The document discusses the current state and future potential of virtual worlds, particularly focusing on Second Life and its use by real-world companies for marketing, recruitment, and collaboration. It outlines various scenarios for 2012 regarding the integration and usage of virtual worlds, envisioning either fragmented or integrated environments depending on technological and societal developments. Companies are encouraged to treat virtual worlds as disruptive technologies and explore new strategies while being cautious of long-term ROI challenges.

1. Fad or Future - What Do Virtual Worlds Have to Offer? Dr. Robin Teigland Stockholm School of Economics [email_address] www.knowledgenetworking.org IFL Conference on Second Life & Virtual Worlds June 14, 2007

2. Today’s discussion What’s happening today in virtual worlds? Second Life Others The future - Four scenarios for 2012 What should you do?

3. What are real world companies doing in Second Life? Branded Presence Adidas, BMW, Dell, IBM, Sun, Cisco, Reebok, Nissan, Pontiac, Starwood, Leo Burnett, Vodafone Marketing & Communications BMW communicates its clean energy concept Coca-Cola holds competitions Product and Concept Development Starwood, Toyota, PA Consulting for its clients Sales American Apparel, Coldwell Banker Recruiting ABN Amro interviews candidates’ avatars PA Consulting uses it for anonymous contact Collaboration/training UC Davis Medical Center has emergency simulations

4. What about Return on Investment in SL? We have a long-term approach to costs and RoI. We have qualitative goals, to expand and develop our presence. - BMW We have no targets for RoI. -ABN Amro There needs to be some RoI eventually, but this is a long-term project and we are just looking at the potential. - Vodafone Financial Times , May 2007

5. Is anybody out there? Visitors 9:30 pm, Friday, June 8, 2007 (GMT+1) ABN Amro -0 Adidas – 1 Cisco - 10 BMW - 0 Dell Island – 1 IBM – 32 Nissan – 10 Reebok - 2 Sun Microsystems - 0 Vodafone - 0 Insead – 0 BMW In-world Wells Fargo and Starwood Hotels are pulling out

6. So, where do people hang out? Most popular places (total time spent there) Phat Cat’s Jazzy Blue Lounge Money Island Largest Dance Island T-Online Beach Ilha Brasil Skye Club Oceania Play for Pay Puerto Banus B-Dazzled Designs Sexy clothing SL, June 10, 2007

7. Is there critical mass on Second Life? * Municipality (kommun) wikipedia.org 43 988 42,060 Motala* 162 263 42,500 Online, Fri, Jun 8 11:30 pm (GMT+1) Second Life 177 41,284 7,252,330 Switzerland Density (people per km 2) Land area (km 2) Population Location

8. Is there critical mass on Second Life? * Municipality (kommun) wikipedia.org 1,391 138 195,250 Richmond, VA 1,434 0.06 95 Online, Fri, Jun 8 11:30 pm (GMT+1) Phat Cat’s #1 popular site 10,316 786 8,143,000 New York 24,759 87 2,153,600 Paris 1,083 450 489,760 Gothenburg* 4,164 188 782,890 Stockholm* Density (people per km 2) Land area (km 2) Population Location

9. And is anyone making money? What are these individuals selling? Real estate & land rentals Simulation environments Clothing, accessories, skins Art, design, furniture USD >5K USD 2-5K SL, June 10, 2007 Total of 427

10. What is happening in other virtual worlds?

11. Are businesses anywhere else? Active Worlds 2 mln users Branding Wells Fargo left SL for AW Habbo Hotel 7 mln users (mostly teens) Digital goods and marketing Target, Wal-Mart, Kellogg, Nintendo, Walt Disney

12. MyCoke

13. Secure virtual workplaces Completely private virtual business worlds offering tools to conduct business and collaborate Fortune 500: Johnson & Johnson, Novartis, Motorola, Intel

14. MMOGs still dominate World of Warcraft 374,000 hours played each day or 50,000 man days each day 8.5 mln players worldwide Xfire.com, MMPORG.com Korean Free to Play (F2P) 4 of top 10 MMOGs in Western world Silkroad Online #1 in West MapleStory with >50 mln players

