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Media Management 2304 Spring Term 2011<br />STEEP Analysis – Virtual Worlds for App Phones and Tablets <br />Group 2a: Chr...
Executive summary<br />The purpose of this presentation is to examine the industry of virtual worlds for mobile devices.<b...
Introduction Virtual Worlds<br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br...
The App Industry<br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br />Conclusi...
Highest retention among social network apps
Positive competition among app stores
Mobile operators have rather failed in the attempt to market and distribute applications  -> collaboration with e.g. Getja...
Advertising via apps
Participation of internet players in the mobile space, emergence of app stores and cross-industry services
Forecast Feb 2010: money transfer applications, location-based services and mobile search will reign as the top mobile app...
Predicition: browers will be available on 80% of all mobiles by 2012, whereas 2009 it was still 60%</li></ul>"The business...
Independent players such as GetJar targeting all operating systems </li></ul>Ankeny, 2010<br />
Examples of Virtual Worlds<br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br ...
Why do people go to virtual worlds?<br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Poli...
Behavior<br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br />Conclusion<br />...
Browser<br />Downloadable Client<br />Smartphone / Tablets<br />Technical development and trends<br />Introduction<br />So...
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  1. 1. Media Management 2304 Spring Term 2011<br />STEEP Analysis – Virtual Worlds for App Phones and Tablets <br />Group 2a: Christine Alff, Niklas Hägerklo, Martina Kettner, Aline Rauh Müller<br />
  2. 2. Executive summary<br />The purpose of this presentation is to examine the industry of virtual worlds for mobile devices.<br />The development and growth of portable communication devices such as smartphones and tablets has led to new opportunities and new demands for both companies and consumers. Technological advances and a change in social habits have moved the virtual world industry forward in terms of communication, availability and graphics. The market for apps, smartphones and applets are widely spread in US, Europe and Asia. Most of the virtual worlds users are people between 10-15 years and many of them are also users of these devices. But technological improvements also open up for new types of virtual worlds and new user groups. Social networking sites and marketplaces are key worlds in these new virtual trends. <br />Virtual worlds are often offered to a worldwide public and therefore deals with a lot of regulatory and regional issues and differences. An economic system in such an environment must deal with these factors and must also offer highly developed payment solutions specifically suited for mobile devices. Technical solutions necessary are often made by third party providers and the virtual world companies main focus is on concept development and business models.<br />Conclusions shows that rivalry among existing competitors are very low but threat of new entrants and substitute companies are high due to social and technological forces, which also have a major impact on the industry in general. User focus and awareness must be prioritized to succeed in this industry.<br />
  3. 3. Introduction Virtual Worlds<br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br />Conclusion<br />“Virtual worlds are persistent, avatar-based social spaces that provide players or participants with the ability to engage in long-term, joint coordinated action. In these spaces, cultures and meanings emerge from a complex set of interactions among the participants, rather than as part of a predefined story or narrative arc.” (Brown & Thomas, 2009)<br />Impact of Virtual Worlds <br />$3.9 billion globally in revenue from subscription fees, in-game virtual goods sales, and third-party marketing by late 2011 (Kzero, 2010)<br />The number of users registered for virtual world sites broke the 1 billion mark during the third quarter of 2010 (Kzero, 2010)<br />Kzero, 2010: Virtual Worlds: 2011 and beyond.; <br />retrieved 3rd of February 2011 <br />
  4. 4. The App Industry<br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br />Conclusion<br />Future Trends<br /><ul><li>Popularity of mobile social networking applications -> social networking by far biggest app category
  5. 5. Highest retention among social network apps
  6. 6. Positive competition among app stores
  7. 7. Mobile operators have rather failed in the attempt to market and distribute applications -> collaboration with e.g. GetjarMobile
  8. 8. Advertising via apps
  9. 9. Participation of internet players in the mobile space, emergence of app stores and cross-industry services
  10. 10. Forecast Feb 2010: money transfer applications, location-based services and mobile search will reign as the top mobile application by 2012
  11. 11. Predicition: browers will be available on 80% of all mobiles by 2012, whereas 2009 it was still 60%</li></ul>"The business is changing, ...more and more brands are figuring out a mobile strategy and using mobile applications as an extension of their service, it's similar to what the Internet was like 15 years ago. If you're developing a mobile application, you must be able to reach the consumer on any device.“Ilja Laurs, founder of GetJar<br />"The key is coming up with a product that consumers want. That may sound intuitive, but we see hundreds of apps come through every week. And while the overall content and execution are getting better, some developers still don't have an idea of what the market is about or what consumers are looking for, developers should talk to consumers, carriers and app stores to see what they want. You would be surprised at how many people don't do this. They also need to consider the situation where the app will be used and how to make it better to fit that occasion.“ Patrick Morck, CMO of GetJar<br /><ul><li>Each of these companies: own application stores (App store, Ovi store, Blackberry App world)
