Fad Or Future Second Life And Virtual Worlds

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Fad or Future -Fad or Future -What Do Virtual Worlds Have to What Do Virtual Worlds Have to

Offer?Offer?

Dr. Robin TeiglandDr. Robin TeiglandStockholm School of EconomicsStockholm School of Economics

[email protected]@hhs.sewww.knowledgenetworking.org www.knowledgenetworking.org

IFL Conference on Second Life & Virtual Worlds June 14, 2007

http://www.hhs.se/

[email protected] 2007

Today’s discussionToday’s discussion

What’s happening today in virtual What’s happening today in virtual worlds?worlds?−Second LifeSecond Life−OthersOthers

The future - Four scenarios for 2012The future - Four scenarios for 2012What should you do? What should you do?

http://www.hhs.se/


What are real world companies What are real world companies doing in Second Life?doing in Second Life?

Branded Presence− Adidas, BMW, Dell, IBM, Sun, Cisco, Reebok, Nissan, Adidas, BMW, Dell, IBM, Sun, Cisco, Reebok, Nissan,

Pontiac, Starwood, Leo Burnett, Vodafone Pontiac, Starwood, Leo Burnett, Vodafone Marketing & Communications

− BMW communicates its clean energy conceptBMW communicates its clean energy concept− Coca-Cola holds competitionsCoca-Cola holds competitions

Product and Concept Development− Starwood, Toyota, PA Consulting for its clientsStarwood, Toyota, PA Consulting for its clients

Sales− American Apparel, Coldwell BankerAmerican Apparel, Coldwell Banker

Recruiting− ABN Amro interviews candidates’ avatarsABN Amro interviews candidates’ avatars− PA Consulting uses it for anonymous contactPA Consulting uses it for anonymous contact

Collaboration/training− UC Davis Medical Center has emergency simulationsUC Davis Medical Center has emergency simulations

http://www.hhs.se/


What about Return on Investment in What about Return on Investment in SL?SL?

We have a long-term approach to costs and RoI. We have

qualitative goals, to expand and develop

our presence.- BMW

We have no targets for

RoI. -ABN Amro

There needs to be some RoI eventually, but this is a long-term

project and we are just looking at the

potential.- Vodafone

Financial Times, May 2007

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Is anybody out there?Is anybody out there?Visitors

9:30 pm, Friday, June 8, 2007

(GMT+1)ABN Amro -0ABN Amro -0

Adidas – 1Adidas – 1Cisco - 10Cisco - 10BMW - 0BMW - 0

Dell Island – 1Dell Island – 1IBM – 32IBM – 32

Nissan – 10Nissan – 10Reebok - 2Reebok - 2

Sun Microsystems - 0Sun Microsystems - 0Vodafone - 0Vodafone - 0

Insead – 0Insead – 0BMW In-world

Wells Fargo and Wells Fargo and Starwood Hotels are pulling Starwood Hotels are pulling

outout

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So, where do people hang out?So, where do people hang out?

Most popular places (total time spent

there)−Phat Cat’s Jazzy Blue Phat Cat’s Jazzy Blue

LoungeLounge−Money Island Money Island −Largest Dance IslandLargest Dance Island−T-Online BeachT-Online Beach−Ilha BrasilIlha Brasil−Skye Club Oceania Play Skye Club Oceania Play

for Payfor Pay−Puerto BanusPuerto Banus−B-Dazzled Designs B-Dazzled Designs

Sexy clothingSexy clothing

SL, June 10, 2007

http://www.hhs.se/


Is there critical mass on Second Life?Is there critical mass on Second Life?

LocationLocation PopulationPopulationLand area Land area

(km(km2)2)Density Density (people per (people per

kmkm2)2)

Second LifeSecond Life 42,50042,500Online, Fri, Jun 8 Online, Fri, Jun 8

11:30 pm 11:30 pm (GMT+1)(GMT+1)

263263 162162

Motala*Motala* 42,06042,060 988988 4343

SwitzerlandSwitzerland 7,252,3307,252,330 41,28441,284 177177

* Municipality (kommun)* Municipality (kommun) wikipedia.org

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Is there critical mass on Second Life?Is there critical mass on Second Life?