15. Where are we today with virtual worlds? Business opportunities limited? Many firms have virtual world presence, but difficulty turning it into an effective, profitable sales channel Primarily for marketing or learning experience No RoI success stories for real world firms Required resources outweigh short-term benefits Limited number of individual success stories Anshe Chung and 138 other individuals making >$5000 per month “ Trapped” in real world activities? Virtual worlds overhyped? Growth lower than appears, small compared to MMOGs Reality vs. fantasy? Disconnect between real world companies/products and SL fantasy avatars

16. So, what about the future of virtual worlds?

17. Gartner Group, April 2007 By the end of 2011, 80% of active Internet users (and Fortune 500 enterprises) will have a “second life”, but not necessarily in Second Life.

18. How can we look into the future? Forecast How we think the future will be Vision How we want the future to be Scenario What the future can be

19. Two underlying questions In 2012… How advanced will the usage of virtual worlds be? Widespread use across all dimensions, high user demands Forces: Economic development, digital divide, environmental pressures How integrated will virtual worlds be? Cooperation between different worlds, VW & RW Forces: Security, technology, legislative, political

20. Four scenarios for 2012 Fragmentated worlds Integrated worlds Advanced usage Less- advanced usage Digital Divide Ease of mobility Self-governance Dominance by gaming generation Traditional vs virtual business One Converged Universe High penetration Easy avatar & asset mobility High scalability & security Business transformation Wild Wests Individual “MMOGs” dominant Virtual vandalism Security problems Retreat Virtual Silos Many competing, limited worlds Difficult avatar & asset mobility Limited scalability High security New business models

21. Entropia Universe = MMOG + MMORP? Today 600,000 users $360 mln in-gaming turnover 2006 Real cash economy Tomorrow Won bid over SL/others to be China’s “first homegrown virtual world where millions will work, communicate, and be in love” 7 mln local + 150 mln overseas Chinese Five virtual banking licenses auctioned for $404,000 May 2007 Financial Times , June 2007

22. Cyworld - A world where “MySpace meets Second Life” 20 mln users $120 mln 2006 in Korea 96% of 20-30 yr olds in Korea regular users More video traffic than YouTube Computer Sweden , June 2007

23. What should you do? Approach as a disruptive technology Enables a new strategy or new business model Enables a larger population of less skilled, less wealthy people to do things in a more convenient, lower cost setting E.g., Telephone, digital photography, PCs, Linux Think wikinomics and crowdsourcing Mass collaboration by free individual agents to improve a given operation or solve a problem E.g., Boeing, Chinese motorcycle industry, P&G Christenson 1997, Tapscott & Williams 2006

24. How? Experiment, “play”, and learn Stay on the look-out Consider creating independent operations Don’t forget other emerging spaces

25. How? Experiment and “play” Find and engage the enthusiasts in your company Support, but make aware of “risks” Don’t ask your leading customers what they think Stay on the look-out Follow developments See how they affect the path to a future scenario Consider creating independent organization for more serious efforts Anonymous bank buying virtual banking contract on Entropia Universe But don’t forget other emerging media Coca-Cola uses combination of all new media channels, e.g., YouTube, MySpace, SL, MyCoke

26. “ I think there’s a world market for maybe five computers.” Thomas Watson, Chairman of IBM, 1943 “ There is no reason anyone would want a computer in their home.” Ken Olson, President, Chairman and Founder of Digital Equipment Corporation, 1977 “ Heavier-than-air flying machines are impossible.” Lord Kelvin, President, Royal Society, 1895

27. All the things right, but not the right thing!

28. Increasing pace of change! Spread of Technology (Penetration rates years after introduction, Year I =Year Invented)

29. Further information Australian Communications Authority (www.acma.gov.au) Vision 20/20: Future Scenarios for the Communications Industry: Implications for Regulation Christenson, C., The Innovator’s Dilemma , 1997 Gartner Group Press Release http://www.gartner.com/it/page.jsp?id=503861 Gullers Group The Future of eGovernment: Scenarios 2016 (www.vinnova.se) Moore, G., Crossing the Chasm , 1991 Tapscott, D. & Williams, A. Wikinomics, 2006, see youtube for video Xfire.com More information: http://ssesecondlife.blogspot.com/ www.knowledgenetworking.org