Second Life & Virtual Worlds Kbm Teigland

Fad or Future - What Do Virtual Worlds Have to Offer? Dr. Robin Teigland Stockholm School of Economics [email_address] www.knowledgenetworking.org Second Life & Virtual Worlds November 2007

Today’s discussion

Background

What are organizations doing in virtual worlds?

Second Life

Other worlds

The future

Four scenarios for 2012

What should you do?

Background

Second Life

Other worlds

The future

What should you do?

A world of rapidly growing knowledge …. > A person’s lifetime 18th century One week 2007 Fischbowl 2007

…that becomes quickly outdated …. 50% knowledge relevant 50% knowledge outdated First year of technical-based education Third year of education

..making it more difficult to keep up Growth Time Output of information and knowledge Human absorptive capacity Junks 1989

” No one knows everything,

everyone knows something,

all knowledge resides in humanity.”

networks. Lévy 1997

Numerous networking possibilities!

Background

Second Life

Other worlds

The future

What should you do?

What are real world companies doing in Second Life?

Marketing, Branding, & Sales

Adidas, BMW, Dell, IBM, Sun, Cisco, Coldwell Banker, Reebok, Nissan, Pontiac, Starwood, Leo Burnett, Vodafone

External Communications

BMW communicates its clean energy concept

Coca-Cola holds competitions

Product & Concept Development

Philips Electronics, Starwood, Toyota, PA Consulting (for its clients)

Recruiting

Job fairs and anonymous contact

ABN Amro, PA Consulting, IBM, Dell, etc.

Internal Communications, Training, & Education

Springtime

“Catalogue” sales

Sears (in collaboration with IBM)

Enables customization of kitchen, garage, home bio

Links to Sears.com for purchase

Product development

Toyota

Launches real and virtual products simultaneously

Enables avatars to customize vehicles in SL

Recruiting Job Fairs

Springtime Training with avatars from Shanghai, Beijing, Stockholm, and Gotland Internal communications

In-house training and education IFL at SSE and Duke Corporate Education Co-developing and running virtual team building exercise

But, is anybody out there?

Visitors

10:15 pm, Tuesday,

Sept 4, 2007 (GMT+1)

ABN Amro -0

Adidas – 0

Cisco - 18

BMW - 0

Dell – 6

IBM – 23

Nissan – 0

Reebok - 0

Sun Microsystems - 1

Vodafone - 2

Insead – 0

BMW In-world Wells Fargo, Starwood Hotels, American Apparel are pulling out

Critical mass is restricted due to technology * Municipality (kommun) wikipedia.org 1,391 138 195,250 Richmond, VA 1,479 0.06 98 Online, Mon, Sep 3 8:15 pm (GMT+1) Freebie Planet #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

And is anyone making money? What are these individuals selling? Real estate & land rentals Simulation & training environments, games Clothing, accessories, skins, animations Art, design, furniture SL, Sept 3, 2007 Total of 424 >$5000 $2000-5000

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

So, what do people do?

Most popular places (total time spent there)

Freebie Planet

Money Island

HippiePay.com

Welfare Island

Cote D’Azur West

Apfelland

Money Tree Island

Life is Life

Phat Cat’s Jazzy Blue Lounge

Japan Resort

SL, Sept 3, 2007

What can we do that we “ cannot” do in real life?

Improving skills Learning to sail with the Starboards Yacht Club

Training for natural disasters A tsunami simulator by National Oceanographic and Atmospheric Administration

Collaborating and co-creating Open source museum with open source art

Experiencing the “impossible” UC Davis Medical Center has simulated schizofrenia

What is happening in other virtual worlds?

Secure virtual workplaces

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

Fortune 500: Johnson & Johnson, Novartis, Motorola, Intel

Disney pays $350 mln for Club Penguin

Kids 6-14 in Canada

700,000 paying users

Virtual goods and online merchandise

paidcontent.org

Cyworld - A world where “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

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

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, 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

Where are we today with virtual worlds?

Business opportunities limited?

Many real world 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

~150 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

Background

Second Life

Other worlds

The future

What should you do?

So, what about the future of virtual worlds?

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.

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

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

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

What should you do in virtual worlds? Experiment, “play”, and learn Stay on the look-out Consider creating independent operations Don’t forget other emerging media

“ 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

We digitized audio and video, why can’t we just digitize, you know, Earth” Philip Rosedale, CEO Linden Lab

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

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

More information: http://ssesecondlife.blogspot.com/

www.knowledgenetworking.org

Appendix

An increasingly connected world new friends family local colleagues old friends old colleagues colleagues at other offices Just a click away… virtual communities local communities old classmates

The number of unique users in Second Life has increased exponentially within one year SL, September 3, 2007

Who’s in world in Second Life? Number of active avatars SL, September 3, 2007 Sweden is #17

US avatars spend the most hours in world SL, September 3, 2007 Total number of hours in world Sweden is #17

25-34 year olds spend most time in world SL, September 3, 2007 Total number of hours in world ~40% Female

“ 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

Is there critical mass on Second Life? * Municipality (kommun) wikipedia.org 43 988 42,060 Motala* 63 712 44,750 Online, Mon, Sep 3 8:35 pm (GMT+1) Second Life 177 41,284 7,252,330 Switzerland Density (people per km 2) Land area (km 2) Population Location

Toyota educates teenagers on credit

Marketing and sales

American Apparel

Sells items of clothing

Offers 15% discount if buy same item in real world

Man-made disasters

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

MyCoke

External communities are growing in importance! Online communities Schoolmates Avatars Previous work colleagues Large portion of new ideas and formal collaboration relationships come from external contacts Organization Physical Networks

Encourage an open innovation attitude 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

The wisdom of crowds (Surowiecki 2004) Closed Expensive Complex Accurate Open Inexpensive Simple Close enough Hinton 2007

Crowdsourcing: Capturing the wisdom of crowds