Areae and the rise of the Social Networking / MMO hybrid

When I started writing this blog, very few people were talking about the melding of MMOs and Web 2.0.  My goal for the last year was to proliferate this concept widely and to help bring together what I observed to be two very segregated, but highly complementary communities.  This was my motivation behind putting together a Virtual Worlds/Casual MMO panel at the Web 2.0 Expo and for including the panel on “Virtual Items: Mainstream or Not” at the Virtual Goods Summit. 

 Yesterday, BusinessWeek published a special report called “Getting Serious about Gaming.”  Two of my investments are mentioned in this article, one of which is Areae:

“One of the most high-profile efforts in this area is the L.A.-based Areae, founded by industry veteran Raph Koster (former chief creative officer at Sony Online Entertainment (SNE)) in December, 2006. Still in stealth mode, the company is talking very broadly about its plan to reinvent virtual worlds. But the basic idea is to bring down the astronomical development costs of the popular MMOGs by borrowing from the equally popular and vastly more economical Web 2.0 technologies supporting sites such as MySpace and YouTube.”

Hrm, they don’t exactly get it right.  What they do get right is that Areae is still very stealthy. In all seriousness, I don’t like invoking a Web 2.0 metaphor where the sole conclusion is ”cost reduction.”  Web 2.0, while an accelerant of more cost efficient development models, is in my mind, primarily characterized by a collaborative and community-driven relationship with your users where “A+B” does not merely equal “A+B.”  This is the kind of alchemy all of us technologists strive for – how do we transform mundane, commodity database driven web pages into something that supports life?  ;>

And since when was MySpace Web 2.0?  

In any case, all my good natured snark aside, I’m very happy to see the transformation in the market that has taken place over the last year.  The conversation around next generation social media has moved far beyond Second Life and WoW.  Every day, I see new business plans and prototypes of entrepreneurs constantly innovating in this space. 

Why emotional relationships with your users matter more than ever

Umair Haque writes a blog called BubbleGeneration that I like a lot.  His writing has consistently helped me expand my thinking in many ways.  He recently commented on my post about why avatars are the web’s most undervalued asset today:

“Controlling the emotional intensity of an industry is an incredibly powerful source of advantage in the post-network economy.

But that’s a small part of the reason avatars are valuable.

The truth is that the post-network economy is an interaction economy. The avatar is a focal point for interaction – a sticky, context independent, information-rich focial point…which should be enough to explain why they can also be explosive focal points for value creation.”

I think we are actually making the same point, we’re just using different words to describe it. 

Whenever I evaluate a new consumer startup, what I am constantly ruminating is “What is the relationship between this service and the user who uses it? Is it a weak emotional relationship or a strong emotional relationship?  What is the nature of this relationship – is borne of need or desire?” and so on. 

I care about this because emotional intensity has a direct correlation with 1) how much attention a user is willing to spend on any given product/topic (Quantity) and 2) the Quality of the interaction the user is likely to have with this service.  Emotional intensity creates option value for the service provider. 

Think about your most recent romantic relationship.  The stronger you feel about someone, the more likely it is that you are going to 1) spend more time with that person and 2) explore the depths of the relationship’s possibilities.

As we are moving into an era where attention is the most valuable currency and the user is pummelled with more content they could possibly consume in a lifetime, the strength of one’s emotional connection with a service, a brand, or a product is of utmost importance.  The dominant strategy for creating defensible unfair advantage around your product in Web 2.0 was community and the associated network effects.  But in a world where every single service has deployed a community platform with identical feature sets, how do you differentiate? It’s not enough to deploy communication platforms, user profiles, and voting tools.  Social game mechanics help, because they lay the foundation for a number of different emotion states: tension, exhilaration, accomplishment, delight, etc.  

As product designer, your role is similar to that of a conductor of a large symphony.  Only, your instruments are peoples’ emotion states.  Each user experience is the orchestration of numerous emotion states.  The value of a customer to you is completely correlated with his/her set of emotional reactions.  To add complexity, the timber of each note varies by instrument and by person.  For example, the emotional footprint of surprise is different than that of longing.  Surprise has a big high and tapers off, leaving it with a short tail.  Some people may be frustrated by a feeling of longing, whereas some people may find it stimulating.  Ad infinium.

