Digital Impact on Society & Media

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The digital impact on society and media -
New opportunities for marketing& communication

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Digital Impact on Society & Media

  1. 1. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss The Digital Impact on Society and Media 6.7.2010 MBA Dual Degree – GSBA/SUNY 1/102
  2. 2. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss New Opportunities for Marketing & Communication 6.7.2010 MBA Dual Degree – GSBA/SUNY 2/102
  3. 3. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss Table of Content 1.Management Summary 6 2.Background – Changes in Technology, Changes in Society 12 3.Evolution of Digital Technology 12 4.Impact of Digital Technology on Media 14 5.Impact of Digital Technology on Society 16 5.1.1.Generation C 17 5.1.2.Life Caching 18 5.1.3.Online Oxygen 18 5.1.4.Masters of the Youniverse 20 5.1.5.Virtual Friendships 21 6.Evaluation of Digital Background 22 7.First Conclusion – Digital Background 24 8.Situation – New Playgrounds, New Toys 26 9.The New Playgrounds of the Digital Society 26 9.1.1.Exchange Platforms 26 9.1.2.Virtual Reality and Gaming Platforms 33 9.1.3.Mobile Connectedness (Entertainment and Information) 40 10.The New Toys of Digital Marketing and Communication 45 10.1.1.Online Marketing 46 10.1.2.Mobile Marketing 54 10.1.3.Home Entertainment 58 10.1.4.Digital On-the-Way 60 11.Evaluation of the Digital Situation 67 12.Second Conclusion – Digital Situation 70 13.Key Issues 71 14.First Issue: Become Part of the Virtual Youniverse 72 15.Second Issue: Invade Private Content Consumption 72 16.Third Issue: Entertain, Involve and Engage Consumers 73 17.Fourth Issue: Create cross-world and – media experiences 74 18.Third Conclusion – Digital Issues 74 19.Opportunities 76 20.Virtual Reality Enhancer 76 20.1.1. Brand and Product Placement in Virtual Realities 78 20.1.2. Brand and Product Integration in Virtual Realities 80 20.1.3. Content, Service and Area Sponsorship 82 20.1.4. Virtual Product or Sub Brand Launch 82 20.1.5. Virtual Brand Being Spaces and Branded Experiences 82 20.1.6. Proprietary Virtual Brand Realities 83 20.1.7. Proprietary Games (Advergames) 84 20.1.8. Social Networking Facilitation and Enhancement 85 6.7.2010 MBA Dual Degree – GSBA/SUNY 3/102
  4. 4. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss 20.1.9. Blogger Relationships Management 86 21.Experience Provider 86 21.1.1.Content Sponsorship (Online, Mobile, Digital TV) 86 21.1.2.Mobile Movies 87 21.1.3.Mobile Games 87 21.1.4. Digitally Enhanced Promotions 88 22.Engagement Trigger 90 22.1.1.Youniversal Communication (Reality, Virtuality, Mobility) 90 22.1.2. RFID-Promotions 91 22.1.3. Co-Creation: Consumer Created Advertising 92 23.Identification of Most Promising Digital Approaches 94 24.Fourth Conclusion – Digital Opportunities 95 25.Key Success Factors 96 26.Consumer Life Cycle 96 27.Marketing-Communication Architecture 97 28.Consumer Journey 99 6.7.2010 MBA Dual Degree – GSBA/SUNY 4/102
  5. 5. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss Preface The subject How digital technology changes society and the media landscape, what new opportunities arise and how to best capitalize on them for marketing and communication. The objective • to address the impact of digital technology on society (consumer’ s mindset and behavior) and media (new channels and tools) • to explore new phenomena arising with the forming of a digital society • to assess the consequences for marketing and communication by evaluating the different marketing/communication approaches as well as new possibilities under these new circumstances • to develop theories for successful marketing and communication now and in the future. The scope The scope of digital technology explored in this thesis is limited to the areas relevant for marketing and communication. The impact on health (medical diagnosis/treatment), logistics (operations management) and other areas greatly impacted by technological development have not been taken into consideration. 6.7.2010 MBA Dual Degree – GSBA/SUNY 5/102
  6. 6. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss 1. Management Summary Background Digitalization spreads quickly and impacts our whole lifestyle. Digital technology and media are already an indispensable part of our everyday life and will play an increasingly important role in our private and professional life. Society adapts very quickly to new technology and uses them to their favor. Consumers of the digital age are on one hand self-confident, self-determining, self-focused, on the other hand they love to share, exchange, play and build social networks. This might also be the reason why everything stays noncommittal. Consumers are looking for relationships that are not too close; they prefer to keep a little distance. And the media landscape is transforming into a stock exchange. The logical conclusion is therefore to see and treat consumers like business partners. They are on the same level. They conclude deals that both sides take profit in while treating each other fairly. Situation New consumer playgrounds pop up on the Internet in the form of virtual realities and exchange platforms for personal opinions, interests and memories. Real people’ s lives get digitalized and shared though the Internet. People let others take part in their most personal thoughts and experiences, and live parallel lives in virtual reality. They create their own content and spaces to share with peers. Virtual realities and digital contents are consumed more and more throughout the whole day and on the go. With the private and individual consumption of digital contents in the midst of other people in the street, in public transport as well as in front of the computer at home or at work during the lunch break, people create their own “ private world” . Within the new playgrounds consumers can not only create their own world, but many different worlds in which to live and navigate between. Even though these playgrounds and worlds overlap through the convergence of technologies, media and content; each one is expected to cover very specific aspects of their life. Consumers know exactly what they want to get there, and when and how they want it: In the virtual world, consumers aspire to explore their Youniverse and probe all facets of it. In the virtual playgrounds, they want to interact, exchange, try out, discover and experiment. It’ s all about the experience of their own personality (through different 6.7.2010 MBA Dual Degree – GSBA/SUNY 6/102
  7. 7. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss identities), of relationships with others (through different stories and situations) and of life as a whole (through different environments and set ups). In the mobile world, consumers intend to connect with their peers as well as with information, services and entertainment. Mobile playgrounds should enhance their time while commuting that provide them with advantages and improve their quality of life in general. At home, deliberately disconnected from the outside, consumers aim at enjoyment, while consuming selected entertainment and information. Even though, in these playgrounds, they do not engage as in the previously mentioned, they are very demanding: they are not satisfied with just any program, but only the one that fits their current interests and momentary moods best. The following graph visualizes the different consumer worlds and summarizes the just mentioned expectations: Virtual Mobile experience service exchange pastime I explore I connect Home entertainment consumption I select Graph 1: Consumers’ worlds Marketers are limping behind: they have new toys, but don’ t know how to play with them. Some playgrounds they are just discovering and do not know what toys to apply or simply haven’ t developed them yet. Most importantly, marketers haven’ t adjusted their game to the mindset of the new, digitally empowered consumers: • In the virtual world they focus on generating clicks, instead of engaging consumers and enabling experiences. 6.7.2010 MBA Dual Degree – GSBA/SUNY 7/102
  8. 8. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss • In the mobile world, they try to generate response rates instead of enabling connections and delivering services. • In the living rooms they strive for reaching the mass market instead of providing selective entertainment and information. 6.7.2010 MBA Dual Degree – GSBA/SUNY 8/102
  9. 9. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss Key Issues The whole marketing and communication industry has to completely change the way of thinking and acting, and new ways and forms of marketing and communication have to be developed in order to cope with a much more complex, fragmented and individualized environment. Brands and marketers have to become more responsive to the individual consumer and not to a target group as a whole. And, marketing and communication strategies have to evolve with the digital lifestyle of the consumer. The key words are: Integration (virtual and real), Engagement (brand and consumer), Experience (stationary and mobile). The key issues: 1. Become part of the virtual Youniverse 2. Invade private content consumption 3. Entertain, involve and engage consumers 4. Create cross-world and – media experiences Opportunities The key issues derived from the analysis of the situation reveal what really matters and what marketers should aim at in order to successfully work in the digital market. The awareness of these key issues allows choosing the right strategic options and approaching the new market from the right angle thus seizing the opportunities concerning the role and position of brands vis-à-vis consumers in the digital market place: Key Issues Opportunities Œ Become part of the virtual youniverse Integration Œ Virtual reality enhancer Invade private content consumption Engagement Experience provider Experience Ž Entertain, involve and engage consumers Ž Engagement trigger  Create cross-world andÐmedia experiences Graph 2: Key Issues and Opportunities in the Digital Market The following is an evaluation of the activities that could be taken to pursue one of the three digital brand strategies with the highest success potential in the new market environment. 6.7.2010 MBA Dual Degree – GSBA/SUNY 9/102
