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Fad Or Future Second Life And Virtual Worlds

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This presentation discusses what is happening today in Second Life and other virtual worlds from a business perspective. It also presents four scenarios for the future as well as discusses what …

This presentation discusses what is happening today in Second Life and other virtual worlds from a business perspective. It also presents four scenarios for the future as well as discusses what businesses should do.

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    • 1. Fad or Future - What Do Virtual Worlds Have to Offer? Dr. Robin Teigland Stockholm School of Economics [email_address] www.knowledgenetworking.org IFL Conference on Second Life & Virtual Worlds June 14, 2007
    • 2. Today’s discussion
      • What’s happening today in virtual worlds?
        • Second Life
        • Others
      • The future - Four scenarios for 2012
      • What should you do?
    • 3. What are real world companies doing in Second Life?
      • Branded Presence
        • Adidas, BMW, Dell, IBM, Sun, Cisco, Reebok, Nissan, Pontiac, Starwood, Leo Burnett, Vodafone
      • Marketing & Communications
        • BMW communicates its clean energy concept
        • Coca-Cola holds competitions
      • Product and Concept Development
        • Starwood, Toyota, PA Consulting for its clients
      • Sales
        • American Apparel, Coldwell Banker
      • Recruiting
        • ABN Amro interviews candidates’ avatars
        • PA Consulting uses it for anonymous contact
      • Collaboration/training
        • UC Davis Medical Center has emergency simulations
    • 4. What about Return on Investment in 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
    • 5. Is anybody out there?
      • Visitors
      • 9:30 pm, Friday,
      • June 8, 2007 (GMT+1)
      • ABN Amro -0
      • Adidas – 1
      • Cisco - 10
      • BMW - 0
      • Dell Island – 1
      • IBM – 32
      • Nissan – 10
      • Reebok - 2
      • Sun Microsystems - 0
      • Vodafone - 0
      • Insead – 0
      BMW In-world Wells Fargo and Starwood Hotels are pulling out
    • 6. So, where do people hang out?
      • Most popular places (total time spent there)
        • Phat Cat’s Jazzy Blue Lounge
        • Money Island
        • Largest Dance Island
        • T-Online Beach
        • Ilha Brasil
        • Skye Club Oceania Play for Pay
        • Puerto Banus
        • B-Dazzled Designs
          • Sexy clothing
      SL, June 10, 2007
    • 7. Is there critical mass on Second Life? * Municipality (kommun) wikipedia.org 43 988 42,060 Motala* 162 263 42,500 Online, Fri, Jun 8 11:30 pm (GMT+1) Second Life 177 41,284 7,252,330 Switzerland Density (people per km 2) Land area (km 2) Population Location
    • 8. Is there critical mass on Second Life? * Municipality (kommun) wikipedia.org 1,391 138 195,250 Richmond, VA 1,434 0.06 95 Online, Fri, Jun 8 11:30 pm (GMT+1) Phat Cat’s #1 popular site 10,316 786 8,143,000 New York 24,759 87 2,153,600 Paris 1,083 450 489,760 Gothenburg* 4,164 188 782,890 Stockholm* Density (people per km 2) Land area (km 2) Population Location
    • 9. And is anyone making money? What are these individuals selling? Real estate & land rentals Simulation environments Clothing, accessories, skins Art, design, furniture USD >5K USD 2-5K SL, June 10, 2007 Total of 427
    • 10. What is happening in other virtual worlds?
    • 11. 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
    • 12. MyCoke
    • 13. Secure virtual workplaces
      • Completely private virtual business worlds offering tools to conduct business and collaborate
      • Fortune 500: Johnson & Johnson, Novartis, Motorola, Intel
    • 14. MMOGs 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
    • 15. Where are we today with virtual worlds?
      • Business opportunities limited?
        • Many firms have virtual world presence, but difficulty turning it into an effective, profitable sales channel
          • Primarily for marketing or learning experience
          • No RoI success stories for real world firms
          • Required resources outweigh short-term benefits
        • Limited number of individual success stories
          • Anshe Chung and 138 other individuals making >$5000 per month
        • “ Trapped” in real world activities?
      • Virtual worlds overhyped?
        • Growth lower than appears, small compared to MMOGs
        • Reality vs. fantasy?
          • Disconnect between real world companies/products and SL fantasy avatars
    • 16. So, what about the future of virtual worlds?
    • 17. Gartner Group, April 2007 By the end of 2011, 80% of active Internet users (and Fortune 500 enterprises) will have a “second life”, but not necessarily in Second Life.
    • 18. How can we look into the future?
      • Forecast
        • How we think the future will be
      • Vision
        • How we want the future to be
      • Scenario
        • What the future can be
    • 19. Two underlying questions
      • In 2012…
      • How advanced will the usage of virtual worlds be?
        • Widespread use across all dimensions, high user demands
        • Forces: Economic development, digital divide, environmental pressures
      • How integrated will virtual worlds be?
        • Cooperation between different worlds, VW & RW
        • Forces: Security, technology, legislative, political
    • 20. Four scenarios for 2012 Fragmentated worlds Integrated worlds Advanced usage 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
    • 21. Entropia Universe = MMOG + 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 2007
      Financial Times , June 2007
    • 22. Cyworld - A world where “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
    • 23. What should you do?
      • Approach as a disruptive technology
        • Enables a new strategy or new business model
        • Enables a larger population of less skilled, less wealthy people to do things in a more convenient, lower cost setting
          • E.g., Telephone, digital photography, PCs, Linux
      • Think wikinomics and crowdsourcing
        • Mass collaboration by free individual agents to improve a given operation or solve a problem
          • E.g., Boeing, Chinese motorcycle industry, P&G
      Christenson 1997, Tapscott & Williams 2006
    • 24. How? Experiment, “play”, and learn Stay on the look-out Consider creating independent operations Don’t forget other emerging spaces
    • 25. How?
      • Experiment and “play”
        • Find and engage the enthusiasts in your company
        • Support, but make aware of “risks”
        • Don’t ask your leading customers what they think
      • Stay on the look-out
        • Follow developments
        • See how they affect the path to a future scenario
      • Consider creating independent organization for more serious efforts
        • Anonymous bank buying virtual banking contract on Entropia Universe
      • But don’t forget other emerging media
        • Coca-Cola uses combination of all new media channels, e.g., YouTube, MySpace, SL, MyCoke
    • 26. “ 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
    • 27. All the things right, but not the right thing!
    • 28. Increasing pace of change! Spread of Technology (Penetration rates years after introduction, Year I =Year Invented)
    • 29. Further 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