  12. 12. Independent players such as GetJar targeting all operating systems </li></ul>Ankeny, 2010<br />
  13. 13. Examples of Virtual Worlds<br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br />Conclusion<br /> Pocket Metaverse<br />Second Life on iPhone and iPad<br />Bobba bar<br />Virtual bar for mobile phones<br />3 D Talk by ICYou (upcoming)<br />Smartphone multiplatform<br />;;;<br />
  14. 14. Why do people go to virtual worlds?<br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br />Conclusion<br /> Sense of “being with others”, share interests, engage in the “play of imagination” <br /> Do the “impossible”: transcend time, loose self-boundaries, identity shifting<br /> Live, explore, interact, form relationships, and build communities as in real life<br />Brown & Thomas, 2009; John & Sular, 1999; Richard & Velaro 2008 ; Watters & Audrey, 2010.<br />
  15. 15. Behavior<br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br />Conclusion<br />The users graphical experience play a minor role compared to having fun<br />Current users need interaction, they want to feel a part of it and not only receive information. Co-creation plays a more important role<br />Cultural differences ask for customization. Acting local enables gain of market share inside national markets<br />E.g.: Muxlim Pal, the first virtual world aimed at the Muslim community in Western countries<br />Stefan Lampinen and Malin Ströman (Guest Lectures); Digital Trends, 2008.<br />
  16. 16. Browser<br />Downloadable Client<br />Smartphone / Tablets<br />Technical development and trends<br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br />Conclusion<br />Trends<br />Many virtual world providers looking into mobile market.Doubts about profitability. <br />From 2D to 3D<br />“Avatar Reality is restructuring in order to concentrate on bringing Blue Mars to portable touch screen devices like the iPhone and iPad. With over 50 million new tablet devices projected to reach consumers this year along with tens of millions of iPhones and iPod Touch devices, the market for Blue Mars Mobile is a massive opportunity.”<br />Jim Sink, CEO Blue Mars, 14 January 2011<br />Social networks looking into virtual worlds?<br />Outsourcing of Graphics / Platform / Voice Communication / Payment mechanism<br />Better graphics <br />
  17. 17. Smartphones/ Tablets<br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br />Conclusion<br />Highly developed from a technological perspective (screen resolution, processor, graphics card, platform)<br />The more developed 3D VWs --> increased system requirements<br />Tablet Penetration<br />Estimations that more than 81.3 million tablets will be sold in 2012, up from the estimated 15.7 million units sold worldwide in 2010<br />Mainly driven by the iPad<br />iPad currently represents 85% of tablet sales in 2010, expected to lead to the category, however at decreasing market share<br />Smartphone Penetration<br />By the end of 2013, half of the cell phones in the US (150 million devices) will be smartphones. (Source App Time) <br />del Rey, 2010; Mashable, 2010.<br />
  18. 18. Economical<br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br />Conclusion<br />Fund Raising: During the development time there is no income stream and there is high investment cost. Thus the business might depend on external investors<br />Sources of Revenue: Find a balance<br />Advertisement and cooperation with companies<br />User money flow (subscription, percentage on transactions)<br />Own virtual currency implications: <br />How and whencan users acquire the currency? What it canbe used for? <br />What are the money sinks to avoid inflation? <br />Unclaimed property laws, regulations on taxation<br />Pillsbury Law, 2010. Overview of Legal Issues with Virtual Currencies.<br />
  19. 19. Environment<br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br />Conclusion<br />Meeting in a virtual world instead of the real world saves carbon footprints. <br />Geography is one of the main drawbacks of real world events, it is not always possible to attend due to other commitments or time restraints.<br />Power consumption increases with increasingly complex 3D worlds and constant internet connection. <br />This is especially important for handhelds where as little as 1 watt increase in power could increase the temperature by 13 celsius in the handheld.<br />Eco city in Second life. Trends are showing that consumers demands environmental friendly products, this is one example where ecological awareness is incorporated in VW. <br /><br />
  20. 20. Environment<br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br />Conclusion<br />Cloud processing not as environmental friendly as previously thought. More energy efficient when producing the virtual world but you have to consider the transport too, adding that to the equation cloud gaming is actually less energy efficent than an actual application when the workload is high.<br />60% to 90% of total power consumption is power for transport at high usage levels<br />Cloud processing creates a need for high speed internet connection which is not available in all parts of the world <br />Cloud<br />Application<br /><br />
  21. 21. Political/ Legal Influence <br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br />Conclusion<br />Property Rights <br /><ul><li>Increased Real money trade (RMT) -> Intellectual Property as the trailblazer of virtual world law? “property interests are clearly going to be the most important arena for the initial development of virtual world law. This is the area of law where most disputes are arising, and it will be so for some time to come” (Lastowska & Hunter, p. 96)