  10. 10. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss Consumer Positionings Opportunities Impact Uniqueness Sustaina-bility Risk Cost Relevance Virtual Reality Brand Being Places 4 6 6 5 2 1 24 Enhancer Access sponsorship 6 3 3 3 6 3 24 Virtual product launches 5 5 5 5 3 2 25 Virtual Service Launches 5 5 5 5 3 2 25 Brand Placement 3 4 3 3 5 3 21 Product Placement 5 5 4 3 5 3 25 In-Game Advertising 3 4 3 3 5 2 20 Advergaming 5 6 6 3 2 2 24 Blogger Relations 5 3 3 5 3 6 25 Social Networking Facil. 5 3 3 4 5 3 23 Experience Online Content Spons. 6 3 3 4 5 4 25 Provider Mobile Content Spons. 6 3 3 4 5 3 24 Mobile Brand Movies 4 4 4 3 2 2 19 Mobile Brand Games 5 5 5 3 2 2 22 Online Promotons 5 5 5 3 3 2 23 Digital TV Sponsors. 4 3 3 4 5 3 22 Video Ads (TV, M, I) 3 3 3 3 5 4 21 Engagement Youniversal Concept 5 5 6 5 2 1 24 Trigger RFID Promotions 4 4 5 3 3 2 21 Digital Promotions 4 4 4 3 4 3 22 Co-Creation 6 5 5 4 3 3 26 Table 1: Evaluation of Marketing and Communication Approaches The ratings just give a general indication of the different directions. The variables depend strongly on the idea, objective, concept and situation of the specific marketing/communication approach and would need to be evaluated for each specific case. Key Success Factors For any of the identified digital strategies to be effective and for each approach under the strategies to be successful, cross-media integration is essential. Following are the key success factors in this context: • Definition of the role of the different media in the customer life cycle • Design of a communication architecture that defines the linking of the communication means • Development of messages and hooks for each communication mean taking into consideration the consumer journey 6.7.2010 MBA Dual Degree – GSBA/SUNY 10/102
  11. 11. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss 6.7.2010 MBA Dual Degree – GSBA/SUNY 11/102
  12. 12. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss 2. Background – Changes in Technology, Changes in Society 3. Evolution of Digital Technology One of the first contacts a large audience had with digital technology was probably the digital watches from the 70’ s. This was the first “ digital trend” , but back then, we had a completely different understanding of what “ digital” meant. “ Digital” stood for technical, cold, quadratic. DOS computers underlined this view even though at that time the mass audience didn’ t associate computers with the word “ digital” . Since then, a lot has changed and now – only 30 years and many digital innovations later – we start to understand what digital technology really means. Window interfaces, digital music, CDs, mobile phones, emails, Internet, PDAs, digital cameras, navigation systems, MP3 players and so on: One new application after the other popped up and became – within no-time – part of our daily life. Now, we communicate digitally, listen to digital music, watch digital TV, go to digital art expositions and so on. Digital technology has become very emotional and embraces our whole lifestyle. Digital technology continues to evolve at a huge pace and new applications are almost instantly adopted by society. Society itself has become a driver of the technology with hundreds of thousands of “ engineers” that invent or enhance digital applications around the globe. The last buzzwords in mass digital technology were bandwidth, mobility and convergence. The next big things will be artificial intelligence and nano technology. A look into the future of Tim Druckery, Leonardo Review: The not so subtle inevitability of technology mediating virtually every facet of being has come to appear normal. In the mad rush to induce smart everything, culture finds itself between euphoria and exhaustion. One month's watershed technology is next month's techno- azoic fossil. And while the debate widens about the extent of bandwidth, the potential of 6.7.2010 MBA Dual Degree – GSBA/SUNY 12/102
  13. 13. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss compression, the speed of transfer, the so-called limitless access to data, the power of the network, a pattern emerges. It is a pattern in which the future promises the fulfillment of the incomplete present. Finding a perspective amid the debates about technologies that will affect every, pardon the expression, fiber of life is no small task. Genetics, neuro-technology, bio-computing, stand aside multimedia, the world wide web, encryption, and wireless technologies as complex and often atomistic, nuisances.” 1 1 addendum.mit.edu/e-journals/Leonardo/reviews/pre2000/druckreybeing.html#top 6.7.2010 MBA Dual Degree – GSBA/SUNY 13/102
  14. 14. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss 4. Impact of Digital Technology on Media2 “ The era of mass media is giving way to one of personal and participatory media. That will profoundly change both the media industry and society as a whole” , says Andreas Kluth, technology correspondent of The Economist.3 This statement has profound implications for traditional business models in the media industry, which are based on aggregating large passive audiences and holding them captive during advertising interruptions. In the new-media era, audiences will occasionally be large, but often small, and usually tiny. Instead of a few large capital-rich media giants competing with one another for these audiences, it will be small firms and individuals competing or, more often, collaborating. Some will make money from the content they create; others will not and will not mind, because they have other motives. With participatory media, the boundaries between audiences and creators become blurred and often invisible. In the words of David Sifry, the founder of Technorati, a search engine for blogs, one-to-many “ lectures” (i.e. from media companies to their audiences) are transformed into “ conversations” among “ the people formerly known as the “ audience” . This changes the tone of public discussions. “ The mainstream media” , says David Weinberger, a blogger, author and fellow at Harvard University’ s Berkman Centre, “ don’ t (yet) get how subversive it is to take institutions and turn them into conversations” . That is because institutions are closed, assume a hierarchy and have trouble admitting fallibility, he says, whereas conversations are open-ended, assume equality and eagerly concede fallibility.4 2 The Economist, 22.04.06 3 The Economist, 22.04.06 4 cyber.law.harvard.edu, The Economist, 22.04.06 6.7.2010 MBA Dual Degree – GSBA/SUNY 14/102
  15. 15. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss One could argue that participatory media will never substitute for mass media since self- publishing by someone of average talent is not very interesting and not always correct. It is true that not everything in the “ blogosphere” is poetry, not every audio podcast is a symphony, not every video vlog would do well at Sundance, and not every entry on Wikipedia, the free and collaborative online encyclopedia, is 100% correct. But exactly the same could be said about newspapers, radio, television and the Encyclopeadia Britannica.5 What is new is that young people today, and most people in the future, will be happy to decide for themselves what is credible or worthwhile and what is not. They will have plenty of help. Sometimes they will rely on human editors of their choosing; at other times they will rely on collective intelligence in the form of new filtering and collaboration technologies that are now being developed. “ The old media model was: there is one source of truth. The new media model is: there are multiple sources of truth, and we will sort it out” , says John Kraus, the founder of JotSpot, which makes the software for wikis. The obvious benefit of this media revolution will be what Mr Saffo of the Institute for the Future calls a “ Cambrian explosion” of creativity: a flowering of expressive diversity on the scale of the eponymous proliferation of biological species 530m years ago. “ We are entering an age of cultural richness and abundant choice that we’ ve never seen before in history. Peer production is the most powerful industrial force of our time,” says Chris Anderson, editor of Wired magazine and author of a forthcoming book called “ The Long Tail” . At the same time, adds Mr Saffo, “ revolutions tend to suck for ordinary people.” 6 Indeed, many people in the traditional media are pessimistic about the rise of a participatory culture, either because they believe it threatens the business model that they have grown used to, or because they feel it threatens public discourse, civility and even democracy. th The Internet “ is a much larger change than the coming of television” in the 20 century, says Mr Semel, former chairman of Warner Brothers. In the past, “ someone decided that the news goes on at a specific time for example. We all grew up when somebody else was the programmer; now the user is the programmer. Furthermore, unlike in television “ you don’ t need hits. Many small audiences are as good for advertisers as few large audiences, and indeed may be better. This has huge implications for content, turning it into one long continuum – from professional to amateur, from blockbuster to subculture niche. Old media economies, which are biased towards hits at the “ head” of this distribution, are being replaced by new media economics, which allows creation and consumption along the entirety of a much longer professional and consumer-generated content tail. 5 The Economist, 22.04.06 6 saffo.com, 30.08.06 6.7.2010 MBA Dual Degree – GSBA/SUNY 15/102
