How Viable Is Virtual Commerce?

Getting the Nissan Sentra out of the enormous vending machine was the easy part. Driving it around the huge 360-degree loop-de-loop was going to be a lot tougher, but it was simply too irresistible not to try.

I kept jumping into the car and attempting the loop. Each time, the result was the same: I had to hop out and retrieve the auto as it hung upside down in midair. The lesson of the day? Getting up enough velocity on the upslope is key—you need that momentum to propel the vehicle through the 180-degree vertical bend.

Welcome to my Second Life. Thanks to the Havok physics software engine within this online 3-D virtual world, I learned—and lived—to try it again another day.

Most people think of virtual worlds, such as Linden Lab's Second Life, as games. However, these online spaces have grown well beyond the realm of fun and escapism to where they're now resting on the edge of "Web 3-D." In fact, their possible implications with respect to brand recognition and sales are grabbing the attention of real-world businesses—like Nissan—every day.

Just as the World Wide Web of the 1990s quickly spawned whole new industries and transformed business applications, commerce, and information flow, the virtual world of Second Life offers a microcosm of vast potential for business, commerce, marketing, and learning in this decade.

Open since 2003, Second Life is one of about 30 virtual social worlds in which multiple "players" interact with one another through digital personas called avatars. Unlike traditional games, which are played within a constructed space to achieve a win, virtual social worlds are open-ended simulations in which the attraction is largely socializing, collaborating, and creating. These immersive elements are a critical distinction within the $350 billion massively multiplayer online game (MMOG) genre. They're the reason behind Second Life's current growth of more than 20% residents per month.

Not coincidentally, these social elements are also the keys to tapping into the unprecedented technological and sociological shifts that are impacting the interplay between real-world business and consumers. Immersive virtual-world applications, born in the consumer world, are beginning to creep into collaborative corporate environments, as Web 2.0 technologies already have.

John Gage, Sun Microsystems' chief researcher, describes the phenomenon this way: "Second Life is a community built entirely on participation. While this is still an experiment for us, we're jumping into Second Life with both feet because we see the online world's unlimited potential for collaboration on everything from social issues to Java-technology development."

Sun and Nissan are just two of the several dozen companies exploring commercial possibilities and trying to engage virtual consumers. Starwood Hotels was an early arrival, prototyping a new real-world hotel on the site; and technology companies like IBM and Sun are quietly eyeing Second Life and other virtual worlds as the building block for next-generation operating systems. Retailers such as American Apparel are mixing and matching virtual and real-world sales, too. (For more on Starwood's plans, see related article, Starwood Pleases Avatars First)