  22. 22. Legal status of online assets remains unresolved in Europe, the US and the rest of the world -> property rights over digital items have not yet been determined
  23. 23. European Network and Information Security Agency (ENISA)
  24. 24. VW provider legally link the online and the real-life world by their EULA-> self-regulation -> Virtual worlds typically publish the terms of use governing participants’activities
  25. 25. VW providers‘ unwillingness to recognize players’ rights to in- game assets due to liability issues </li></ul>Property Rights<br />“The law doesn’t stop just because this is a virtual world, but with its borderless nature, it may be challenging to determine whose laws apply. And there’s a culture of anonymity, so it is often difficult to know whom you are dealing with.”<br />David Naylor<br />Political Influence<br />Personality Rights<br />Tax System <br />Bonifield & Tomas, 2008; Günther, 2010<br />
  26. 26. Political/ Legal Influence <br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br />Conclusion<br />Tax System<br /><ul><li>Virtual Currency can be cashed out for real money, to buy real world goods, traded for other currency -> what about the taxes
  27. 27. Various countries have imposed or are considering imposition of a tax on gains from virtual goods and virtual currency transactions
  28. 28. E.g. China has imposed a 20% tax on such transactions
  29. 29. US: a congressional study is under way
  30. 30. Specific guidance on various tax issues, such as when a gain is realized/recognized and what reporting obligations exist and by which entities, remains to be provided.</li></ul>Personality Rights <br />Publicity rights: individuals’ rights to control commercial use of his or her name, image <br />Privacy rights: individuals’ rights to be free from unsanctioned intrusion and having one’s personality publicly represented without authorisation <br />Bonifield & Tomas, 2008; Virtual Worlds & Video Games, n.d.<br />
  31. 31. STEEP/Porter<br />Introduction<br />Social<br />Technology<br />Economic<br />Environment<br />Political<br />Conclusion<br />
  32. 32. References<br />Ankeny, J., 2010, The App store that´s never closed Entrepreneur, p. 21-27<br />Apple, 2011, retrieved 30th of January 2011<br />Bennett, A., 2009, The environmental sustainability of the games industry retrieved 3rd of February 2011<br />Bonifield, C. & Tomas, A., 2008, Intellectual Property Issues for marketers in the virtual world. Brand Management Vol. 16, 8. pp. 571-581<br />Digital Trends, 2008, A Muslim Virtual World Arrives. retrieved 2nd of February 2011<br />Günther, P. (2010). Virtual goods and regulatory insights fromt the European perspective. Virtual Economy Research Network. Retrieved from regulatory_i on February 6th, 2011<br />Joffe, B., 2009, Virtual worlds in Asia: Trends and Ecpectations retrieved 31st of January 2011<br />KZero, 2009, Virtual worlds: 2010 and beyond retrieved 31st of January 2011<br />KZero, 2010,Virtual Worlds: 2011 and beyond; retrieved 3rd of February 2011<br />Mashable, 2010, Tablet Sales expected to quadruple in 2012. retrieved from http://<br /> on February 3rd 2011<br />Pillsbury, 2010, Overview of issues with virtual currencies retrieved 31st of January 2011<br />del Rey, J., 2010, APP Time. Inc December 2010/ January 2011, p. 116-123<br />Suler, J., 1999, Cyberspace as a Dream World retrieved 3rd of February 2011<br />Terdiman, D., 2008, Commerce drives virtual world retrieved February 2nd 2011<br />Terdiman, D., 2009, Virtual world designer Metaplace to shutter retrevied February 1st 2011<br />Thomas,D., Brown, J.S. ,2009. Why Virtual Worlds Matter. retrieved 4th of February, 2010<br />Velayo, R., 2008, Studying Virtual Worlds: What is in for Psychology? retrieved 2nd of February 2011<br />Watters, A., 2010, Number of Virtual World Users Breaks 1 Billion.<br />number_of_virtual_world_users_breaks_the_1_billion.php retrieved 2nd of February 2011<br />Zyga, L., 2010, How energy-efficient is cloud computing retrieved 1st of February 2011<br />Other sources<br />Interview ICYou, Stockholm 2011-01-31<br />Guest lecture Stefan Lampinen, Stockholm, 2011-02-02<br />Guest lecture Malin Ströman, Stockholm, 2011-02-02<br />
  33. 33. Recommendations ICYou<br />Already integrate customers in the design of virtual worlds -> see Tine Article -> too many companies are so convinced of their idea that they do not take into account customers <br />Many countries have similar laws and obligations. Accordingly, it is very important that companies involved with virtual worlds and virtual goods understand these issues and take appropriate actions to comply.<br />Define and understand what is your target market and what they look for in VW's, different group ranges and people from different cultures should have different needs. Offering a lot of things for different segments can result in not creating a real connection with any market.<br />Pay attention to what users want, behaviors change fast, keep up by doing research constantly<br />There are many apps competiting for peoples time. Retention is critical, what are you offering that makes people keep on using your product? You need to keep on renewing Interactive City so it keeps on being interesting<br />Find the balance between revenue from advertisements/partnerships and from money from users (i.e. percentage of transactions done by users)<br />Find the balance of how good the graphics can be to engage users but that does not consume a lot of battery<br />Keep track of political discussions, regulations should change a lot in the next years as VW's become a more solid industry<br />