Second Life Faces Otherworldly Competition

Meanwhile, longstanding competitors like There.com and Fortera continue doing business. For example, when the U.K. and U.S. armies were looking to conduct a joint training experiment in a virtual world, they chose Fortera Olive, rather than Second Life, for the platform. And Habbo, a browser-based virtual world primarily catering to teen chat, dwarfs Second Life in size, with 106 million accounts created since the service started eight years ago, and 9.5 million unique visitors per month.

Another potential competitor is OpenSim, an open source Second Life competitor built by reverse-engineering Second Life's published APIs and portions of SL code that Linden Lab has open source. OpenSim is now in alpha testing.

The competition will make things tough for Linden Lab, said Christian Renaud, head of the analyst firm Technology Intelligence Group, which advises enterprises on emerging technology. "It's hard enough to fight in one market against entrenched competition -- especially against companies that are well-heeled, like Google -- much less in three or four directions," Renaud said. "They're already struggling with what they've been doing."

Linden Lab CEO Mark Kingdon said he doesn't see browser-based virtual worlds as a threat. "This is a huge and developing space," he said. "In some ways, those services can be gateways to Second Life," Kingdon said. "Whenever Google enters a market, it's an incredible validation for the market that Google is interested in."

Indeed, Linden Lab is pursuing a strategy of working with virtual worlds competitors to try to expand the market, on the theory that the company is better off with a piece of a big pie than it is with nearly all of a small pie. Linden Lab is working on interoperability with other virtual worlds, particularly OpenSim, in partnership with IBM, with the goal of allowing users to be able to transfer their avatars and belongings between them.