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There.com – A Virtual World’s App Strategy for Facebook and Open Social
September 4th, 2008 – Los Angeles
All Facebook sat down with Michael Wilson, CEO of There.com at the Virtual Worlds Expo in Los Angeles. Michael is a tech savvy visionary who was the 4th employee at eBay and an early employee of Oracle. There.com is a popular 3D social virtual world that allows users to build avatars that 1) express themselves in a graphically rich, online environment, 2) communicate with other users in real time via chatting and voice chat and 3) build social networks with other members via their avatars. There.com also creates a thriving virtual goods economy, where users can create, buy and sell virtual goods through an in-game auction platform.
There.com’s Social Network Strategy
There.com recently launched a Facebook application, Facing There. Facing There’s app design, launch and roadmap are part of There.com’s strategy for operating in a world where their users have to manage participating in a growing number of social graphs. Michael explicitly cited the exploding number of social graphs online, and we discussed his company’s strategic decision making on how to partner with Facebook and MySpace versus compete with them. These large social networks do not have support for avatar based interaction, the core of There.com’s user experience. Facing There is an explicit attempt to allow users to take their There.com experience and make it a part of their social networking experience. The company is starting with Facebook and has larger plans to participate in Open Social. However, Facebook was clearly the easiest and most production ready platform on which to begin their strategy of helping make There.com a part of members’ experience on other social networks.
“Facing There†- Facebook Application
The Facing There app allows users to take their social graph from There.com to Facebook. The app allows There.com members to bring to Facebook their in-world profiles, skills, groups and events. The app extends the other way as well, enabling members to list the upcoming events that they are attending in the There.com virtual reality and then to send invites to There.com friends via the Facebook application platform. These friends will then join each other on a different social media platform to enjoy a graphically rich experience, such as competing in a 3D buggy race together. The Facing There app brings the table There.com’s substantial user information as well as well-earned member loyalty when working with Facebook as a provider of a social operating system.
Strategy Questions Raised by There.com:
All Facebook would like to highlight strategic issues raised by the There.com application:
Virtual Goods Monetization
There.com operates a thriving auction business for virtual goods within its 3D worlds. Virtual goods monetization is an important revenue stream for the company. The Facing There app allows users to view virtual goods auctions that are happening within the There.com virtual world from within their Facebook profile. If a user lists an item in an auction, this can be displayed to Facebook profile. There.com links out of Facebook in order to buy items in auction they have discovered via the app.
Facebook currently does not participate in the revenue stream of virtual goods sales that this app will help drive, instead treating There.com like any other app developer who is allowed and encouraged to make money via the F8 platform free of charge. Facebook (apparently) doesn’t send notifications in the app users’ News Feed about item listings, auction purchases, either – a viral mechanism core to the platform - which would clearly drive monetization for the application provider here.
Would a closer integration involve a revenue sharing arrangement or advertising spend?
Privacy When Merging Social Graphs
There.com struggled with and answered some interesting privacy issues when designing how to bring a social graph from another social media platform into the Facebook environment.
There.com does not assume that because two people are friends on Facebook, they should also be friends on There.com. There.com also does not believe that if two There.com members are connected in the virtual world and are also found to be friends on Facebook that they should suggest and/ or connect them on Facebook. There.com only facilitates this connection – the full merging and overlap of social graphs - if people are 1) connected within the There.com environment, 2) friends on Facebook and 3) have installed the Facing There app.
All Facebook believes this is a very savvy way of handling privacy and relationships when merging social graphs. Do you agree?
Social Media Partnerships
There.com has been operating its virtual world since 2003. As such, it is a very sophisticated social media company. The There.com Facebook app is strategically solid, which reflects their expertise in the virtual world industry. From Facebook’s perspective, however, their application 1) is useful for members of another social network, 2) is designed to pull members off platform to join virtual world experiences and 3) does not share in virtual goods revenues – which is a significant global market and one that we covered as a major potential source of revenue for Facebook.
Does this app create long term strategic threats to Facebook?
Conclusion:
Analyzing virtual worlds can provide useful insights into Facebook’s likely competitive response to other social networks’ participation in their graph via apps. In this case the social media platforms are very different: 1) virtual worlds seek to be entertaining via a graphically rich environment and real time communications and 2) Facebook is a social utility that relies primarily on a graphically simple, elegant aesthetic combined asynchronous communications features to create the experience that fueled its enormous growth. The launch of the “Facing There†app is a useful case study for understanding the possibilities for integration between two leaders from very different social media sectors.
This may well be the cannon ball “shot across the bow†of Web 2.0 social media sites from Virtual Worlds. And virtual worlds have lots of cannon balls. There.com’s integration from a position of strength illustrates how Facebook’s long term value proposition will depend on a winner take all approach when merging social graphs.
What do you think about the threat to Facebook from Virtual Worlds apps? How should it respond?
I honestly don't think that virtual worlds are a threat at all. Virtual worlds like There and Second Life have peacefully coexisted with Facebook and MySpace for a number of years. I don't think that they really need to feel threatened by social networking sites. If anything, this type of integration, I think, would just drive more people to look at them as they see apps like Facing There on their friends' profiles. The social networking sites, in turn, could probably see a number of people that are friending each other on the site due to a connection they made in a virtual world.
That's just my guess, that virtual worlds and social networking can be beneficial to each other, and neither needs to see the other as a threat.
As an aside, I was on There all the time during its beta days, and absolutely loved it.