Virtual Worlds 2011+

Virtual Worlds: 2010 and beyond Key industry trends and market developments

About KZero Consulting, Analytics, Insight

KZero services (we don’t just do charts) For Start-ups: Business planning, market sizing, financial modeling, strategic guidance For Virtual World/Goods companies: Marketing strategy, product development, user analysis For Brands: Media planning, campaign creation, virtual brand strategy For VC’s/Investors: Deal-flow, investment analysis, market sizing

Clients

Media References

Market Growth Buckle-Up. It’s Going North

Key Growth Drivers Perceived Value: Parents allowing their children to spend more time in VWs Greater Funding: Uplift in VC activity moving into 2010 Brand Awareness: More VWs having a real-world presence Payment Mechanics: Easier, faster ways to purchase virtual currencies/services/goods

Growth: Number of VWs 900 750 600 450 300 150 0 2005 2006 2007 2008 2009 2010 2011 2012

Virtual World Revenues (USD) 10bn 8bn 6bn 4bn 2bn 0bn 2007 2008 2009 2010 2011 2012 2013

KT&T Kids, Tweens and Teens

KT&T: Growth areas Media brands: TV shows, films, youth IP all creating VWs to create greater engagement Music: Major growth area for virtual goods and event simulcasting Virtual Celebrities: Starting with musicians More genres: Lots of different types of KT&T worlds Mobile payments: The avg. age of a new mobile phone user in the UK is 8 !!

Q-on-Q Growth: total registered accounts 400m 300m Q1 09 Q2 09 Q3 09 200m 100m 5-10 10-15 0m 15-25 Age Group 25+

Q-on-Q Growth: net increase in reg. accs. 90m 67.5m Q2 09 Q3 09 45m 22.5m 5-10 10-15 0m 15-25 Age Group 25+

Q-on-Q Growth: % increase in reg. accs. 50% Q1 09 Q2 09 Q3 09 40% 30% 20% 10% 5-10 10-15 0% 15-25 25+ Age Group Total Market

Something for the ‘Grown-Ups’ Don’t forget about the Adults

Adults: Growth Drivers Gambling: SMOGs and MMOGs Dating: Great for virtual goods and gifting Creative platforms: Micro-worlds. Vastpark, Mycosm New Genres: Sci-Fi

ARPPUs US$6.00 US$5.00 US$4.00 US$3.00 US$2.00 US$1.00 US$0 12-13 14-15 16-17 18-19 20-29 30-39 40-49 50+ Source: Andrew Chen, http://andrewchenblog.com/

Screenshot from PKR

Screenshot from Mycosm

Screenshot from Vastpark

Screenshot from Omnidate

SocNetthe neighbourhood Moving into Extension

SocNet extension SocNets have an inverse issue to VWs SocNets have user bases without greater interaction VWs have the interaction without the user bases (for new worlds) We expect SocNets to aggressively move into the VW and VG space

Sports The competition has arrived

Screenshot from Football Superstars

Education Immersive Learning

Education: Growth areas Remote Learning: Regardless of geographical location Immersive Learning: For sweet-spot subjects like History and Geography New Student Outreach: Already being used - we expect more P2P Learning: Students helping other students

Photo-Realistic Avatars To lower the barrier to entry

Photo-Realistic Avatars: Growth areas Key to Mass Adoption: Creates meaning and relevance to VW interaction for early majority market Consumer: Dating, gaming and older VW platforms B2B/Enterprise: Critical for convincing employees/stakeholders to adopt VWs Bigger Picture: Could become the key‘digital self’management platform

Reputation Management What’s your score?

Reputation Management Necessary for trade-based and B2B platforms A reputation or trustworthiness‘score’ Similar to an Ebay rating - P2P Immersionalists vs Augmentalists

Accounts per unique resident (Second Life) 1.80 Stabilization 1.70 1.60 1.50 1.40 Innovators Early Adopters 1.30 1.20 Jan06 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-07 Feb Mar Apr May Jun

Mirror Worlds Virtually Real

Mirror Worlds: Growth areas Tactical Uses: Events, promotions Immersive Learning: For education ARGs: Mirror worlds support Alternate Reality Gaming But,facing competition from rapid development applications (on the fly)

Screenshot from Near

Screenshot from Twinity

Mirror Worlds: Microsoft Photosynth Screenshot from Twinity Source: http://michaelaltendorf.wordpress.com

Cross-World Ideas without Frontiers?

Growth areas: Cross-World We have to be able to move‘things’from one world to another Or have a‘place’to aggregate or move from Cross-world applications could be buddy-lists, communicators, virtual goods or even currencies

More Brands KT&T

Growth areas: Brands The first‘brand rush’is over (Second Life 2007) We expect a lot more brands to move in-world Either tactically or into their own worlds

Virtual Goods Integration Plenty of new business models

Growth areas: Virtual Goods Integration Virtual Goods are a booming industry Lots of emerging business models in support - such as Viximo Increased third-party integration of virtual goods into SocNets and virtual worlds

Virtual Goods Revenues (USD) 15bn 12bn 9bn 6bn 3bn 0bn 2007 2008 2009 2010 2011 2012 Source: KZero. Includes VGs from VWs, socnets and cross-world

KZero campaign for L’Oreal Paris

Summary Ansoff Matrix

Summary of 2010+ Market Development New Virtual Goods Integration Diversification Markets B2B / Enterprise Currency Management Education Reputation Management SocNet Extension Market Penetration Product Development Existing Second Life Metabrands, Micro-Worlds Markets More Brands, Mirror Worlds Theme Parks, Cross-World Sports, Sci-Fi Photo-Realistic Avatars KT&T Dating, Gambling Existing Products New Products

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Virtual Worlds 2011+

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