Most Business-Launched Virtual Worlds Fail, Gartner Says

Many projects are abandoned because of a lack of clear objectives and a limited understanding of the demographics, attitudes, and expectations.

Antone Gonsalves, Contributor

May 16, 2008

2 Min Read

The vast majority of virtual world projects launched by businesses fail within 18 months, but the impact of the collaboration technology on organizations could eventually be as big as the Internet, a market research firm said this week.

Fully 90% of business forays into virtual worlds fail because organizations focus on the technology rather than on understanding the needs of the employees using it, Gartner said.

"Businesses have learned some hard lessons," Gartner analyst Steve Prentice said in a statement released Thursday. "They need to realize that virtual worlds mark the transition from Web pages to Web places and a successful virtual presence starts with people, not physics. Realistic graphics and physical behavior count for little unless the presence is valued by and engaging to a large audience."

Other reasons for the high failure rate include starting projects for the "cool" factor or because competitors are doing it, Gartner said. Many projects are abandoned because of a lack of clear objectives and a limited understanding of the demographics, attitudes, and expectations of virtual-world communities.

A benefit of virtual worlds is the rich collaboration experience, which includes a real-time visual dimension through the use of avatars and the ability to include emotional information in the online conversations between individuals, Gartner said. These attributes separate virtual worlds from other forms of Web-based interactions.

Virtual worlds as a collaboration tool are also attractive because of the relatively low price. Companies can implement a virtual world platform for about $50,000, and trials can start as low as $5,000, Gartner said. The low cost makes virtual worlds viable as an additional form of communication to reduce the use of expensive videoconferencing facilities and the need to bring employees from multiple locations and time zones to a single site.

"Companies need to start thinking what their virtual world strategy is, incorporate it into their Internet strategy, and merge their two-dimensional Web pages to support a 3-D Web place," Prentice said. "Virtual world presence is not to replace the 2-D world but to supplement it."

In selecting a virtual-world route, organizations have three choices: They can enter an existing one, such as Second Life or; create their own public world; or build an internal, private world. By 2012, Gartner estimates that 70% of organizations will have established their own private virtual worlds. By then, the success rate will be far greater because of lower expectations, clearer objectives, and better constraints.

Gartner believes virtual world adoption will begin in role-based scenario-driven training exercises. Examples would include training in emergency services within medical institutions and fire and police departments.

The second phase would involve extending the technology to a secure, persistent, and interactive virtual workspace that allows individuals to interact and improve collaboration. From there, the technology can be extended to a broader community that includes supply chain partners and customers.

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