Challenges abound in the highly complex virtual world transactions where open technical standards are key if its business benefits are to be realised. Asia's virtual world platform operators are seen to be playing a central role here.
Amid all of the excitement around the potential of virtual worlds we've seen this year, one historic analogy has become increasingly unavoidable: what Compuserve and AOL were to the 2D web of the 1990s, Second Life, There.com and other "walled-garden" virtual worlds are to the emerging 3D web of the 21st century. As we saw with the 2D web, the key to realising the business and social benefits of its three-dimensional descendant will be in establishing widely-accepted and open technical standards, a process in which Asian players are playing an emerging central role.
While Linden Lab's Second Life, Makena's There.com and other contenders vie for standards dominance in North American and European markets, some Asian virtual world players are taking a proactive approach to establishing standards. China's HiPiHi is one of the most prominent advocates of such standards and was viewed as a critical participant in a standards meeting convened by IBM at the recent Virtual Worlds Conference in San Jose, California. The much-discussed Beijing-based platform operator has the advantage of building its world from the ground up with the benefit of hard won lessons gleaned from the pioneering work done by Linden Lab and Makena. HiPiHi can orient its technical architecture towards open standards from the outset.
In Japan, Second Life is enjoying explosive growth in the wake of the release of a Japanese language client over the summer. Meanwhile, local player 3Di.jp has ported Second Life to the mobile platform through its own browser, crafted an intuitive, browser-based Japanese language SL client and announced plans to release its own virtual world ("JinSei", or "Life") in 2008. 3Di.jp made this impressive progress through collaboration with the developers of the OpenMV project and using open source software from Linden Lab®, the developer of the highly popular Second Life platform. This stands as proof that all parties stand to benefit when this kind of technology is even partially opened.
On the 2D web, open standards allow for information and media content to move smoothly across servers, domains and browsers; on the 3D web, this flexibility will need to be extended to fully-fledged, data-intensive and complex objects -- daunting but theoretically possible. For example, the goal of building a virtual sofa in one 3D environment and making a copy in order to furnish your virtual apartment in another is easy enough for engineers to tackle; the hardest part will be in facilitating transactions regarding such objects across disparate platforms. This is where the idea of a virtual currency exchange becomes important.
There are many issues to consider when developing a virtual currency exchange. First is the diminutive size of most virtual transactions; people are rarely willing to pay more than a few U.S. dollars for a virtual shirt or sofa. The potential for commerce is huge when the numbers are aggregated, but individual transactions are tiny and each carries its own cost. Further complexity is added by the use of not only multiple real world currencies, but the use of unregulated virtual world currencies specific to a given platform -- for example, Second Life's Linden dollars.
In most cases, virtual world currencies are governed and regulated only by the terms of service set out by a platform operator and agreed to by users on sign-up; such terms typically give operators almost complete discretion in how and when their currency can be issued or exchanged. This contrasts with real world currencies that are managed through publicly accountable central banks or currency boards. In the absence of central regulation, virtual currencies are vulnerable to mismanagement or abuse that could lead to runaway inflation or depreciation of users' virtual assets. Achieving open technical standards for disparate virtual worlds will be challenging enough -- but who will regulate the issuance and exchange procedures for virtual currencies (in both virtual-to-virtual and virtual-to-real currency transactions)? At what point does a virtual currency become real from a legal perspective? These are matters more suited for lawyers, bankers and taxation officials -- let alone engineers.
Currency and technical standards form the bulk of the interoperability challenge, but there are additional considerations, personal identity foremost among them. How can you carry your unique identity in one world -- and its attendant business and cultural value -- into another? How much personal (real-life) information will travel with you, and how much will be displayed from world to world? The use and misuse of anonymity adds another wrinkle; as with technology and currency, solutions are easy to imagine, but complexity, not to mention competing agendas among platform operators, can slow things down. An initiative called OpenID, supported by many leading technology vendors including AOL, Microsoft, Sun and Novell, could provide the basis for a solution. Today, it is estimated that there are over 160 million OpenID enabled URIs with nearly 10,000 sites supporting OpenID logins.
Perhaps the most nuanced challenge associated with interoperability relates to cultural identity. Intangible attributes of a community including etiquette, body language, and aesthetic preferences are woven through any virtual world platform. The tech-savvy roots of CyWorld's Korean creators, for example, are subtly evident to the careful observer throughout that environment. Just as many people prefer to buy locally produced food and crafts in the real world, some may find that they favour virtual goods that were conceived in culturally familiar real-world environments.
Today's virtual "walled gardens" will inevitably open and flourish. Despite the associated complexity, technical challenges are in some ways the easiest to tackle. Financial, legal and cultural contradictions will be tougher. Encouragingly, the influence of Asia's virtual world platform operators appears to be pulling industry leaders elsewhere in the world closer to a solution.
Ted Tagami is vice president, business development, of Millions of Us. Read full bio.