Second Life & Virtual Worlds Kbm Teigland

1-1

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

Second Life & Virtual Worlds November 2007

http://www.hhs.se/

[email protected] 2007

Today’s discussionToday’s discussion

BackgroundBackgroundWhat are organizations doing in virtual What are organizations doing in virtual

worlds?worlds?−Second LifeSecond Life−Other worldsOther worlds

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

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A world of rapidly growing knowledge A world of rapidly growing knowledge ….….

>A person’s lifetime

18th centuryOne week

2007

Fischbowl 2007

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……that becomes quickly outdated ….that becomes quickly outdated ….

50%knowledge

relevant

50%knowledgeoutdated

First year of technical-based

educationThird year

of education

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Growth

Time

Output of information and knowledge

Human absorptive capacity

..making it more difficult to keep up..making it more difficult to keep up

Junks 1989

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””No one knows everything, No one knows everything,

everyone knows something, everyone knows something,

all knowledge resides in humanity.”all knowledge resides in humanity.”

networks.

Lévy 1997

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Numerous networking possibilities!Numerous networking possibilities!

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

Marketing, Branding, & Sales− Adidas, BMW, Dell, IBM, Sun, Cisco, Coldwell Banker, Adidas, BMW, Dell, IBM, Sun, Cisco, Coldwell Banker,

Reebok, Nissan, Pontiac, Starwood, Leo Burnett, Reebok, Nissan, Pontiac, Starwood, Leo Burnett, Vodafone Vodafone

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

Product & Concept Development− Philips Electronics, Starwood, Toyota, PA Consulting Philips Electronics, Starwood, Toyota, PA Consulting

(for its clients)(for its clients) Recruiting

− Job fairs and anonymous contact Job fairs and anonymous contact − ABN Amro, PA Consulting, IBM, Dell, etc.ABN Amro, PA Consulting, IBM, Dell, etc.

Internal Communications, Training, & Education− Springtime

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““Catalogue” sales Catalogue” sales

Sears (in collaboration with IBM)Sears (in collaboration with IBM)•Enables customization of kitchen, garage,

home bio•Links to Sears.com for purchase

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Product developmentProduct development

ToyotaToyota•Launches real and virtual products simultaneously

•Enables avatars to customize vehicles in SL

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RecruitingRecruiting

Job Fairs

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[email protected] 2007 14

SpringtimeSpringtime Training with avatars from Shanghai, Training with avatars from Shanghai,

Beijing, Stockholm, and GotlandBeijing, Stockholm, and Gotland

Internal communicationsInternal communications

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In-house training and educationIn-house training and education

IFL at SSE and Duke Corporate IFL at SSE and Duke Corporate EducationEducation

Co-developing and running virtual Co-developing and running virtual team building exerciseteam building exercise

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But, is anybody out there?But, is anybody out there?Visitors

10:15 pm, Tuesday, Sept 4, 2007

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

Adidas – 0Adidas – 0Cisco - 18Cisco - 18BMW - 0BMW - 0Dell – 6Dell – 6IBM – 23IBM – 23

Nissan – 0Nissan – 0Reebok - 0Reebok - 0

Sun Microsystems - 1Sun Microsystems - 1Vodafone - 2Vodafone - 2

Insead – 0Insead – 0BMW In-world

Wells Fargo, Starwood Hotels, Wells Fargo, Starwood Hotels, American Apparel are pulling outAmerican Apparel are pulling out

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Critical mass is restricted due to Critical mass is restricted due to technologytechnology

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

Density Density (people per (people per

kmkm2)2)

Freebie Freebie PlanetPlanet#1 popular #1 popular sitesite

9898Online, Mon, Sep Online, Mon, Sep

3 8:15 pm 3 8:15 pm (GMT+1)(GMT+1)

0.060.06 1,4791,479

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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0

50

100

150

200

250

300

350

400

450

500

February March April May June July

> $5,000 USD

$2,000 to $5,000 USD

And is anyone making money?

What are these individuals selling?Real estate & land rentals

Simulation & training environments, gamesClothing, accessories, skins, animations

Art, design, furniture SL, Sept 3, 2007

Total of 424

>$5000$2000-5000

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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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So, what do people do?So, what do people do?

Most popular places (total time spent

there)−Freebie PlanetFreebie Planet−Money Island Money Island −HippiePay.comHippiePay.com−Welfare IslandWelfare Island−Cote D’Azur WestCote D’Azur West−ApfellandApfelland−Money Tree IslandMoney Tree Island−Life is LifeLife is Life−Phat Cat’s Jazzy Blue Phat Cat’s Jazzy Blue

LoungeLounge−Japan ResortJapan Resort

SL, Sept 3, 2007

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What can we do that What can we do that we “we “cannot”cannot” do in do in

real life?real life?

