EU-China Information Society Project
Virtual Worlds in Asia
Trends and Expectations
Shaping and Governing the 3-D Internet
Benjamin Joffe, CEO | Plus Eight Star | Beijing, 2009.03

Foreword

Benjamin Joffe
ベンジャミン
벤자민
本杰明

4 years
1 year
4 years

www.plus8star.com

Cross-Market Consulting
Telecom & Internet Innovation
China | Japan | South Korea

26 events | 98 speakers | 3,296 members | 1,440 companies

I am going to talk about
1. What is a virtual world
2. What are their origins
3. What’s the market situation
4. What are the trends
5. What are the legal challenges
6. More complexities
7. The digital third place
for 60 minutes

Chapter 1.
What is a
Virtual World?

Before getting started…

Questions

Who uses Internet (almost) every day?

Question 2
Yesterday

Virtual World?

Problem 1
What does “virtual” mean?

3D Analog World
Without Server Lag?

Online / Offline

In-
Offline Online
between

Digital Immigrants
&
Digital Natives

Offline Audience: 300
Online Audience: >30,000
(and counting)
Factor 100!

Online + Offline = Life

Problem 2
What means “world”?

Avatars?

Video
[Superbowl Ad]

Key elements
(1) Reach
(2) Reputation

Definition
Persistent environment
Synchronous communication
Personified users

Chapter 2.
Origins of
Virtual Worlds

1981 1984 1992

The Matrix (1999) Ghost in the Shell (1989)

LambdaMOO (1990)

Habitat (Lucasfilm, 1986)

Kingdom of the Wind (Nexon, 1996)

EverQuest (Sony, 1999)

Virtual World Types
Platform
Community
Gaming
Business

Chapter 3.
Market Situation

“It’s complicated”

>150 virtual worlds

In 2008, over US$580 million
were invested in 41 virtual goods-
related businesses.
Source: Virtual Worlds Management

Is it a business?

Revenue Scale
Online games = x 1,000 million
Social networks = x 100 million
Virtual worlds = x 10 million

However: Convergence
Online games have revenues
Social networks have loyalty
Virtual worlds have appeal

2D Worlds

Europe & North America

Daily Users: 495,210
Monthly unique users: 6.6 million across Facebook & MySpace

Service Registered users Revenue 2008 (E) Valuation (E)
Habbo 100 mln 50 mln USD 1.25 bln USD
Gaia Online 7 mln UV/month 10 mln USD n.a.
Stardoll 20 mln 30 mln USD 450 mln USD
Club Penguin 12 mln 50-150 mln USD 350-700 mln USD

South Korea

Japan

Service Registered users Revenue 2008 (E) Valuation (E)
Cyworld 22 mln 200 mln USD n.a.
Mobile Game Town 12.6 mln 250 mln USD 1.4 billion USD
Gree 8 mln 60 mln USD 1.2 billion USD
Nicotto Town 100,000 n.a. n.a.

China

3D Worlds

Europe & North America

(60% Made in China)

Japan

Internet
Adventure Meet-me
(by SEGA)

Video
[Mii TV ad - 2007]

PS3 “Home”

25 million Xbox 360
consoles getting
software upgrade?

South Korea

Video
[Nurien Demo]

China

Chapter 4.
Trends

Trend 1
Away from Second Life

Gaming
Mainly Second virtual
Life adaptations worlds
2D dating
2005 2006 2007 2008 2009
2D
worlds
Variety of
concepts and
revenue models

Trend 2
Browser

Browser Hybrid Client
2D
3D

Trend 3
Virtual goods

Business models
• Virtual real estate
• Virtual currency
• Virtual goods
• E-commerce
• Advertising
• Platform licensing
• Content creation

Chapter 5.
Legal Aspects

Trademarks

Patents

Forterra (There.com) vs. IMVU

Prior Art

Worlds.com vs. NC Soft

“System and Method for Enabling
Users to Interact in a Virtual Space”
(7,181,690)

Will patents hurt the market?
(“1-click” patent case)

Copyrights

Who owns what?

Facebook’s Terms of Service (TOS)
• “We reserve the right, at our sole discretion, to
change, modify, add, or delete portions of these
Terms of Use at any time without further notice.”
• Chronology of the TOS-gate
– 2009.02.15 | Change in TOS – Facebook can do
whatever it wants with the content
– 2009.02.15 | Users uproar
– 2009.02.17 | Back to old TOS
– 2009.02.26 | Opens its TOS for input from users

Terms Of Service (TOS)
vs.
Regulation

Copyright? Civil rights? TOS?

