Fallon Brainfood: Virtuality

Slide 1: Virtuality October 23, 2007 ::Brainfood:: Copyright ©2007 Fallon Worldwide. All rights reserved.

Slide 2: Introduction In today’s session of Brainfood, Fallon strategic planners Aki Spicer and Avin Narasimhan break down the vast and complex trends of Virtuality and their implications for brands. Copyright ©2007 Fallon Worldwide. All rights reserved. 2

Slide 3: “80% of active internet users will have a “second life” in a virtual world by the end of 2011. Gartner Symposium/ITExpo 2007 Copyright ©2007 Fallon Worldwide. All rights reserved.

Slide 4: Welcome to the first session of Brainfood. What can you expect today? A brief introduction to Virtuality and how we got here. Virtual Worlds: the most visible form of Virtuality. Implications and trends in society. What it could mean for business. Key takeaways for you and your clients. Copyright ©2007 Fallon Worldwide. All rights reserved. 4

Slide 5: Virtuality: Our lives are increasingly “virtual,” but we often don’t recognize it as such. Copyright ©2007 Fallon Worldwide. All rights reserved.

Slide 6: We can trace the roots of our virtual pursuit back to 1955 when Sensorama recreated the full experience of riding a motorcycle. Copyright ©2007 Fallon Worldwide. All rights reserved. 6

Slide 7: Flash forward to the 80s and 90s: works of fiction laid the groundwork for the concept of today’s visual Web. Copyright ©2007 Fallon Worldwide. All rights reserved. The Matrix Metaverse 7

Slide 8: And beyond fiction, the work of French social theorist Jean Baudrillard helped to explain the basis of Virtuality as seen in culture. Copyright ©2007 Fallon Worldwide. All rights reserved. 8

Slide 9: Virtuality reframes our economy, worldview, and culture. Copyright ©2007 Fallon Worldwide. All rights reserved.

Slide 10: As early as the first iteration of Windows, we began a mass adoption of 3-D virtual surrogates on PC desktops. Copyright ©2007 Fallon Worldwide. All rights reserved. 10

Slide 11: We trade millions of dollars everyday based on the virtual values. Copyright ©2007 Fallon Worldwide. All rights reserved. 11

Slide 12: We express who we are and how we feel through digital representations and alter-egos. Copyright ©2007 Fallon Worldwide. All rights reserved. 12

Slide 13: And many of us, particularly young people, are turning to games instead of movies and TV, driving mass awareness and further blurring lines. Copyright ©2007 Fallon Worldwide. All rights reserved. 13

Slide 14: We’re moving away from 2-D MS-DOS style flat apps towards rich 3D environments that bring the same data to life. Copyright ©2007 Fallon Worldwide. All rights reserved. 14

Slide 15: Digital prototyping enables the real parts to work flawlessly before they’re ever made real. Copyright ©2007 Fallon Worldwide. All rights reserved. 15

Slide 16: Virtuality commands real love and attentions. Copyright ©2007 Fallon Worldwide. All rights reserved. 16

Slide 17: We’ve reached the age where what was once fantasy and “futuristic” is now increasingly becoming a way of life. Copyright ©2007 Fallon Worldwide. All rights reserved. 17

Slide 18: “Welcome to the desert of the real.” Copyright ©2007 Fallon Worldwide. All rights reserved. 18

Slide 19: Virtuality is no longer nerdy fantasy. It’s real and it’s happening all around us. Copyright ©2007 Fallon Worldwide. All rights reserved.

Slide 20: “ Personally, I feel the vague lineaments of something beyond Web 2.0, and they involve some fairly radical steps. Imagine a Web without browsers. Imagine breaking completely away from the document metaphor, or a true blurring of application and information. That's what Web 3.0 will be, but I bet we will call it something else. Copyright ©2007 Fallon Worldwide. All rights reserved. Stowe Boyd Social Media/Web 2.0 Theorist

Slide 21: We’ve become beings of a digital world wherein almost any conceivable life event can—and largely does—take place virtually. Copyright ©2007 Fallon Worldwide. All rights reserved.

Slide 22: Virtuality is reality, and it’s the next evolution of our increasingly digital social lives. Copyright ©2007 Fallon Worldwide. All rights reserved. Web 2.0 Web 3.0 22

Slide 23: Virtuality is changing human behavior. Copyright ©2007 Fallon Worldwide. All rights reserved.

Slide 24: “One of the things our grandchildren will find quaintest about us is that we distinguish the digital from the real, the virtual from the real. In the future, that will become literally impossible. The distinction between cyberspace and that which isn't cyberspace is going to be unimaginable.” William Gibson Copyright ©2007 Fallon Worldwide. All rights reserved. author, futurist

Slide 25: Understanding Virtuality can be a vague and somewhat abstract concept. Today we’ll look at what is the clearest manifestation of Virtuality. Copyright ©2007 Fallon Worldwide. All rights reserved.

