second Life was engineered in the days before the business model was fully proven. Linden Lab residents exchanged more than $360 million worth of virtual goods and services in 2008, making the virtual economy and the ability to make a living one of the big draws of the virtual world. Top merchants in Second Life have made more than $500,000 in real money in 2008.

So there is definitely something afoot at the moment even in serious global recession there is a kind of exodus into virtual alternatives happening. The most important message is that developing on a reasonably stable and mature platform is not a big investment and companies, education departments and entertainment property owners should still see this investment as two key returns in the ‘real time, immersive arena’  – how to create experiential services and how to engage with a community. I leave you with a diagram I created nearly 3 years ago that shows a transition from web 1.0 to web 3.0 and let you decide if and how it maps onto my mapped Gartner hype curve above.

Web 1.0 to Web 3.0


8 responses to “The Virtual Worlds Hype Cycle for 2009”

  1. […] Social Media, Web The Gartner hype cycle for social virtual worlds: disillusionment trough? – – via @fleep   […]

  2. Andrew Hughes Avatar

    This is a great article! thanks for sharing!

  3. […] Gary Hayes offers a Gartner-style hype cycle for social virtual worlds. […]

  4. Cyber Traveller Avatar

    Very informative article, thanks for sharing with us.

  5. […] that will spread like wild fire. Secondly around that period in 2007 Second Life was still in its hype phase and almost any news “got the readers in”, especially stories showing how wacky the […]

  6. […] no one sees them. For example, I see a lot of overly optimistic posts on things like Google Wave, virtual worlds, social media and so on where people correctly identify the potentials but don’t foresee all the […]

  7. sälja guld online…

    […]b I as well as my friends were actually analyzing the excellent hints located rx[…]…

  8. Nick Avatar

    Wow was this ever off on every graph… And even in 2009 we knew these dates were not write…

Leave a Reply

Your email address will not be published. Required fields are marked *