  16. 16. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss This leads to a media landscape that will look more and more like a stock exchange. An exchange, that is, for users who offer (create) and bid for (search, navigate, share, enjoy) content. And a stock exchange for advertisers, who bid against one another to have their sponsored links placed in front of these users. Exchange becomes necessary because people need help navigating around this huge continuum of content. In the present century, says Paul Saffo of the Institute for the Future, “ you get large by allowing the many and small to gather on your lawn.” Successful media companies will, according to PricewaterhouseCoopers, a consultancy firm, become “ marketplaces that let consumers search, research, share and configure their media experiences.” To be good, these exchanges need to combine “ a personalized media experience with a social context for participation.” Instead of “ exclusive ownership of content or distribution assets” (the stuff of the old media), the media marketplaces will compete in their “ knowledge of consumer activity” , which they will use both to interact more intimately with consumers and to match them better to advertising that is unobtrusive and helpful (itself a novelty), and thus lucrative.7 One could argue that the above described is not the direct result of digital technology evolution but an effect caused by changes in society (the development of digital society) described in the next chapter induced by technology. Both are true. What remains is the 100 million dollar question: what was first? The chicken or the egg? 5. Impact of Digital Technology on Society What follows is the description of five major consumer trends that are induced, driven and accelerated by digital technology. They are just examples since the wider implications for society will become visible gradually over a period of decades, as it was the case with past innovations like the book press (the starting point of the mass media 7 The Economist, 22.04.2006 6.7.2010 MBA Dual Degree – GSBA/SUNY 16/102
  17. 17. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss era that achieved its zenith in 1958, more than 400 years after Gutenberg’ s invention in 1455). 5.1.1.Generation C The Generation C phenomenon captures the avalanche of consumer-generated content that is building on the web, adding tera-peta bytes of new text, images, audio and video. Consumers around the world pro-actively post, stream if not lead parts of their lives online. There are three main drivers for this trend: • (1) The creative urges each consumer undeniably possesses. We're all artists, but until now we neither had the guts nor the means to go all out. • (2) The manufacturers of content-creating tools, who relentlessly push us to unleash that creativity, using -- of course -- their ever cheaper, ever more powerful gadgets and gizmos. • (3) The proliferation of 'personal showrooms' helping GENERATION C to instantly display its creations to a global audience. 57% of American teenagers create content for the Internet – from text to pictures, music and video. In this new-media culture, says Paul Saffo, a director at the Institute for the Future in California, people no longer passively “ consume” media (and thus advertising, its main revenue source) but actively participate in it, which usually means creating content, in whatever form and on whatever scale. This does not have to mean that “ people write their own newspaper” , says Jeremy Zawodny, a prominent blogger and software engineer at Yahoo!, an Internet portal. “ It could be as simple as rating the restaurants they went to or the movie they saw,” or as sophisticated as shooting a home video.” Many members of Generation C choose to open their own showrooms on a funky platform like Cyworld. This South Korean phenomenon now provides more than 10 million South Korean citizens (25% of the population) with their own cyber-outlet, where self-made poems, stories, songs, photos, and videos can be shown off to other Gen C members and producers, agents, talent scouts and employers alike. Pleasant Cyworld detail: when users liven up their space with funky digital decorations, or spice things up with videos and music, (all purchased with acorns, Cyworld's currency) this brings in about EUR 116,000 a day.8 This means that instead of asking consumers to watch, to listen, to play, to passively consume, the race is on to get them to create, to produce, and to participate. “ People 8 trendwatching.com 6.7.2010 MBA Dual Degree – GSBA/SUNY 17/102
  18. 18. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss creating stuff to build their own reputations are at one end of the spectrum and one-man super brands such as Steven Spielberg at the other” , says Philip Evans at Boston Consulting.9 Generation C is much more cynical, savvy and uninfluenced by traditional advertising. They’ re content creators, not watchers, and they have a lot more control over the media they consume. As a result, they have much higher expectations of brands and how they communicate. Engaging and entertaining is everything. Mass broadcasting of generic messages are nothing. 5.1.2.Life Caching Today’ s consumers (fueled by a need for self-worth, validation, control, vanity, even immortality) love to collect and store possessions, memories, and experiences, in order to create personal histories, mementoes of their lives, or just to keep track for practical reasons. The experience economy still gaining ground -- with consumers more often favoring the intangible over the tangible -- collecting, storing and displaying experiences is ready for its big moment. Thanks to the onslaught of new technologies and tools, from blogging software to memory sticks to high definition camera phones with lots of storage space and other 'life capturing and storing devices', an almost biblical flood of 'personal content' is being collected, waiting to be stored to allow for ongoing trips down memory lane. This trend owes much to the bloggers: ever since writing and publishing one's diary has become as easy as typing in www.blogger.com, millions of people have taken to digitally indexing their thoughts, rants and God knows what else; all online, disclosing the virtual caches of their daily lives, exciting or boring. Next came moblogging, connecting camera phones to online diaries, allowing not only for more visuals to be added to blogs, but also for real-time, on the go postings of experiences and events. 5.1.3.Online Oxygen Consumers don't just want online access anywhere/anytime, they absolutely crave it! From airports to living rooms to roof gardens to classrooms to city parks, people go to great lengths to get a dose of online oxygen. Seven years after the first web sites started popping up, and email made its way from science labs to office desks and living rooms, 600 million consumers worldwide are beginning to see online access as an absolute 9 The Economist, 22.04.06 6.7.2010 MBA Dual Degree – GSBA/SUNY 18/102
  19. 19. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss necessity, and there are no signs that the pace of integrating online access into daily life is slowing down. And we haven’ t even touched upon the looming explosion of WIFI enabled PDAs and phones. “ Traditional” cell/mobile phones connecting to the Internet at high speed are a common sight already.10 Cellular carriers have started providing high-speed Internet access over many of the most populated and heavily traveled regions worldwide. These services are made possible by new networks that carriers refer to as 3G, for “ third generation” . The services deliver download speeds of about 400 to 700 kilobits a second, which is roughly 10 times as fast as dial-up and the wireless services that have been offered for years; the upload speeds are less, though, in the range of 50 to 80 kilobits a second. These new services are based on technology called HSDPA (high-speed download link packet access). All you need to use the service is an available PC-card slot or an already built-in wireless modem.11 Following are some numbers that back up this trend: • Internet has overtaken television as the most heavily used medium among teenage boys in Hong Kong, according to new research from NFO WorldGroup (2005). • AOL has found that the Internet is now the primary communication tool for US teenagers. Among 12 to 34-year-olds, 46 percent voted the Internet as the "most essential" medium to their lives (TV 29%). • And it's not just teens and families: almost 20 percent of European seniors now have Internet access, according to a new study conducted in 2005 by Forrester Research, the number of consumers older than 55 that are online has increased by 50 percent in 2.5 years, up from almost 10 million in 2000 to more than 15 million at the end of 2002. • US teenagers now spend 16.5 hours a week on surfing the Internet, chatting and writing e-mail (boys spend 16 hours, girls spend 17 hours in total).12 • Internet has become the most indispensable medium amongst the US population (see graph below). 10 trendwatching.com 11 International Herald Tribune, 18.05.06 12 BuzzBack Market Research 2005 6.7.2010 MBA Dual Degree – GSBA/SUNY 19/102
  20. 20. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss 152 160 140 120 100 100 80 60 46 40 23 20 10 9 0 Internet TV Radio Movies at Newspaper Movies at home theaters Graph 3: Amount in USD you would have to pay to an American to abandon the Internet for 14 days13 What Mr Semel, former chairman of Warner Brothers says about his daughters is exemplary: The 24 year old does a lot on the Internet, the 19 year old does everything on the Internet, and the 13 year old “ lives online.” 5.1.4.Masters of the Youniverse Human beings want to be in charge of their own destiny. Or at least have the illusion of being in charge. And just because they can now get this control in entirely new ways, aided by an online, low cost, creativity-hugging revolution that's still in its infancy, young and old (particularly the young) consumers now weave webs of unrivaled connectivity and dig instant knowledge gratification. They exercise total control over creative collections, including their own creative assets, assume different identities in cyberspace, wallow in customization, personalization, co-creation to make companies deliver whatever and whenever on their own terms and so on. Masters of the Youniverse seek for freedom, mobility and independence. In a not-too distant past, the automobile was the ultimate symbol of freedom: a way out from all constraints. No longer: for hundreds of millions of consumers worldwide, 'The Cell Phone is the New Car' (as the Economist cleverly stated earlier this year). But, not only mobile phones gratify this generation with a go-anywhere, get-everything, go-anytime mentality. They love to create their own (virtual) Youniverse and to live multiple identities in cyberspace. Millions of them now 'live' in online communities, play multiplayer games, and chat with anyone and everyone. What is this all about? It is about escaping to an alternate reality: 13 yahoo.com, OMD 2004 6.7.2010 MBA Dual Degree – GSBA/SUNY 20/102