Slide 26: Virtual worlds have been buzz words in popular media as of late, and myriad forms exist. Digital Life Pure Gaming/Fantasy Copyright ©2007 Fallon Worldwide. All rights reserved. Kids Play 26

Slide 27: It’s not happening on the fringes of society, but rather has engaged us globally. 1% of the world’s population registered World of Warcraft residents. Time spent in Second Life increased six-fold in 2006. If NeoPets were a country, its population would be the 5th largest in the world. Club Penguin has 4M+ unique monthly visitors and generates a 50% profit margin, projecting $30 million in 2007 profits. Copyright ©2007 Fallon Worldwide. All rights reserved. Swivel Data Research August 2007 Wikipedia Social Media Club May 2007 27

Slide 28: Second Life populations are sky rocketing as they become more integrated in our daily lives, translating into real world commerce. Copyright ©2007 Fallon Worldwide. All rights reserved. Blizzard Entertainment March 2007 Blogpulse trend search July 2007 28

Slide 29: slowing growth. Yet, Second Life may be experiencing Copyright ©2007 Fallon Worldwide. All rights reserved. 29

Slide 30: It’s important to remember that we’re still in the early stages, and so far these worlds are reminiscent of our first forays onto the Internet. Copyright ©2007 Fallon Worldwide. All rights reserved. 30

Slide 31: Exploring Virtuality through the lens of worlds that let users fully define the experience reveals the most interesting insights. Copyright ©2007 Fallon Worldwide. All rights reserved.

Slide 32: People are people…and even in the metaverse, we still behave like people. Copyright ©2007 Fallon Worldwide. All rights reserved. Linden Labs 2007 Technographics Survey 32

Slide 33: We’re creating living, breathing societies with unique social mores and culture, which embody the ideals of autonomy and self-efficacy. Copyright ©2007 Fallon Worldwide. All rights reserved. 33

Slide 34: It’s an evolution of the very idea of “face-to-face” interaction and personal connections. Copyright ©2007 Fallon Worldwide. All rights reserved. 34

Slide 35: They provide a new venue for the exchange of dialogue and even political movements with no consideration of physical boundaries or barriers. GLOBAL IBM CONFERENCE ADVENTURE ECOLOGY ACTIVISTS Copyright ©2007 Fallon Worldwide. All rights reserved. EXPERT PANEL AT CRAYONVILLE 35

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Slide 37: More and more we see life imitate art as Virtuality redefines traditional experiences. James Cameron’s new movie—Avatar. Draft FCB mockumentary of Second Life. Copyright ©2007 Fallon Worldwide. All rights reserved. CSI:NY will take murder mystery into the virtual world. 37

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Slide 39: “There's real money to be made in the marketplace. People actually earn part or all of their real-life income from such businesses as party and wedding planning, tattooing, auto manufacturing, fashion and jewelry designing, real estate development, architectural design, bodyguarding, publishing, and private investigation.” Copyright ©2007 Fallon Worldwide. All rights reserved. —Patricia Duebel, PhD The Journal

Slide 40: What could it all mean for business…and brands? Copyright ©2007 Fallon Worldwide. All rights reserved.

Slide 41: As with most emerging technologies, the potential for business application is often hard to see at first glance. HOW MIGHT OUR BRAND FIT IN HERE? Copyright ©2007 Fallon Worldwide. All rights reserved. 41

Slide 42: Copyright ©2007 Fallon Worldwide. All rights reserved. 42

Slide 43: Kid-centric fantasy may be perhaps the easiest in-roads for brands… Copyright ©2007 Fallon Worldwide. All rights reserved. Answers.com via Wikipedia 43

Slide 44: …as youth today are rapidly embracing Virtuality. 2007: 24% of U.S. child and teen Internet users visit virtual worlds. 2008: 34% 2011: 53%. Copyright ©2007 Fallon Worldwide. All rights reserved. 44

Slide 45: Even for today’s youth, branded virtual worlds are providing a level of engagement that static sites can’t compete with. Copyright ©2007 Fallon Worldwide. All rights reserved. 45

Slide 46: Companies eager to jump on the virtual bandwagon have learned cost of entry is more than just “showing up.” Wells Fargo—Departed. American Apparel—Barren Copyright ©2007 Fallon Worldwide. All rights reserved. Business Week Online May 2007 46

Slide 47: The right to participate needs to be earned. The NBA understood this imperative and truly offers a unique experience and commitment to residents. Copyright ©2007 Fallon Worldwide. All rights reserved. 47

Slide 48: With or without brands, resident entrepreneurs are reaping lucrative rewards through their own creations. Alan Graief Anshe Chung Philip Rosedale Reuben Steiger Sibley Verbeck Land Baron Land Baron Creator: SL Consultant Consultant +$1M revenue +$1M revenue $19M in VC +$6M in fees $15K per project Copyright ©2007 Fallon Worldwide. All rights reserved. Kevin Alderman Alyssa LaRoche Adult Entertainment Clothier $50K and up $30-$100K fees BW Online April 2007 48

Slide 49: Many of these content creators are extremely protective and skeptical of those who would intrude without respect. The influx of real world brands is sometimes met with discontent and other times overt hostility. Copyright ©2007 Fallon Worldwide. All rights reserved. 49

Slide 50: Brands that add the most value to the user experience are the future—not just of virtual worlds, but of the social web and how we live our lives. Copyright ©2007 Fallon Worldwide. All rights reserved.