Second Life Interview Incident

USA: Digital Millennium copyright Act
(DMCA)
EU: EU Copyright Directive
(EUCD)

Subpoena?
Fair Use?

If the effort it takes to file
repeated claims is greater
than the effort to create an
account and repost a video,
then certainly something is
flawed.

My expectation would be
that Linden Lab swiftly
research that problem and
close that loophole.
Otherwise it would raise
questions about how ready
Second Life actually is for
professional use.

Video
[User-Generated Music Video]

Commerce
of Virtual Goods

400,000 Gold Farmers
in China & South Korea?

Identity Management

“On the Internet, nobody knows
you’re a dog.”
The New Yorker, 1993

“On the Internet, nobody knows
you’re a bot.”
Wired, 2005

“Glider is a tool that plays your
World of Warcraft character
for you, the way you want it.
It grinds, it loots, it skins, it
heals, it even farms soul
shards... without you.”

Single Multiple Use of Shared
account accounts Bots account

Shared account
Use of Bots
Whose persona?

Online & Offline Identities
Real name
Pen name
Anonymous

Identity depends
on the social circle

Chapter 6.
More Complexity

Regulating virtual worlds is already complicated
for service providers

There.com CEO joins the conversation…
as a voice over his avatar

Video
[Fix8 Demo]

Obama Outfitted With
238 Motion Capture Sensors
For 3-D Record Of Presidency

…or not.

Lawrence
Howard Clay
Lessig
Rheingold Shirky

Chapter 7.
The Digital
Third Place

What is a third place?

Economic activities

Creative activities

Cultural products

Social environments

Digital Third Place

Afterword
What Next?

Necessary skills
for the future?

Business is online
Online identity & reputation
are most important

Increase awareness
of the risks
and how to avoid them

Celebrate the benefits

About +8*

There are more ideas
outside your country
than inside
Tom Kelley
CEO, IDEO
The 10 faces of Innovation

“Innovation Arbitrage”
• About us
– +8* | Plus Eight Star is the leading cross-market and cross-cultural consultancy in Asia.
– We provide local expertise & global perspective on mobile and Internet innovation from
China, Japan and South Korea to add value to and accelerate the development of our
clients’ businesses.
• Our services
– Analysis of proven best practices and business models from Asia
– Other services: executive study trips, market entry strategy, M&A advisory, partners
identification, negotiation support.
• Founder & CEO: Benjamin Joffe
– 9 years experience with mobile & Internet in Asia
– Selected among “China’s Top 100 mobile industry influencers” in 2007
– Regular speaker at events on mobile and Internet in Asia
– Fluent in English, Japanese, French with working knowledge of Mandarin, Korean and
Spanish

Selected References
• Adidas | E-commerce strategy for China, Japan & Korea
• Bouygues Telecom | Cases studies of leading Asian Web 2.0 services
and virtual worlds
• Deutsche Telekom / T-Online | Benchmark of Korean mobile & Internet
convergence strategies
• Hemisphere | Analysis of mobile marketing best practices in Japan and
South Korea (Hemisphere is a leading digital advertising agency),
analysis of leading social platforms (SNS, virtual worlds, online games).
• Microsoft | Analysis of Japan’s key players and market catalysts for
mobile commerce market positioning in China
• DeNA | Case studies of the best practices of leading social networks in
China and South Korea (DeNA operates Mobile Game Town, Japan’s
leading mobile SNS service)
• China Mobile | Benchmark of Korean leading online communities
• Sands Capital Management | Evaluation of China’s investment
opportunities in social networks in China

Social Contribution
• Mobile Monday
– Founder of the Mobile Monday forum in Beijing since 2006 (3,000+
members, 23 events, over 80 presentations).
• Media
– Monthly column on Asian innovation for Asian Business Leaders (one of
the leading Chinese business magazines), numerous interviews in
international media.
• Events
– Regular keynote speaker and moderator at Internet, Telecom, Media and
Investment events
e.g. eComm, ITU Asia, Asia Venture Capital Forum, China Mobility International
Summit, O’Reilly’s Graphing Social Patterns, Red Herring Asia, Media 08
Conference, Wireless Developer Forum, Open Web Asia, XMediaLab, Mobile
Monday Global Summit, etc.

Contact Us
www.plus8star.com
benjamin@plus8star.com
+81 | Japan
benjamin0123 +82 | Korea
+86 | China
http://twitter.com/plus8star
Telecom & Internet
www.linkedin.com/in/benjaminjoffe
+ Added Value
www.slideshare.net/plus8star * High quality