  21. 21. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss • Gaming's great benefit for gamers is escapism. within an alternate reality. Within this alternate reality, fundamental human desires are satisfied— the drive to explore, with the promise of reward."14 • For gamers, the thrill of the game is the virtual experience, the chance to escape reality and, to a degree, control their destiny. Gaming, whether online, mobile or console-based, lets players be a part of the storyline and live in an alternate reality. This allows the player an experience that generates real emotions. In a video game, you decide where you are going... You can't do that with a TV show."15 • Minutes after registration, you can shed, or if you wish, simulate your real life (RL) identity by personalizing an avatar, custom-designing your own hang-out, haven or "crib," or importing your buddy list and IMing new pals. For many visitors, these worlds fulfill the yearning for a much-needed outlet beyond home, work and school— not unlike what Starbucks’ founder Howard Schultz touts as the coveted third space in RL."16 • In online games, it is possible for every person to have at least a few moments of feeling truly accomplished, befriended and loved."17 How are these virtual worlds/games impacting daily life? • In games, the individual is always the star. Which then translates to gamers expecting to be a star in the real world, in daily life, in the workforce, wanting to lead and to stand out. • In games, there's always a solution, gamers just have to find it. Pounding on a problem until it gets solved may then translate into more persistence and optimism when not behind the console as well. • In games, failure is part of success. Anyone who tries a new game fails multiple times before getting it right, so the Gamer Generation is more willing to take risks.18 • And, with the change of expectations of this generation, the nature of consumerism and relationships with brands and companies are bound to change as well. 19 5.1.5.Virtual Friendships As people spend more time on the virtual world of the Internet, they will have less time to establish friendship in the real world. However, the Internet is a great place to 14 Mediaedge:cia 15 Promo Magazine 16 iMediaConnection 17 Edward Castronova 18 USA Today and “ Got Game” , by John Beck and Mitchell Wade 19 trendwatching.com 6.7.2010 MBA Dual Degree – GSBA/SUNY 21/102
  22. 22. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss cultivate and cement existing friendships in the real world. With e-mail, Instant Message, Skype, and blog, people can keep in touch with their friends so easily. They don’ t have to go out for a lunch or coffee to chat or discuss important matters. Through e-mail, people can talk privately; through IM or Skype, they can talk in groups; through blog, they can express their feelings, opinions in public and have a chance to make new friends. For people who need someone to consult with, the Internet could even be a better consultant than their close friends. It is easier to find answers for professional questions from the World Wide Web than from you close friends— unless you friends happen to be experts of various walks of life. For emotional support, the consolations from people who have the same problem or experience with you always work better, and one can easily find this kind of person through the Internet. Sometimes, talking to a stranger is more relaxed than talking to someone who knows you very well. Nevertheless: “ New technology links people over greater distances, but cuts into face-to-face meeting time.” 20 Or as chichu from “ A Nontechie’ s Exploration of the Digital World exemplarily states: “ One and half years ago, I burst into tears while leaving my country to go to Washington DC. For quite a long time, my only friend here was my husband. But I didn’ t feel lonely at all, because, thanks for the Internet, I could talk to my families and friends in Taiwan whenever I wanted, which also slowed down my pace to build up new friendship around my new orbit.” Social behavior changes with every new communication technology. Mobile phones have already changed the way we plan and behave in social contacts. Everything has become more noncommittal: we fix a date, but “ we call before to see if it’ s still ok and at what time” ; we don’ t know yet if we’ ll come, but we’ ll write you an SMS later” . We don’ t want to settle things; we rather leave it open and decide last minute amongst the options. This new trend goes in the same direction: we’ d rather stay in contact with people we met on vacation over the Internet than meet the friends that are around the corner. This does not have to do anything with the profoundness of the relationships, but we build in a noncommittal factor through the interface that is in-between. 6. Evaluation of Digital Background The Digital Revolution Society is in the midst of a dramatic change process that transforms “ analog” consumers into “ digitally embraced” consumers with new mindsets, expectations, needs, living 20 Study of the University of Arizona and Duke University, 2006 6.7.2010 MBA Dual Degree – GSBA/SUNY 22/102
  23. 23. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss environments, reference groups and therefore new ways of living and behavior. This change is massive enough to be called a revolution: “ The Digital Revolution” . The “ Digital Revolution” is not a final status quo or a changeover that you’ re done with once it is completed. It is rather a change process that was induced more than 20 years ago and accelerated in the last five years. Even though it is now turning at high speed, it has not yet reached its maximum acceleration level. The pace of innovation will speed up even more in the next few years, bringing up lots of new stuff that impacts and fundamentally changes our lifestyle, society and business. “ There will be more innovations in the next 10 years than in the last 5’ 000.” Predicted Dr. James Canton, futurist, social scientist and author, at the Pioneer’ s event of GDI – the most recognized Think Tank in Switzerland – in May 2006. The visualization of the digital transformation process shows the interdependence and interaction of digital technology, digital media and digital society. Each of the three main participatory elements in the digital market acts as a turbo in the digitalization process by speeding up the development through feeding the loop with self-induced novelties as well as by adopting and further developing changes brought about by the other elements. Digital Technology Evolution Innovation Behavior Digital Society Development Enhancement Digital Media Formation Graph 4: Digital Transformation Proccess Will that revolution be for the better or for the worse? We learned have from history that revolutions gradual enough to be associated with a name (Renaissance, Reformation, Industrial Revolution, Digitalization?) often have enduring effects. The big thinkers about today’ s digital revolution tend to veer towards extremes of optimism or pessimism. Paul Saffo, a futurologist and one of the world’ s most enthusiastic technophiles, also looks at the downsides. “ Each of us can create our own personal-media walled garden that surrounds us with comforting, confirming 6.7.2010 MBA Dual Degree – GSBA/SUNY 23/102
  24. 24. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss information and utterly shuts out anything that conflicts with our world view,” he says. “ This is social dynamite” and could lead to “ the erosion of the intellectual commons holding society together… We risk huddling into tribes defined by shared prejudices.” This contrasts with the view of Lee Rainie, the director of the Pew Internet & American Life project, a research foundation. He believes that “ people will become not less but more aware of differing arguments as they become heavier Internet users,” because contradictory views are just a hyperlink away. Some people worry about what the new digital age will do not only to democracy but also to brains, thoughts, grammar and attention spans. These concerns usually arise out of encounters with teenagers in their native habitat – i.e., in front of screens with several simultaneous instant messaging “ threads” (“ cu2nite bfz4evr” – “ see you tonight and best friends forever” ). They will be playing iTunes with a video game running in the background, blogs in the foreground, and homework in the small window to the bottom right. Other people are not worried at all, Steven Johnson, the author of “ Everything Bad is Good for You” , argues that the very things about new-media culture that scare older generations actually make younger generations smarter, because digital media train kids from an early age to shift through and discard clutter, thus “ enhancing our cognitive abilities, not dumping them down.” The honest conclusion, of course, is that nobody knows whether the digital era, on balance, be good or bad. And as Joseph de Maistre, a conservative who lived through the French Revolution, famously said, “ every country has the government it deserves.” In the coming era, more than ever before, every society will get the media it deserves.21 7. First Conclusion – Digital Background Digitalization impacts our whole lifestyle. Digital technology and media are already an indispensable part of our everyday life and will play an increasingly important role in our private and professional life. Society adapts very quickly to the new technologies and uses them to their favor. Consumers of the digital age are, one one hand, self-confident, self-determining, self- focused, on the other hand, they love to share, exchange, and play and build social networks. This might also be the reason why everything stays somehow noncommittal, always with a little distance built in. 21 The Economist, 22.04.06 6.7.2010 MBA Dual Degree – GSBA/SUNY 24/102