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Improving skillsImproving skills

Learning to sail with the Starboards Yacht Club

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Training for natural disastersTraining for natural disasters

A tsunami simulator by National National Oceanographic and Atmospheric Oceanographic and Atmospheric

AdministrationAdministration

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Collaborating and co-creatingCollaborating and co-creating

Open source museum with open source art

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Experiencing the “impossible”Experiencing the “impossible”

UC Davis Medical Center has UC Davis Medical Center has simulated schizofreniasimulated schizofrenia

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

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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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Disney pays $350 mln for Club Disney pays $350 mln for Club Penguin Penguin

28

•Kids 6-14 in Canada•700,000 paying users

•Virtual goods and online merchandise

paidcontent.org

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

•40% of entire population

•$96% of 20-30 yr olds in Korea regular users

•120 mln 2006 in Korea •More video traffic than

YouTube

Computer Sweden, June 2007

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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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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, June 2007

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 real world firms have virtual world presence, but Many real world firms have virtual world presence, but

difficulty turning it into an effective, profitable sales channeldifficulty turning 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 ~150 other individuals making >$5000 per month~150 other individuals making >$5000 per month

− ““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 fantasy Disconnect between real world companies/products and SL fantasy avatarsavatars

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

http://www.hhs.se/


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

worlds?worlds?

http://www.hhs.se/

[email protected] 2007Gartner 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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What should you do in virtual worlds?What should you do in virtual worlds?

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 media

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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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We digitized audio and video, why can’t we just

digitize, you know, Earth”

Philip Rosedale, CEOLinden Lab

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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

− http://video.google.com/videoplay?docid=5065262745272895737&q=wikinomicsXfire.com)

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

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AppendixAppendix

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The number of unique users in Second Life The number of unique users in Second Life has increased exponentially within one has increased exponentially within one

yearyear

0

1000000

2000000

3000000

4000000

5000000

6000000

June 2006 June 2007

SL, September 3, 2007

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Who’s in world in Second Life?Who’s in world in Second Life?

0

20000

40000

60000

80000

100000

120000

140000

United S

tate

s

Germ

any

Brazil

United K

ingdom

Franc

e

Japa

nIta

lySpa

in

Nether

lands

Austra

lia

Canada

Number of

activeavatars


Sweden is #17

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US avatars spend the most hours in US avatars spend the most hours in world world

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

United S

tate

s

Germ

any

Franc

e

United K

ingdom

Nether

lands

Japa

nIta

lySpa

in

Brazil

Canada


Total number

of hours

in world

Sweden is #17

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25-34 year olds spend most time in 25-34 year olds spend most time in worldworld


Total number of hours in world

~40% Female

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“We think it has potential as a way of doing business. We’re

just experimenting with it ourselves but we see massive

potential in the human interaction you can bring. It’s a

big browsing environment in many ways.”

- IBM Director

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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 44,75044,750Online, Mon, Sep Online, Mon, Sep

3 8:35 pm 3 8:35 pm (GMT+1)(GMT+1)

712712 6363

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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Toyota educates teenagers on creditToyota educates teenagers on credit

http://www.hhs.se/


Marketing and salesMarketing and sales

American ApparelAmerican Apparel•Sells items of clothing

•Offers 15% discount if buy same item in real world

http://www.hhs.se/


Man-made disastersMan-made disasters

http://www.hhs.se/


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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External communities are External communities are growing in importance!growing in importance!

Onlinecommunities

Schoolmates

Avatars

Previous work colleagues

Large portion of new ideas and formal collaboration relationships come from

external contacts

Organization

PhysicalNetworks

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Encourage an open innovation Encourage an open innovation attitudeattitude

Not all the smart people work for us. We need to work with smart people inside and outside the

company.

The smart people in our field work for us.

If you create the most and the best ideas in the industry, you will

win.

If you make the best use of internal and external ideas, you

will win.

Closed attitude Open attitude

Chesborough 2003

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The wisdom of crowds (Surowiecki The wisdom of crowds (Surowiecki 2004) 2004)

ClosedExpensiveComplexAccurate

OpenInexpensive

SimpleClose enough

Hinton 2007

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Crowdsourcing: Crowdsourcing: Capturing the wisdom of crowdsCapturing the wisdom of crowds

What is it?What is it?−Customer participation in business and Customer participation in business and

business developmentbusiness development

Why the interest?Why the interest?−ExperienceExperience−OwnershipOwnership−EngagementEngagement−LoyaltyLoyalty

Brayrie 2007

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What can organizations do?What can organizations do?

InnovationProduct developmentContent generation

Decision makingFunding

Sales & marketingDistribution

Brayrie 2007

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Innovations - www.innocentive.comInnovations - www.innocentive.com

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Problem solutions - The Goldcorp Problem solutions - The Goldcorp ChallengeChallenge

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Product development - Product development - www.ideastorm.comwww.ideastorm.com

Brayrie 2007

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CommunitiesCommunitiesA driving force in crowdsourcingA driving force in crowdsourcing

ParticipationParticipationEngagementEngagementCommitmentCommitmentOpennessOpennessConversationConversationConnectednessConnectedness

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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 peer-to-peer exchange−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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Technology

Second Life & Virtual Worlds Kbm Teigland