The following correction was printed in the Guardian's Corrections and clarifications column, Monday 6 April 2009.
In the article below we said that Linden Lab, the company behind the virtual world Second Life, had created a new version of Second Life that allows companies to run a private, protected Second Life server while still connecting to the main Second Life world. In fact, the current release does not allow these users to move from their private area into the public one, but an experimental version being jointly produced with IBM can.
Two years ago, the virtual world Second Life was everywhere, as pundits and press alike rushed to proclaim it as the Next Big Digital Thing. Inevitably, the backlash began soon afterwards. The company behind it, Linden Lab, lost focus and fans; key staff left. Finally, last March, Second Life's CEO, creator and visionary, Philip Rosedale, announced that he was taking on the role of chairman of the board, and bringing in fresh leadership. But against an increasingly dismal background, who would want to step into his shoes?
Mark Kingdon, apparently. For seven years he had been chief executive of the leading interactive marketing company Organic, founded in 1993, but was attracted to the job for two very different reasons. "From the time I was six, I wanted to be a fine artist, and I only decided to get into business when I figured I'd be a starving artist. So I look at it through the lens of the designer, and I see [Second Life] as just an incredible platform for creativity."
More pragmatically, he adds: "I see what a phenomenally brilliant business model Second Life has. If you're a social media property today, your biggest challenge is figuring out how to monetise it. Because the experience and the economy are so closely linked, Second Life doesn't have the problem that other social media properties have." As a result, Linden Lab "is a company with an extraordinary balance sheet, a great and profitable revenue stream."
Engineer a solution
As well as Kingdon's general experience in running a large company, Rosedale was interested in one aspect in particular: "I come from a user experience background," Kingdon says. "In order to make Second Life a more broadly accepted experience, we have to make it a lot easier to use." Kingdon is addressing this problem by bringing in top engineers from companies such as Adobe, Intuit and Pixar. Altogether, he's hired 100 people since joining Linden Lab last May. He claims that the results are already showing.
"We reduced the hours lost to downtime by 50%, and I think we'll do the same again," he says, an important issue when many users were frustrated by the frequent non-availability of the service.
Engineering improvements have also led to a growth in the number of concurrent users. When Kingdon joined last May, the maximum was 60,000. "It's 86,000 now," he says, "and we're projecting that it will be 100,000 concurrent by the end of the year." He also has ambitious plans for the total number of active users - defined as those who spend more than an hour a month using the service: "I'd like to see a Second Life that, instead of 640,000 active users" - today's figure - "has 6 million active users."
Alongside these expansion plans, Kingdon is also reshaping the in-world experience, perhaps most dramatically with a plan to fence off "adult" content. He explains: "Our residents were asking for a more predictable experience." Or, as the official announcement put it: "Some residents are interested in pursuing certain 'adult' activities in Second Life that others would rather not casually encounter."
One increasingly important group of users looking for more "predictable" experiences are companies, and it is here that perhaps the biggest turnaround in Second Life's fortunes has taken place. In 2006 - well before joining Linden Lab - Kingdon was recommending businesses explore Second Life as a marketing tool. Today, he sees things differently: "What has changed in my perception between 2006-07 and now is that I see Second Life more as a tool for collaboration and virtual meeting, and less of a large-scale branding tool."
Kingdon cites two main reasons for companies' renewed interest in Second Life. "One is that a younger generation of worker is very tech-savvy, accustomed to using very flexible tools to communicate, collaborate and share. Then there's the tremendous pressure on businesses to be eco-friendly, not to travel as much and not to build physical buildings."
One major technological improvement may also have contributed to the growing use of Second Life as a tool for collaboration. "Voice was a major accelerant for business and education," Kingdon says, referring to the capability of Second Life users to talk to each other in-world, using a headset. This was added in August 2007, in the teeth of some opposition. Today, more than 50% of Second Life participants are using this free service at any one time. "We're doing over 1bn minutes a month of in-world voice."
Linden Lab is now aiming to build on this enthusiasm for communications: "There's been a huge amount of interest in Second Life as a collaboration and learning tool, to the extent that we've created a new product that's a behind-the-firewall product." This allows companies to run a Second Life server on their own intranet: they can still connect to the main Second Life world, but it provides them with a virtual space where confidential discussions can take place.
Unreal estate
This approach seems to have supplanted Linden Lab's original idea, which was to make its server code open source to let others create compatible worlds (the Second Life viewer is already open source). Perhaps that fits in better with Kingdon's more pragmatic approach, as it ensures that Linden Lab retains full control of land sales - its main source of income - and provides it with a new revenue stream.
But Linden Lab isn't the only one making real money from virtual worlds. One figure that Kingdon looks at every week is "cash-outs" - how much people take out of Second Life by cashing in the Linden dollars they make from in-world e-commerce, expected to hit $450m (£318m) this year. "It's a sense of the health of the [Second Life] economy if people are able to generate a profit," he says. "I can tell you that the users generate more revenue out of the in-world economy than Linden Lab does. And we're a very nice and profitable company."
After all the hype, maybe Second Life is finally starting to deliver.