  25. 25. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss Consumers are looking for relationships that are not too close. They prefer to keep a little distance. And the media landscape is transforming into a stock exchange. The logical conclusion therefore, is to see and treat consumers like business partners. They are on the same level. They conclude deals that both sides take their profit in and they treat each other fairly. The new playgrounds of our new business partners is the next logical discussion. 6.7.2010 MBA Dual Degree – GSBA/SUNY 25/102
  26. 26. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss 8. Situation – New Playgrounds, New Toys 9. The New Playgrounds of the Digital Society It is evident that with these big changes in society behavior of consumers changes as well. Consumers are looking for and creating new playgrounds that express the mood and lifestyle of the rapidly developing and growing digital society: 9.1.1.Exchange Platforms 9.1.1.1. Blogs 28m blogs were in the worldwide web in June 200622 and a new blog is created every second of every day, according the Technorati, a search engine for blogs, and the blogosphere is doubling in size every five months. But, the attention blogging gets and the role it plays in society still is varying from one country to the other. In 2005, for instance, only 1% of all blogs were in German, compared with 41% in Japanese, 28% in English and 14% in Chinese.23 Graph 5: Number of tracked blogs on the Internet24 A “ personal online journal” is the definition that most newspapers offer when they need to be brief. That analogy is not wrong, but nor is it entirely right (conventional journals 22 lefigaro.fr, 14.06.06 23 technorati.com, 22.04.06 24 technorati.com, 22.04.06 6.7.2010 MBA Dual Degree – GSBA/SUNY 26/102
  27. 27. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss usually come in chronological order, whereas blogs are displayed in reverse chronological order, with the most recent entry on top). More importantly, this definition misses the main point about blogs. Traditionally, journals were private or even secret affairs, and were never linked to other journals. Peeking into the diary of one’ s big sister typically led to a skirmish. Blogs, by contrast, are social by nature, whether they are open to the public as a whole or only to a small select group. Technically, a blog is part of a web page to which its owner regularly adds new entries, or “ posts” , which tend to be (but need not be) short, and often contain hyperlinks to other blogs or websites. Besides text and hypertext, posts can also contain pictures (“ photoblogs” ), videos (“ vlogs” ) or contents captured with mobile phones (“ moblogs” ). Each post is stored on its own distinct archive page, the so-called “ permalink” , where it can always be found. On average, Technorati tracks some of 50’ 000 new posts an hour. A blog is “ the inedited voice of a single person” , preferably an amateur, says Dave Winer, a software engineer who pioneered several blogging technologies, and who keeps what by his own estimate is the longest-running blog of all (dating back to 1997). Blogs, in other words, usually have a raw, unpolished authenticity and individuality. This definition would exclude quite a few of the blogs that firms, public-relations people or newspapers set up nowadays. Strictly speaking, these are no longer blogs, they only use their popular form. This explains the initial appeal of blogging as an outlet for pure self-expression. As Glenn Reynolds of Instapudit, a well- known blog on American politics, said when asked why he blogs: “ It beats yelling at the television.” But venting an opinion is usually only the start. “ At first, I saw it as being about publishing, now I see it more as a revolutionary way to communicate,” says Mena Trott, who runs a company, Six Apart, that illustrates this with its three main products. Blogs powered by its products TypePad and Movable Type have an average of 600 readers, although a few are read by more people than some newspapers are. 9.1.1.2. Life Journals But, there is another kind of blogging: the so called life journals. Their users are under 21 and female. Many of the posts are about who snogged whom last night and what happened next, why I am sad, how adults don’ t get it, and so forth. Other posts ask things like, “ Anybody want to catch King Kong at 8 pm?” and have the replies in the comment pane below within minutes. That is because many adolescents consider e-mail passé, and instead are using either instant messaging (IM) or blogging for their communications. E-mail was supposed to be “ asynchronous” , as meaning that the people taking part do not have to be online simultaneously. But today’ s adolescents have never known e-mail without spam and see no point in long trails of “ reply” and “ cc” messages pilling up in their in-boxes. As for synchronous communication, why adults would send 6.7.2010 MBA Dual Degree – GSBA/SUNY 27/102
  28. 28. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss e-mails back and forth instead of “ IM-ing” is beyond them. For these kind of life journal blogs, the average number of readers is seven, according to Six Apart. Such small audiences are common in participatory media. Indeed, they may conform to the biological norm, whereas mass-media audiences may have been an aberration. Robin Dunbar, an anthropologist at the University of Liverpool, studies primates and discovered a surprisingly stable ratio between relative size of the neocortex and the size of groups formed by particular species. For humans, the upper limit is about 150. Many clans, fan clubs and other groupings remain well below this limit, as do most blog networks. Life journal groups of readers are typical of the new-media era in another way. Bloggers (i.e., creators) are one another’ s audience, so that distinctions between the two disappear. Creators and audiences congregate ad hoc in meandering conversations, a common space of shared imagination and interests. MySpace.com, a social networking and blogging service, reflects this quality even in its name. Conversations have a life of their own. They tend to move in unexpected directions and fluctuate unpredictably in volume. It is these unplanned conversational surges that tend to bring the blogosphere to the attention of the older and wider (non-blogging) public and the mainstream media. 9.1.1.3. Citizen Journalism But, there is a very fine line between blogging and online (mass) media. There is Ohmy Media, the world’ s most successful example to date of “ citizen journalism” in action. Ohmy News is a sort of online newspaper in South Korea that gets an average of 700’ 000 visitors and 2 million page views a day, which puts it in the same league as large newspapers. But Ohmy has no reporters on its staff at all. Instead, it relies on amateurs to contribute the articles, which are then edited by Mr Oh, a former magazine journalist, and a few colleagues. Mr Oh calls Ohmy a “ playground” for South Korean hobbyists, where “ adults” set certain rules and thus give the site credibility. Ohmy also has built-in feedback and rating systems so that the best articles rise to the top. One of Ohmy’ s biggest innovations is economic in nature. The site has a “ tip-jar” system that invites readers to reward good work with small donations. All they have to do is click a little tip-jar button to have their mobile phone or credit-card account debited. One particularly good article produced the equivalent of $30’ 000 in just five days. 9.1.1.4. Vlogs 6.7.2010 MBA Dual Degree – GSBA/SUNY 28/102
  29. 29. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss Another example of a successful citizen journalism platform (actually a mixture between citizen journalism and vlog) is Current TV. In 2005, Al Gore, a former American vice- president, set up this cable-television channel that encourages its viewers to contribute their own video stories. And they do. “ Viewer-created content” – or “ VC2” , as Current TV calls it – now accounts for 30% of the channel’ s airtime, and rising (forecast is 50%). To help people get started, Current TV has extensive online tutorials on storytelling techniques, camera equipment and so forth. And to organize the content that comes in, its website allows users to vote on the quality of each video clip. It is, in many ways, pure meritocracy.25 Picture 1: Home video example on youtube.com26 The most successful vlog is youtube.com, a vlog platform with the slogan “ broadcast yourself” that allows users to view and share videos. Millions of home videos uploaded by consumers around the globe are waiting to be discovered by the Internet community. 60’ 000 new pods (consumer generated piece of video) get uploaded every day and the best ones (top five) are watched by an average of 150’ 000 viewers within their first day of “ shelf life” . The total number of video downloads adds up to 40 million a day with people having the possibility to rate, comment and send them via email. YouTube was launched in May 2006 and has gone from 0 to 20 million (unique) visitors in less than one year. This means an impressive growth rate of 200% per month leading to the doubling of the audience every second month. 25 The Economist, 22.04.06. 26 youtube.com, July 2006 6.7.2010 MBA Dual Degree – GSBA/SUNY 29/102
  30. 30. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss Graph 6: YouTube User Development in the US August 2005 to May 200627 Not only are there a huge number of consumers visiting the online video gallery, these consumers are also showing interest and contributing a lot of time to the Generation C- platform: Each visitor views an average of 43 pages and spends a total of 36 minutes on average on the site. Besides quantity of YouTube users, the profile of them is surprising as well. Mature people with high income make up the biggest part of the YouTube -community. Almost 60% are older than 35 (comfort seeker)! Only 20% are children and teens under 25 years old (identity builder) and another 20% are young adults between 25 and 35 years old (positioning designer). Almost two thirds of them earn more than USD 60’ 000 per year.28 9.1.1.5. Social Networking Platforms On social networking or online community websites people create their own private community. They are searching for acquaintances matching their profile and expectations in order to share photos, journals, and experiences and also to further develop their social network. The concept of social networking is a powerful thing and the underlying concept will influence the way advertising is done in all media, not just online. People use social network sites to form connections with other people and bridge their online life with their offline life. Companies whose business is built on creating buzz need to tap into those connections in order to effectively market to tastemakers. Social networking, by bringing together friends and strangers alike, enables instant 27 emarketer.com, July 2006 28 ComScore Media Matrix, June 2006 6.7.2010 MBA Dual Degree – GSBA/SUNY 30/102