LocationLocation PopulationPopulationLand Land area area (km(km2)2)

Density Density (people per (people per

kmkm2)2)

Phat Cat’sPhat Cat’s#1 popular #1 popular sitesite

9595Online, Fri, Jun 8 Online, Fri, Jun 8

11:30 pm 11:30 pm (GMT+1)(GMT+1)

0.060.06 1,4341,434

ParisParis 2,153,6002,153,600 8787 24,75924,759

New YorkNew York 8,143,0008,143,000 786786 10,31610,316

Stockholm*Stockholm* 782,890782,890 188188 4,1644,164

Richmond, Richmond, VAVA

195,250195,250 138138 1,3911,391

Gothenburg*Gothenburg* 489,760489,760 450450 1,0831,083

* Municipality (kommun)* Municipality (kommun) wikipedia.org

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And is anyone making money?Avatars with Positive Monthly Cash Flow

0

50

100

150

200

250

300

350

400

450

Dec 2006 Jan 2007 Feb 2007 Mar 2007 Apr 2007 May 2007

> $5,000

$2,000 to$5,000

What are these individuals selling?Real estate & land rentalsSimulation environments

Clothing, accessories, skinsArt, design, furniture

USD >5K

USD 2-5K

SL, June 10, 2007

Total of 427

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What is happening in What is happening in other virtual worlds?other virtual worlds?

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Are businesses anywhere else?Are businesses anywhere else?

Active Worlds•2 mln users

•Branding•Wells Fargo left SL for

AW

Habbo Hotel•7 mln users (mostly

teens)•Digital goods and

marketing•Target, Wal-Mart,

Kellogg, Nintendo, Walt Disney

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Secure virtual workplacesSecure virtual workplaces

•Completely private virtual business worlds offering tools to conduct business and

collaborate•Fortune 500: Johnson & Johnson, Novartis,

Motorola, Intel

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MMOGs still dominateMMOGs still dominate

World of Warcraft•374,000 hours played each

day or 50,000 man days each day

•8.5 mln players worldwide

Xfire.com, MMPORG.com

Korean Free to Play (F2P)•4 of top 10 MMOGs in Western world

•Silkroad Online #1 in West•MapleStory with >50 mln players

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Where are we Where are we todaytoday with virtual with virtual worlds?worlds?

Business opportunities limited?− Many firms have virtual world presence, but difficulty Many firms have virtual world presence, but difficulty

turning it into an effective, profitable sales channelturning it into an effective, profitable sales channel Primarily for marketing or learning experiencePrimarily for marketing or learning experience No RoI success stories for real world firmsNo RoI success stories for real world firms Required resources outweigh short-term benefitsRequired resources outweigh short-term benefits

− Limited number of individual success storiesLimited number of individual success stories Anshe Chung and 138 other individuals making >$5000 per Anshe Chung and 138 other individuals making >$5000 per

monthmonth

− ““Trapped” in real world activities?Trapped” in real world activities? Virtual worlds overhyped?

− Growth lower than appears, small compared to MMOGsGrowth lower than appears, small compared to MMOGs− Reality vs. fantasy? Reality vs. fantasy?

Disconnect between real world companies/products and SL Disconnect between real world companies/products and SL fantasy avatarsfantasy avatars

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So, what about the So, what about the future of virtual future of virtual

worlds?worlds?

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Gartner Group, April 2007

By the end of 2011, 80% By the end of 2011, 80% of active Internet users of active Internet users

(and Fortune 500 (and Fortune 500 enterprises) will have a enterprises) will have a “second life”, but not “second life”, but not necessarily in Second necessarily in Second

Life.Life.

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How can we look into the future?How can we look into the future?