Slide 51: As an example, the desire for connections and companionship in these worlds have spawned new industries. In-world engagements like sldogs.com allow us to buy and accessorize a pup to accompany us in digital life. Copyright ©2007 Fallon Worldwide. All rights reserved. 51

Slide 52: And worlds like Neopets attempt to redefine the idea of pets for the digital space. Copyright ©2007 Fallon Worldwide. All rights reserved. 52

Slide 53: As interest in Virtuality grows, some innovative companies are cutting out the middleman and building their own worlds. JC Penneys (Forterra) Novartis (Prontomedia) Copyright ©2007 Fallon Worldwide. All rights reserved. BusinessWeek Online May 2007s 53

Slide 54: Virtuality soon demands reappraisal of our socio-political assumptions. Copyright ©2007 Fallon Worldwide. All rights reserved.

Slide 55: Life’s eternal questions still linger…and take on even greater significance in Virtuality. Copyright ©2007 Fallon Worldwide. All rights reserved. 55

Slide 56: And these questions spark the collective curiosity of burgeoning societies and new communities. Copyright ©2007 Fallon Worldwide. All rights reserved. 56

Slide 57: Copyright ©2007 Fallon Worldwide. All rights reserved. 57

Slide 58: The complications of digital life has spawned ethical debates of copyright, decency, freedom and access—since the 90s when the Internet was in its infancy. …and they continue still, without clear resolve. Copyright ©2007 Fallon Worldwide. All rights reserved.

Slide 59: DISPOSABLE FAD? IMPRACTICAL? DEHUMANISING? UNNECESSARY? Copyright ©2007 Fallon Worldwide. All rights reserved. A HAVEN FOR PORN? 59

Slide 60: As with any emerging tech, there are bumps in the road—and even predictions of impending doom. Copyright ©2007 Fallon Worldwide. All rights reserved. 60

Slide 61: “For virtual worlds and metaverses to achieve greater potential in the marketplace and grow beyond early adopters, the experience must be untethered to meet the needs of the Anywhere Consumer.” Yankee Group Analysis of Second Life, 2007 Copyright ©2007 Fallon Worldwide. All rights reserved.

Slide 62: While virtual worlds may not be the final chapter, Virtuality is the OS of tomorrow. Boot up. Copyright ©2007 Fallon Worldwide. All rights reserved.

Slide 63: We’ve covered a lot today. Some key takeaways… Virtuality: Life Remixed: Extension of our real lives. Worlds Unbound: Expanding global culture. Spawned Industries: Entirely new economies. Engage Me: Fueling participation, not just consumption. Control and Protect: Creative self-expression/control of ideas. First Life Beta: A new level of try before you buy. Visual Web: A richer 3D experience. Half Life: Blurring lines between real and virtual. …leading us toward a broader ubiquity of Virtuality. Copyright ©2007 Fallon Worldwide. All rights reserved. 63

Slide 64: Continue the conversation on our blog: http://fallontrendpoint.blogspot.com Participate The Sims Fantasy Spawned Industries Customization Co-Created Digital Life Gaming Neopetz Avatar Kidz Play Self-Efficacy There.com Humanized Google Earth Webkinz Digital Self Visual Web Autonomy Parallel Life Emoticon Instant Message Virtuality Slurl 3D Residents Postcards from Second Life Borderless Age Life Remixed Habbo Hotel Virtual Worlds Life Beta Youth Escapism Early Adopter Metaverse User Defined Experience Entropia Copyright ©2007 Fallon Worldwide. All rights reserved. Test Drive Engage Me Control and Protect Virtual Life In-World Zwinky Playdo Connections Brand Evangelists Sacred Creations Playstation Home Tech Savvy Virtual Culture Futurist Worlds Unbound Business 3.0 World of Warcraft 64

Slide 65: And look out for the invite to next month’s Brainfood session. Brainfood is an executive digest of Fallon Planner’s strategic intelligence and bridges the gap between trends, business issues, and actionable opportunities for its readers. Copyright ©2007 Fallon Worldwide. All rights reserved. 65

Slide 66: Copyright ©2007 Fallon Worldwide. All rights reserved. 66