  31. 31. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss communication and provides an easy way to share content (whether self-created or from another source) and offers a single source for viral marketing and word of mouth. One of the biggest social networking platforms is myspace.com. Last month, MySpace (slogan: a place for friends) racked up visits from 51.4 million unique visitors in the US, according to comScore Media Metrix. That represents 30% of the entire US Internet population and doesn't include traffic from international markets, where MySpace is making an ever-bigger push. MySpace was the seventh most visited site on the Internet last month, and is adding members at a rate of more than six million a month and has more than tripled its number of monthly visitors in the past year. The following numbers on members of the most popular social networking platforms underline the importance of this rapidly arising and growing consumer playground: • MySpace: 68 million members • MSN Spaces: 30+ million members • MSN Messenger: 100+ million users • Yahoo! Messenger: 63+ million users • QQ Messenger: 150+ million users in China • AOL Messenger: 43 million users in the USA • Cyworld: 17 million members in Korea (= 33% of population). In China, Cyworld acquired 1.3 million subscribers in only eight months. Instant communication and sharing seem to be the big thing in the internet: Three out of the four top ranked activities of internet heavy users are related to social, experience or knowledge exchange: More than two thirds of the 16 to 49 year olds use instant messaging, almost one third social networking and two out of ten peer-to-peer platforms. Not surprisingly are the usage rates among young adults even higher, figuring between one third and two thirds. 6.7.2010 MBA Dual Degree – GSBA/SUNY 31/102
  32. 32. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss Table 1: Online offers used by internet heavy users in the US29 Unusual is also the level of loyalty that users feel toward social networking platforms. According to Nielsen/NetRatings, MySpace has a user retention rate as high as 67%, meaning that two thirds of the visitors in April 2006 had been at the site the previous year. Table 2: Retention rate of US social networking sites30 "The popularity of social networking is not expected to wane in the near future," said Peter Daboll, president and CEO of comScore Media Metrix. "This is a phenomenon we're seeing not only in the US, but also around the world."31 The advertising volume on myspace.com amounts to USD 800m. Globally, social networking will be an estimated $350 million business in 2006, rising to $2.5 billion in 2010. 29 Universal McCann, emerketer.com, 30.08.06 30 emarketer.com, 07.07.06 31 emarketer.com, 07.07.06 6.7.2010 MBA Dual Degree – GSBA/SUNY 32/102
  33. 33. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss "Regardless of the social networking venue to use, gaining an understanding of how messages are spread virally and involving customers (and potential customers) in the marketing process are two things that will surely pay off in the future," says Ms. Williamson. 9.1.2.Virtual Reality and Gaming Platforms Virtual reality (VR) is a technology, which allows a user to interact with a computer- simulated environment. Most virtual reality environments are primarily visual experiences, displayed on a computer screen. 9.1.2.1. Massively Multiplayer Online Games (MMOG) A Massively Multiplayer Online Game (MMOG or MMO) is a computer game that is capable of supporting hundreds or thousands of players simultaneously, and is played on the Internet. Typically, this type of game is played in a giant persistent world. MMOs enable players to compete with and against each other on a grand scale, and sometimes to interact meaningfully with people around the world. The friendships made on MMOs are sometimes as real as those in the real world, and generate a large amount of online 'social capital'. However, most MMOs require players to invest large amounts of their time into the game (drawing one away from the real world), and are more suitable for the serious gamer. Still, almost anyone who enjoys games or human interaction can enjoy an MMOG. 9.1.2.2. Massively Multiplayer Online Role-Playing Games (MMORPG) The most popular sub-genre that did much to pioneer the category is massively multiplayer online role-playing game (MMORPG), an online computer role-playing game (RPG) in which a large number of players interact with one another in a virtual world. As in all RPGs, players assume the role of a fictional character (traditionally in a fantasy setting, other settings are related to sports or fighting) and take control over most of that character's actions. MMORPGs are distinguished from single-player or small multi- player RPGs by the game's persistent world, usually hosted by the game's publisher, which continues to exist and evolve while the player is away from the game. Though MMORPGs have evolved considerably, many of them share various characteristics: 6.7.2010 MBA Dual Degree – GSBA/SUNY 33/102
  34. 34. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss • Traditional Dungeons & Dragons style game plays, including quests, monsters, and loot. • A system for character development, usually involving levels and experience points. • An economy, based on trading of items (such as weapons and armor) and a regular currency. • Guilds or clans, which are organizations of players, whether or not the game actively supports them. • Game Moderators (or Game Masters, frequently abbreviated to GM), sometimes paid individuals in charge of supervising the world. As most MMORPGs are commercial, like EverQuest and World of Warcraft, players must either purchase the client software for a one-time fee or pay a monthly subscription fee to play. Most major MMORPGs require players to do both these things. By nature, "massively multiplayer" games are online, and require monthly subscriptions due to the needs of the design and development process. With this in mind, the alternate term MMGS, standing for Massively Multiplayer Gaming Service, is also appropriate for describing MMOGs in general and MMORPGs in particular. MMORPGs are immensely popular, with several commercial games reporting millions of subscribers. South Korea boasts the highest subscription numbers, with millions of users registered with the more popular games.32 And numbers in Europe and North America are rising as well. World of Warcraft (WoW), for example, has 6m subscribed online gamers worldwide with 50 – 70’ 000 people being online simultaneously around the clock. WoW is a fantasy game that is not only about fighting. The aim of the game is – as for the majority of games – to earn credits in order to further develop one’ s character. Players create characters, which serve as their avatars in the online world of Azeroth. When creating a character in WoW, the player can choose from eight different races and nine different character classes. The races are split into two diametrically opposed factions, the Alliance (the good ones) and the Horde (the bad ones). Each race and character class comes with a different set of attributes such as agility, strength, intellect and so on. In addition, one can choose professions (primary and secondary) that determine one’ s skills. In order further develop the character – as in real life – one has to learn, to practice and to earn money (through fighting or selling goods created). Or as Michael Böhni, CEO of shift-think, PHD in AI, member of the management team of the Digital Culture Association and online gamer since the age of 9 puts it: “ You have to use your creativity and come up with ideas to advance in the game.” 32 wickipedia.com, 20.06.06 6.7.2010 MBA Dual Degree – GSBA/SUNY 34/102
  35. 35. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss 9.1.2.3. Metaverse – the real virtual parallel world Second Life represents an early view of the ultimate in creative youniversal branding thought: users creating truly an alternate world. They truly live a second life with an alter ego in a metaverse, a parallel world only existing on the Internet. The special thing about SL is that the majority of the content is residential-created. SL gives it users tools to add to and edit its world and participate in its economy. This means that the entire virtual world is built and managed by the 240’ 000 residents. But this is not the only difference. While not technically a MMORPG, SL allows anyone to create virtually any kind of game within the virtual world himself. While most other MMORPGs are goal-oriented (conquer this castle, beat this villain), SL knows no mission. Another difference is that most MMORPGs play in fantasy worlds while SL mimics real life. Also, normal MMORPGs are closed systems while SL is an open one. The website mmogchart.com analyzes many role-playing games. The statistical data suggests that it’ s the open and aimless system that makes people stay loyal longer than in other MMORPGs. In traditional games a lot of players take a leave after having achieved their goal since there is no challenge anymore. SL incites creativity. Every resident perambulates the virtual world with an avatar, a character that represents the gamer in the virtual world and can be customized in a variety of ways. The result can either be faithful to the original humanoid avatar, or can result in a completely non-humanoid representation of the character. The residents can also get a 3D-grogram for the creation of virtual goods of any kind. With this construction tool the residents create everything from trousers to cars. Without the creativity of the residents the game would not work. There is also a strong economic factor in SL. You can sell your goods and buy objects from others with “ Linden Dollars,” a virtual currency that has a fixed exchange rate to the US Dollar. Virtual goods worth USD 230’ 000 are traded every day in SL. Each 6.7.2010 MBA Dual Degree – GSBA/SUNY 35/102
