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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
[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?
[email protected] 2007
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
[email protected] 2007
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
[email protected] 2007
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
[email protected] 2007
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
[email protected] 2007
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
[email protected] 2007
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
[email protected] 2007
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
[email protected] 2007
What is happening in What is happening in other virtual worlds?other virtual worlds?
[email protected] 2007
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
[email protected] 2007
Secure virtual workplacesSecure virtual workplaces
•Completely private virtual business worlds offering tools to conduct business and
collaborate•Fortune 500: Johnson & Johnson, Novartis,
Motorola, Intel
[email protected] 2007
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
[email protected] 2007
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
[email protected] 2007
So, what about the So, what about the future of virtual future of virtual
worlds?worlds?
[email protected] 2007
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.
[email protected] 2007
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
[email protected] 2007
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
[email protected] 2007
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
[email protected] 2007
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
[email protected] 2007
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
[email protected] 2007
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
[email protected] 2007
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
[email protected] 2007
“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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Increasing pace of change!Increasing pace of change!
Spread of Technology (Penetration rates years after introduction, Year I =Year Invented)
[email protected] 2007
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