Investing in the online property boom
As the virtual world of Second Life adds more languages, a growing group of users are cashing in for real money.
Imagine the real estate mogul in a world where everything is for sale. No, it's not Donald Trump in Vegas, but a Chinese-born teacher who is the land baroness of the virtual world Second Life. The profits are real, even though the landscape and the character named Anshe Chung are simulated. The woman who created Chung, and whose brick-and-mortar home is in Germany, owns about $250,000 in virtual land that she buys, sells and leases with fellow virtual citizens, or avatars.
In Second Life, users can fly, teleport and create anything their imaginations and skills allow. Moreover, they can freely buy and sell their goods for an in-world currency, called Linden dollars, that can be exchanged for real life greenbacks. However, these transactions have largely been limited to English- and German-language speakers. Some users have found creative ways around the limits. For example, a Second Life denizen created a "translation hud" that an avatar can wear to communicate in nearly any language. Simply don the device, set the language you'll be typing in and the one that you want to appear on screen. But not everyone knows about it. "The language issue has presented some cultures from embracing Second Life completely. Even if they speak English as a second language, they'll stay away," says David Fleck, vice president of marketing at Linden Lab, the San Francisco-based company that created Second Life.
Now, however, Linden is adding more language options to Second Life, which could broaden virtual reality's global reach, giving anyone with a computer and the common language of SL's building tools a chance to test their entrepreneurial skills. Even when the virtual world was essentially bilingual, Second Life had users in 101 countries and was exploding in terms of population and commerce. There are more than 1 million residents, up from about 20,000 a year ago, and they're spending more than $400,000 in a typical 24-hour period on land, clothing, batwings, beautifully constructed facial expressions and programs that allow their avatars to engage in warm embraces and other physical manifestations of human emotion. Linden has silently added Korean and Japanese language options; Chinese will soon follow.
Fleck envisions a universe where Rwandan teens and Chinese housewives have equal opportunity to flex their enterprising muscles and make more money than they could in their real life economies, giving the promises touted by globalization advocates a run for their money. "For a person in a developing country, they can make meaningful amounts of money in Second Life," says Fleck. Moreover, these budding businesspeople will not operate in different countries, separated by language, but still all exist in Second Life. The site itself is responding in kind by looking more and more like a sprawling city with ethnic enclaves and neighborhoods, something akin to New York, Hong Kong, Paris or Toronto.
In this new vision of a capitalist and multicultural world, avatars from all walks of life share equal influence with corporations including Starwood (Charts), Sony (Charts), Sun Microsystems (Charts), Nissan, Toyota (Charts)Toyota and Reebok, as these companies now race to establish presence in a virtual land. As always, Chinese consumers are an extremely attractive group for companies that want organic growth, as the country of more than a billion people continues to grow its middle class. This demographic also includes a host of computer savvy citizens who have been playing in online virtual realities for years. "Since more female gamers have appeared, there has been a trend away from shoot-em-up style virtual reality games to more collaborative virtual realities [similar to Second Life]," says Duncan Clark, chairman of the consulting firm BDA China. Based in Beijing, Clark's group helps companies navigate China's telecom, media and technology sectors. He adds that China already has a half-billion-dollar online game market that has favored home-grown games that cater to a Chinese sensibility.
Fleck says that as Second Life grows in markets with robust gaming industries like China, Korea and India, users will have to decide whether to spend their time playing World of Warcraft or creating in SL. "They can spend that time in Second Life making anywhere from $5 to $25 a month. Thousands of people are doing that already," says Fleck. "When you have that amount of energy and time and $10 means a lot to your economic conditions, you might choose Second Life." For now, Linden dollars can only be converted to US dollars and distributed via PayPal or check for high amounts, but Second Life hopes to soon establish foreign payment systems.
All of which means more entrepreneurs like Anshe Chung's creator. She chooses to not reveal her name so as to keep her real and virtual worlds separate, but she now employs a group of people in China to manage her real estate holdings in Second Life, bringing real world outsourcing to her rapidly expanding simulated business. Therein lies some of the bizarre beauty of Second Life. "When Second Life launched, it was 64 acres with digital tumbleweeds," says Reuben Steiger, founder of Millions of Us, a company created to usher real life businesses, politicians and artists into SL. "Only a tiny subset looked at it and said, 'I get it. We can make this whatever we want.'"