  36. 36. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss virtual product belongs to the inventor. It is he who owns the copyrights and not the operators of SL. You can therefore sell a product created in the virtual world in the real world as well. The Australian Nathan Keir for instance invented the game “ Tringo” in SL. After a while he made thousands of dollars by selling virtual copies of the game to other residents of SL. Now he sold the license for Tringo in real world and the game can also be bought for Nintendo’ s Gameboy. The possibilities in SL are almost unlimited: A Californian politician transferred his campaign into the virtual world. A cancer organization organized charity walks for its real life organization in the virtual world. A red light district is building up and some are already earning good money with it. SL is also composed of rich, diverse, user-driven subcultures and countercultures. The activities of these groups are usually centered on particular interests. Creating groups can give people a common ground for discussion and provide an easy way to break the ice. Some groups remain websites to bridge the gap between real-life (RL) and Second Life interests. Besides groups, subcultures found in SL revolve around events. These include many activities related to arts/culture, charity/support groups, commerce, discussion, education, games/contests, nightlife/entertainment, sports etc. In SL one finds for example casinos, theaters, shopping malls, space stations, movie theaters, etc. Second Life brings to reality what the science fiction author Neal Stephenson 1992 described in his book, “ Metaverse” . The Metaverse was a parallel world that only existed on the Internet and whose avatars interacted virtually with each other. What happens in the virtual world impacts real world and vice versa. Second Life inventor Philipp Rodedal is completely conscious of that. He means: “ we don’ t’ create a game, we create a new land. It’ s a little bit like in the movie “ The Matrix” . The latest developments of metaverse platforms: • New metaverse platforms like Active Worlds, Open Croquet Project and Multiverse, are all aiming to help independent game developers create high-quality Massively Multiplayer Online Games (MMOGs) and non-game virtual worlds for less money and in less time than ever before. • Spore will be a more mythical take on the metaverse. Currently being developed by Will Wright, the creator of SimCity and The Sims, Spore will allow participants to bring to life their own civilizations, starting from a single cell organism, and eventually dominating the universe with highly intelligent species. The launch is foreseen for early 2007. But in virtual worlds like this, you have to be prepared to have your brand morph and evolve in unexpected ways. 6.7.2010 MBA Dual Degree – GSBA/SUNY 36/102
  37. 37. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss 9.1.2.4. Rules and Mechanics in Virtual Realities General rules and mechanics of life in the virtual realities are very similar to the ones in real life – physically, legally and socially as discussed in the context of Second Life: • From a physical point of view for example, materials react the same way as in real nature. One can swim in water; one can stick something into wood, but not into metal; glass breaks, it takes time to travel around etc. Day and nighttime correspond, meaning that when the sun goes down in real word, it also goes down in the virtual world. And, events of the real world such as Christmas or Valentines Day take place in the virtual reality as well. Very sophisticated virtual worlds like the one of Oblivion (an offline-game) are not even constructed anymore, but grown according to the rules of nature with artificial intelligence (AI). Most of the games nowadays include some sort of AI, which makes the experience more real and less predictable, which means closer to the real world. • From a “ legal” point of view, meaning that one is teleported to some sort of prison for a time, the punishment depends on the gravity of the violation. In Second Life for example, the prison is represented through a cornfield where one only finds a slow tractor and a black and white television with only one channel for entertainment.33 Or, one gets excluded from the game, which actually means the death penalty, and is also seen and feared as such by the player community since they worked hard and invested a huge amount of time and often money to build up their existence in the virtual world. More about possible real life legal consequences of virtual game activity later in this chapter. • From a social point of view, meaning that there are people that stick to the rules and ones that don’ t, there are people that represent the good or the bad or something in between. In WoW, for example, you can choose to be a character and live in the world of the good or in the world of the bad. What is different is that you can have multiple characters, entirely good ones and entirely bad ones for example. More to the social behavior in virtual realities in the next paragraph. 9.1.2.5. Social Behavior in Virtual Realities MMORPs are very interesting from a social point of view: • First, people play a role different from the one they play in real life. Different is that they can choose who they want to be, how they look and what attributes and skills 33 secretlair.com/index.php?/clickableculture/enty/hidden_virtual_world_prision, 02.06.06 6.7.2010 MBA Dual Degree – GSBA/SUNY 37/102
  38. 38. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss they have. This means that they can slip into the skin of a new person and experience the reaction of others and interaction with their environment through the eyes of their second personality. MMORPs are even used for therapy for physically disabled people in order to build up their self-esteem since in the virtual world nobody sees their disability and they can live “ a normal life” through their avatar. In Second Life there is even a “ Virtual Hallucinations building” where people can experience how it feels to be schizophrenic.34 People identify with their second personality so much that they even create videos – spending hours to develop stories, direct the filming together with others in the virtual world, cutting and composing them – with their character and put them online on warcraftmovies.com for others to watch. • Second, one meets an avatar with a certain appearance and standing in the virtual reality and takes him/her for what she/he represents in the real world, not knowing who really sits behind the computer, and if that person has similar or completely different attributes and skills. • Third, the behavior in some virtual worlds, like WoW is very social. It happens regularly that one gets a present from somebody passing by for no obvious reason except for the generally social code of conduct in this world. People are also very open and get into contact with each other when they are interested in someone that passes by. In other virtual worlds, like Second Life, the behavior is rather aggressive and ego-centered. Could be that in fantasy worlds people are more relaxed since they play for fun. In more economically focused worlds a lot of people invest money and hope to get rich. Therefore they play harder and are more focused on their own benefit. The good thing is, on the Internet, you can choose the world with the social code of conduct that suits you most. In real life you can’ t; the real world is not split into “ good” and “ bad” areas; it’ s all mixed up. 9.1.2.6. Convergence of virtual reality and real life Virtual life does become very real sometimes since it has become a lucrative industry of its own that grows at a fast pace. Some examples: • Second Life is one of the only online games where you can legally buy things like land with real money. The current exchange rate (May 2006) is one dollar for 309 Linden (the virtual currency of Second Life). The economy of SL generates an average of USD 500’ 000 in economic activity each week.35 34 Second Life.blogs.com/nwn/2004/09/in_the_minds_ey.html, 02.06.06 35 wickipedia.com, 20.06.06 6.7.2010 MBA Dual Degree – GSBA/SUNY 38/102
  39. 39. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss • The American Marc Bragg is accused of having cheated in an online auction in order to buy land under market value. He was not only excluded from the online game, but was cited before a real court that will handle the virtual matter in real life.36 • Estimated industry turnover in 2006: EUR 1 billion • A Player on SL has built a disco that he sold to another one for EUR 100’ 000. The disco owner refinances himself through the entry of the virtual people in his virtual club • A Japanese woman is the big fish in the immobility market on SL: she buys the land, builds fancy houses with nice gardens and resells the land with the house • A German business man has hired five employees in China that spend the whole day gaming on different platforms and he then sells the gained trophies on eBay 9.1.2.7. Interesting and large enough target group Online gamers are no longer a small segment of youngsters and nerds as the following numbers demonstrate: • Even though the biggest peak is in the segment of 10 to 15 year olds, the mass of the gamers is between 20 and 45 years old (half men, half women!).37 Game pages have a reach of 77m people, which represents 50% of the Internet community. 20% of the online gamers have an annual salary of more than $75’ 000, which makes them an interesting advertising target group. Regarding media consumption games come third in Germany. • More than 100 million people log on every month to play interactive computer games.38 • In the USA, over 70 percent of males in the 18 to 34 demographic play video games, according to NPD Group. Young men play 12.5 hours of video games a week, while they watch television 9.8 hours, and three-quarters of households with a male member age 8 through 34 own a video game system, according to Nielsen Entertainment.39 • An average European gamer will play for 10.9 hours a week, 87% have played in the last week, and 72% play at least three times a week. To put this into perspective: gaming is, for gamers, the third-most-popular use of media entertainment in the last week, after watching TV (96%) and listening to music (94%).40 • 60% of trendsetters and 33% of mainstream 14-34 yo have a social networking page.41 36 20 Minuten, 23.05.06 37 Nielsen Interactive Entertainment, 2005 38 NYT, December 2005 39 MediaLife, January 2006 40 Mediaedge:cia, December 2005 41 TrendCentral, May 2006 6.7.2010 MBA Dual Degree – GSBA/SUNY 39/102