In short, this matters because emotional intensity is the most important filter by which people determine how to spend their time and energy.  If you understand what the emotional relationship with your user feels like, you can then figure out what the possible range of monetization opportunities might be. 

SXSW Panel: Web 2.0 to Web 3D [part 1]

Folks like Wagner James Au and Mitch Wagner of InformationWeek have already blogged about the panel, but I wanted to share my presentation with the folks that couldn’t make it.  This is my take only.  The other panelists – Wagner James Au, Robert Scoble, and Robin Hunicke all had great things to say.  By the way, Robin is brilliant.  She’s the lead designer for the forthcoming MySims on the Nintendo Wii and a PhD candidate in CS/AI at Northwestern.  As she spoke, I thought ”Sheesh, it’s going to be hard to follow her.”

The question I was trying to answer was, “Is the next generation of the consumer web 3D?”  I think the answer is not necessarily.  

1. The reason why we’re asking this question is because there’s a bubble forming in the virtual world space right now.  

That’s a pretty incendiary statement. What do I mean by it?  What I see on the horizon are dozens and dozens of new virtual world platforms and titles hitting the market – far more than the public will want to consume.   By ‘title,’ I mean a self contained, branded version of a virtual world much like “Virtual Laguna Beach.”  All the big media and consumer goods companies are looking at what’s happening with online community sites like MySpace and Facebook and want in on this action desperately.  

However, I think that all of the media hype around Second Life is misleading the public about what the next generation consumer Internet might look like.   That isn’t to say that Second Life doesn’t have tremendous merit in moving the dialogue forward about what collaborative work and play spaces feel like.  What I mean is that there are now quite a few companies who equate “future of online communities” with “3D graphical world.”  The mad rush by these big brands to create empty showrooms in SecondLife is proof of this.   Just like in the dot-Bust days, there will be lots of shoddy substandard products brought to market in the mad frenzy to create a ‘presence.’ 

But the good news is that in this crazy landgrab, there will be a couple of winners that shine through.   There is considerable appetite for online play spaces right now – you can see the proof of this in the many bootstrapped and under the radar services that are getting a lot of traction. 

2.  What does the next generation consumer Internet look like?

What I’m interested in above all else is the nature and evolution of people and our constructs [culture, economic and belief systems.]  As I’ve said before, I think the real story behind the consumer web today is what’s going on cognitively – how our relationship with the Internet is changing. 

Here’s how I see the evolutionary arc of the online user experience:

Web 1.0: Information Sharing
Web 2.0: Interaction
Web 3.0: Immersion

By immersion, I mean that people will demand experiences that are more emotional, engaging and genuine.  3D graphics are one way to create immersiveness, but not the only tool we have in our toolkit.

Let’s look at how the ways people have expressed themselves online have changed over time:

Pre-Web: Text based worlds
(I am looking at a character named Ulion and the text he has used to describe himself)

Web 1.0: Geocities

Web 2.0: MySpace, currently the world’s largest massively multiplayer online game

Then, there are a few sites that reveal glimpses of what the future might look like.

Web 2.1: Gaia Online
(Gaia started as a bulletin board system that has slowly layered in a 2D virtual world graphical metaphor over time. What you’re looking at is one user’s profile.)

Web 2.1: Yelp

Web 2.1: Flixster

3. What are the implications?

We are moving from web pages to web places.  More and more game-like features will find their way into everyday web design – you see this already being implemented successfully on sites like Yelp and Flixster.  People will seek out experiences, rather than just content.  3D is just one tool out of the many we have available to create immersive, engaging experiences.  3D should be used tactically – it makes sense for some audiences and for some applications.  There are many ways to think about presence and dimensionality online.  3D graphics facilitate spatial/physical awareness. But we should also be thinking about 3 dimensional social presence and shared/collaborative presence.  Luckily, there are a couple of good examples in this space already.

This post will be continued…

I'm moderating a panel at Web 2.0 Expo on the future of online games & virtual worlds

I think the future of online gaming eventually converges with the future of Web 2.0.  This session will explore what we think the future of online games looks like. On the panel with me are Raph, Craig Sherman – CEO of Gaia Interactive, Gene Yoon – VP International of Linden Lab, and Joi Ito – my guild leader and Creative Commons guru!

 Early bird registration ends today, so if you want to go, sign up and receive a discount.

Also if you have any thoughts or ideas about the type of content we should cover, I welcome your suggestions.