Beyond Second Life

Companies thinking twice about the popular virtual world are finding more security and flexibility in alternatives

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Is there life beyond Second Life? Companies ranging from Walt Disney (DIS ) to Wells Fargo (WFC ) are seeking alternative virtual worlds with both greater security against hackers and control over such things as brand messaging and participants. After all, the Web-based parallel universe is a messy marketplace where you're as likely to see a bare-chested, rabbit-headed avatar trolling for adult-themed entertainment or vandalizing a digital store as a corporate suit leading a training session. And some companies want to target age groups younger or older than the average 30-year-old denizen of Second Life.

Even the earliest adopters of Second Life are turning elsewhere. In September, 2005, Wells Fargo (WFC ) was ahead of the corporate stampede into Second Life when it launched a 3D virtual environment, "Stagecoach Island," in Second Life to attract youthful, tech-savvy customers and teach them about banking. Now nearly 50 corporations use Second Life, with Royal Philips Electronics (PHG ), Coca-Cola, (KO ) and News Corp. (NWS ) among the latest. But Wells Fargo is gone. It pulled its Stagecoach Island out and opted to create its own world, a larger, stand-alone online universe that it can monitor more closely and customize.

Starwood Hotels & Resorts (HOT ) is getting ready to bail now, too. Last summer, Starwood made a splashy, widely publicized entrance into Second Life, hoping to draw on the wisdom of avatars to get customer feedback on possible real-world design features for its stylish new brand of hotels geared toward hip twenty- and thirtysomething business travelers on a budget. Although Starwood first heralded Second Life as an ongoing project, it will soon leave, too. Starwood discovered avatars don't need to sleep, and so a virtual hotel didn't make much sense in the long run. Unlike Adidas or General Motors (GM ), which sell digital versions of Reeboks and Pontiacs in the online world, Starwood didn't have goods to sell—and found itself unable to sustain avatars' interest.

Even newcomer Coke isn't banking solely on that particular patch of cyberspace as its main online platform. In May the company closed its "Virtual Thirst" contest, which asked the public to design a vending machine for Second Life. The winner gets 500,000 "Linden Dollars," the virtual world's currency. But Coke is also reaching out to potential vending-machine designers via a (NWS ) social-networking page, keyword tagging, a Flickr (YHOO ) photo page, and a YouTube (GOOG ) video clip. Coke's multichannel Web 2.0 onslaught shows the beverage giant is going anywhere on the Internet where the young can be found.

MTV Networks (VIA ) started in Second Life but decided to use Makena Technologies to create stand-alone online environments to accompany its Laguna Beach TV series, and more recently, The Hills and Pimp My Ride. The cybersites weave the shows' story lines into interactive digital environments without any competing brands.

Disney (DIS ) hired Finnish developer Sulake to create its own Virtual Magic Kingdom, a cartoony, interactive world that replicates Disney's amusement parks online. Sulake is also the creator of Habbo Hotel, a seven-year-old Web-based world aimed at teenagers with 76 million individual avatars worldwide. Companies without any presence in Second Life, including Target (TGT ) and Wal-Mart Stores (WMT ), sponsor digital "lounges" and events at Habbo Hotel. More than 150 avatars can hang out simultaneously in these branded environments, nearly double the maximum at a Second Life shindig.

Linden Lab, the creator of Second Life, doesn't think that building a series of separate virtual worlds is a good strategy, director of marketing Catherine Smith says. The company, however, is working on allowing corporate players to increase security by hosting their own servers that could keep their back-end data separate from Linden Lab's main server. Last fall hackers obtained the credit-card details of many Second Lifers.

This growing crop of Second Life alternatives is diverse and highly specialized but shares a common focus on security, customization, and control—three qualities that are business-friendly. Although Second Life clearly isn't fading away any time soon, corporate interest is broadening. Analysts such as Joe Laszlo of JupiterResearch predict virtual worlds are poised to become the next hot Web acquisitions for big media companies.

By Aili McConnon and Reena Jana

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