  40. 40. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss • Synthetic worlds are popular: currently, these new worlds have around 10 to 20 million inhabitants and the total number of players is expected to reach 40 million by 2020.42 • And, some more big numbers of popular virtual reality platforms: Habbo Hotel: 50 million members, Neopets: 70 million+ virtual pet owners, Coke Studios: 8+ million registered users, Virtual Magic Kingdom: 1+ million registered users, Goonzu: (Korea): 3 million members, Guild Wars: 2 million members, Project Entropia: 400,000 members, Ragnarok Online: 17 million members, Second Life: 290,000 members, World of Warcraft: 5.5 million members And, a study of Electronic Arts (May 2006) reveals that gaming makes people happy. The study concludes that people that regularly play online games go in for sports more often than non-gamers and spend more time with their friends. This rebuts the picture of the lonely and lazy online gamer. 9.1.3.Mobile Connectedness (Entertainment and Information) Mobile phones have long become more than just telephones; they are people’ s personal connection to the world. They have become steady companion, lifestyle tool and pastime while on the road. And the significance of mobile devices will continue to gain importance with the following developments. 9.1.3.1. Mobile Broadband Access In some areas it is already reality and in others it will be in the very near future: high speed access to the Internet via mobile phone, as already described earlier in the context of the consumer trend, “ online oxygen” . HSDPA (high speed downlink packet access) for example, which was introduced to the Swiss market in May 2006, allows down- and uploading of data five times as fast as the current technology UMTS. It will soon be possible to download entire short movies, interactive multimedia games (multiplayer online games) and audiovisual news services. Mobile communication hereby becomes more emotional and experience oriented. This will have a huge impact on the quality and penetration of mobile applications particularly multimedia applications like mobile games, mobile TV, mobile content and mobile services, which are described in the following chapters. Latest studies show that already 50% of the 17 to 29 year olds have a mobile phone capable of handling multimedia applications. Those who have a multimedia mobile 42 Swansey University 6.7.2010 MBA Dual Degree – GSBA/SUNY 40/102
  41. 41. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss phone know how to use it and half of them access Internet applications at least once a month.43 The mobile industry predicts that mobile will one day go alongside with TV, cinema, radio, press, online and outdoor in brands media schedule, but they also add that “ it is still in its early days.44 9.1.3.2. Mobile Games Mobile Games are already highly penetrated. In Germany, 85% of all age groups have already played a mobile game and one third does it on a regular basis. Every third person has already downloaded a game on his mobile phone. Consumers are also interested in free advergames and 20% have already downloaded one. But, it’ s more a men’ s thing. They represent around 70% of the mobile gamers. Surprisingly it’ s not the youngsters segment that is the most engaged in mobile games, but young adults between 20 and 39 years old. Mobile Games are emerging as serious contenders to traditional game applications in the market place, with many predicting that their revenues will mount a serious challenge to console, PC, Mac, handheld and online gaming in the near future. Current estimates of the size of the global mobile games market in 2005 range from $3.5b to $5b, with revenues exceeding $20b considered a real possibility by some of the more bullish forecasters within a matter of five years. The installed base for mobile handsets currently runs to an estimated 1.7 billion (1,700 million), with some forecasters predicting an increase to more than 2.7 billion by 2010.45 Admittedly, only an estimated 900 million mobiles currently have WAP/GPRS (2.5G) / 3G capabilities, making the download of games from the web a possibility. However, with replacement cycles for mobile handsets continuing to shorten (15-18 months on average), the accelerating uptake of 3G and heavily subsidized upgrades by mobile network providers, it will not be long before the majority of handsets will have wide ranging mobile games capabilities. 43 ifmm.net, Minick Credentials, May 2006 44 Brand Republic, Digital Bulletin, 12.05.06 45 Brand Republic, Digital Bulletin, 12.05.06 6.7.2010 MBA Dual Degree – GSBA/SUNY 41/102
  42. 42. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss 1400 1232 1200 1064 1000 885 800 711 527 600 400 200 0 2005 2006 2007 2008 2009 Graph 7: Forecast of mobile game sales volume in Europe in Mio. Euros (Jupiter Research)46 Because of the earlier described increase of data transfer speed and the popularity of the still rather simple mobile gaming applications, the successful model of multiplayer gaming platforms is about to be translated into the mobile world analogue the example of World of Warcraft. Mobile network providers, mobile phone producers and game development companies are currently developing such business models. « The market for mobile multiplayer games is not yet developed. But we see a big growth potential here », says Heidi Anders, responsible for new business segments at Siemens.47 But stand alone mobile game applications, aren’ t the only mobile devices being developed. The link of traditional gaming platforms to mobile devices is also being developed. Microsoft, for example, introduces « Live Anywhere » in May 2006. Live Anywhere is a communication platform that links the Xbox (Microsoft’ s game console) to PCs and mobile devices. Gamers can use their digital identity- the « gamer tag » on their console, PC and mobile phone in order to play, communicate and use gaming functions through the Xbox-Live-interface from the device of their choice whenever they please.48 9.1.3.3. Mobile Content and Services Mobile information and entertainment consumption is another mobile application with huge development and success potential. Mobile content usage is not yet a mass market phenomena, but it’ s already a nice segment: 60% have accessed mobile content within the last three months and 10% do it on a monthly basis. And the number is growing: In 46 Financial Times Germany, 26.04.06 47 Financial Times Germany, 26.04.06 48 e3expo.com, 10.05.06 6.7.2010 MBA Dual Degree – GSBA/SUNY 42/102
  43. 43. The Digital Impact on Society and Media Marion Marxer Opportunities for Marketing and Communiation Prof. Chris Buss Switzerland 88% of the population has a mobile phone, and over 85% have pre-installed mobile Internet access. 500’ 000 customers buy mobile content, 200’ 000 of them on a monthly basis and 250’ 000 participate in mobile promotions every month.49 People are most interested in content and services centering around music, photos and video clips as research, conducted in the UK revealed. Respondents showed increased interest in content applications such as music (34%), movies (22%) and photos (52%). The research found that 18-34s are most interested in content services: 67% are interested in sharing pictures with family and friends, 58% in downloading songs, 53% in video calling, and 39% in watching movie trailers or sporting highlight video clips.50 Popular as well are social networking applications. In April 2006 10,6% of the respondents had used such a service within the last month. 13 to 17 year old boys have the highest affinity to the socializing offers.51 LimeLife has revealed the findings of research examining the mobile motivations, usage patterns and content interests of women. LimeLife predicts that the number of women aged 15-45 who download mobile content will grow to 20 million by 2007. • The mobile phone initially serves as a "private line" for girls 16-17 then evolves to an "always with me connected buddy" during college years, gradually becoming more functional and ultimately beginning to serve as a "command central" for working moms and women pursuing careers. • Games are second only to ring tones for desired mobile downloads among women. • 67% of those surveyed showed strong interest in wallpapers made from "Photos I Take." Further, the use of ring tones as "caller ID" identifiers is also representative of the importance of customization and personalization in mobile content for younger women. 69% of women surveyed, aged 18-22, have already downloaded one or more ring tones. As experience quality and emotional sensation of mobile multimedia services improve and their application areas expand, mobile service usage will continue to grow and consumer behavior will develop towards multimedia consumption of information and entertainment. 9.1.3.4. Mobile TV Mobile TV, video or movie is one adaption form of content to mobile devices. The highly emotional audio-visual expression of the format has a high entertainment and fun factor 49 ifmm.ch, Minick Credentials, May 2006 50 Enpocket Mobile Media Monitor UK 51 International stucy of M:Metrics 6.7.2010 MBA Dual Degree – GSBA/SUNY 43/102

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