The overwhelming response to Lively has been to compare it to Second Life, the popular online virtual world created by Linden Labs. Some are even calling Lively a Second Life killer, which is premature and a simplification. Lively is not a fully immersive virtual world in the manner of Second Life and we don't think this is what Google intends. Lively will not morph into a second, Second Life. Google is struggling to monetize YouTube so why would it want to create another variant of a social network that would inevitably face a similar challenge‾
Lively is a free, value-added service that has elements of social networking features in the form of chat and the ability to share video and photos, topped with the fun of doing this in a virtual space. But it is a simple virtual environment. Animation is down to basic movements and the rooms and avatars in Lively are not user-generated but chosen from a catalogue with personalization capabilities thrown in. The more accurate competitor here is IMVU, not Second Life.
So Lively is not a social network. However, it is designed to integrate with Facebook and, going forward, other social networks supporting Open Social. The idea is to enable Lively members' feeds, buddy lists and log-ins to tie directly to their social network(s). This is smart, as is the move to make Lively browser based so that it is not tethered to a particular website but can be entered from - or embedded in - other websites.
It is also designed to add value to other Google properties. Lively allows YouTube videos to be played on virtual televisions in Lively rooms, or photos from Picasa to be shown in virtual photo frames. There could also be advertising opportunities further down the line in the form of product placements in a room or video advertisements playing on a virtual TV, for example.
But we need to keep in mind that Lively is in beta and has some challenges ahead. The most obvious is how to keep Lively clean and above board. There are already reports that adult-oriented rooms are appearing and we know from Second Life that avatars can get aggressive with each other and don't always play nice. This could become a concern for a service where the minimum age to sign up is 13 years old.
Another challenge Google will have to think about is how to improve on the graphics and animation in Lively, which are not sophisticated and could pall once the novelty value wears off. Google is not exactly renowned for its graphics capabilities.
Nevertheless, if things don't work out Google can call write Lively off as an interesting if flawed Google Labs experiment and quietly wind down the beta without too much harm done.