Forecast−How we think the future will beHow we think the future will be

Vision−How we want the future to beHow we want the future to be

Scenario−What the future can beWhat the future can be

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Two underlying questionsTwo underlying questions

In 2012…1.1. HowHow advanced will the usage of virtual worlds will the usage of virtual worlds

be?be? Widespread use across all dimensions, high user Widespread use across all dimensions, high user

demands demands Forces: Economic development, digital divide, Forces: Economic development, digital divide,

environmental pressuresenvironmental pressures

2.2. How How integrated will virtual worlds be? will virtual worlds be? Cooperation between different worlds, VW & RWCooperation between different worlds, VW & RW Forces: Security, technology, legislative, politicalForces: Security, technology, legislative, political

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Four scenarios for 2012Four scenarios for 2012

Fragmentatedworlds

Integratedworlds

Advancedusage

Less-advanced

usage

Digital Divide•Ease of mobility•Self-governance

•Dominance by gaming generation•Traditional vs virtual business

One Converged Universe•High penetration

•Easy avatar & asset mobility•High scalability & security•Business transformation

Wild Wests•Individual “MMOGs” dominant

•Virtual vandalism•Security problems

•Retreat

Virtual Silos•Many competing, limited worlds•Difficult avatar & asset mobility

•Limited scalability•High security

•New business models

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Entropia Universe = MMOG + Entropia Universe = MMOG + MMORP?MMORP?

Today•600,000 users

•$360 mln in-gaming turnover 2006

•Real cash economy

Tomorrow•Won bid over SL/others to be China’s “first homegrown virtual world where millions will work, communicate, and

be in love”•7 mln local + 150 mln overseas

Chinese•Five virtual banking licenses

auctioned for $404,000 May 2007Financial Times, June 2007

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Cyworld - A world where Cyworld - A world where “MySpace meets Second Life”“MySpace meets Second Life”

•20 mln users •$120 mln 2006 in Korea •96% of 20-30 yr olds in

Korea regular users•More video traffic than

YouTube

Computer Sweden, June 2007

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What should you do?What should you do?

Approach as a disruptive technology−Enables a new strategy or new business modelEnables a new strategy or new business model−Enables a larger population of less skilled, less Enables a larger population of less skilled, less

wealthy people to do things in a more wealthy people to do things in a more convenient, lower cost settingconvenient, lower cost setting

E.g., Telephone, digital photography, PCs, LinuxE.g., Telephone, digital photography, PCs, Linux

Think wikinomics and crowdsourcing−Mass collaboration by free individual agents to Mass collaboration by free individual agents to

improve a given operation or solve a problem improve a given operation or solve a problem E.g., Boeing, Chinese motorcycle industry, P&GE.g., Boeing, Chinese motorcycle industry, P&G

Christenson 1997, Tapscott & Williams 2006

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How?How?

Experiment, “play”, and learn Stay on the look-out

Consider creating independent operations

V ice P re sid e n tR e se a rch /D e v l.

P ro du c t A P ro du c t B P ro du c t C

V ice P re sid e n tM a nu fa c tu ring

V ice P re sid e n tM a rke ting

P re sid e n t

Don’t forget other emerging spaces

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“I think there’s a world market for maybe five

computers.”Thomas Watson, Chairman

of IBM, 1943

“There is no reason anyone would want a

computer in their home.”

Ken Olson, President, Chairman and

Founder of Digital Equipment

Corporation, 1977

“Heavier-than-air flying machines are impossible.”

Lord Kelvin, President, Royal Society, 1895

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All the things right, but

not the right thing!

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Increasing pace of change!Increasing pace of change!

Spread of Technology (Penetration rates years after introduction, Year I =Year Invented)

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Further informationFurther information Australian Communications Authority

(www.acma.gov.au)− Vision 20/20: Future Scenarios for the

Communications Industry: Implications for Regulation Christenson, C., The Innovator’s Dilemma, 1997 Gartner Group Press Release

− http://www.gartner.com/it/page.jsp?id=503861 Gullers Group

− The Future of eGovernment: Scenarios 2016 (www.vinnova.se)

Moore, G., Crossing the Chasm, 1991 Tapscott, D. & Williams, A. Wikinomics, 2006, see

youtube for video Xfire.com

More information: http://ssesecondlife.blogspot.com/ www.knowledgenetworking.org

http://www.hhs.se/