Member Koni Lanzius sent me information on a trendline called the "Gartner Hype Cycle". Koni writes:
"The Gartner Hype cycle is an insider business predictor that describes where a particular type of innovation sits on the cycle of hype... due to it's perceived profitability (this one looks at the *educational* hype cycle) but notice how virtual worlds are on the upswing and heading into the "Slope of enlightenment", after spending time in the "Trough of Disillusionment"."
Following is the diagram she provided:
THE GARTNER HYPE CYCLE
As Koni pointed out, this cycle of "Hype, Trough of Disillusionment and Slope of Enlightenment" follows pretty much precisely the trendline of Second Life and Virtual reality in general.
Second Life soared during the initial hype phase. Following the OpenSpace sim fiasco people became disillusioned with the company and their region and user base plummeted (that was in 2008). It has very, very slowly pulled into the "Enlightenment" phase, which tends to level out into realistic rather than hype levels.
It's important to understand why this is called a "hype cycle". That's exactly what it is. It is the trendline a company and product takes when a company hypes and makes claims regarding a product then fails to live up to those claims, either because of inability to do so or because of bad management.
In the case of Linden Lab most would agree that bad management was the problem. It would be difficult to believe the company didn't have the ability to fulfill goals. All that was needed was for them to write good code and to keep in mind and priority the welfare of their customers. Had they done so, they likely would have lived up to expectations and instead gone into a regular growth phase then leveled out at "maximum potential" (ie, project success). Instead, they went into the above hype cycle, along with the steep "disillusionment" decline cycle. Now that people are more enlightened as to how both Linden Lab and Second Life really work, they are slowly starting to accept the actual product as is.
What this chart above doesn't show however is the eventuality of a hype-cycle when two things happens:
1) The company fails to react to the disillusionment cycle and continues "business as usual" and...
2) Competent competition and better products appear
When that happens the hype cycle can plummet and the product become outdated or non-viable. Whether the company continues to coast along with a less-accepted product-- or loses its market entirely to another entity-- is the question answered by the "Viability over Time" cycle. Does the trendline flatten out and remain at marginal profitability, not dying out but never living up to its full potential... or does it take another and plummet into "dead duck" finality? Does the company replace their own product... and if so does that new product (fighting an uphill battle against past reputation) succeed or fail?
Only time will reveal the outcome.