The document discusses virtual worlds and business models. It provides an overview of key characteristics of virtual worlds, including shared space, graphical user interfaces, and persistence. A conceptual framework is presented covering the supply and demand sides. Emerging applications for virtual worlds in areas like collaboration, learning, and prototyping are described. Issues around adoption and the future of virtual worlds are also examined.

1. © 2009 by Strategic Business Insights. All rights reserved. Virtual Worlds and Business Models Eilif Trondsen Director, Strategic Business Insights [email_address] http://www.strategicbusinessinsights.com

2. Agenda Definition VWs and Business Models: Conceptual Framework Demand & Use of VWs Supply & Technology Adoption Issues Future

3. Key Characteristics of Virtual Worlds* Shared Space : The worlds allow many users to participate at once. Graphical User Interface : The worlds depict space visually, in styles ranging from 2-D “cartoon” imagery to more realistic 3-D environments. Immediacy : Interaction takes place in real time. Interactivity : Many worlds allow users to alter, develop, build, or submit customized content—but differences exist among virtual worlds. Persistence : The worlds continue to exist regardless of whether individual users are logged in and active. Socialization or community : The worlds allow and encourage the formation of in-world social groups like guilds, clubs, cliques, housemates, and neighborhoods. * 3D Immersive Environments

4. Virtual Worlds and Business Models Conceptual Framework Supply Side/Enabling Technology Demand Side/Adoption; Consumers/Enterprise Create VALUE for users through applications Play games in VWs--for free or using "freemium model". With free basic play, but pay for enhanced play or premium service, and pay for virtual products and services Ad model does not work as well in VWs today, as most don't have sufficient number of users (and many of most popular VWs are for kids) VWs can lower operating costs, including costs of collaboration as well as enhancing collaborative work Open source VWs--enable building customized worlds for particular purposes that can generate revenues Co-creating value with customers or partners Affordances of VWs enable "richer/deeper" forms of collaboration

5. Emerging Applications of Virtual Worlds for "Serious Work" Collaborative work All industries with distributed project work (IBM, Intel, Unilever) Meetings & Events All industries (Cisco, Oracle, IBM and others use VWs and Virtual Meeting Platforms (Unisfair, InXpo, CGS, Digital Reactor, On24, and others) Learning & Training Universities and industry (Silicon Image, BP, AstraZeneca, DoD, BAE) Prototyping and Experimentation Architecture and Construction (Starwood Hotels, Phillips, Crescendo Design) 3-D Modeling and Data Visualization Data centers (computer industry and other high-tech industries) and control centers (Chevron, Statoil, NOAA, FXPAL) Trust Building and Socialization All industries using virtual, distributed teams (IBM, Sun, Cisco, J&J) Focus Groups with Innovators Music and entertainment (Sony BMG Music Entertainment, Viacom, Electrolux) Branding and Promotion Consumer product companies (P&G, Pepsi, Dell, CIGNA) Talent Discovery and Recruiting Consulting industry and hiring agencies (TMP Worldwide Advertising & Communications, Manpower, Kelly Services) Application s Industries and Companies (early adopters)

6. Many Types of Virtual Worlds Source: http://www.secondtense.com/2009/01/virtual-worlds-game-worlds-and-user.html

7. Programmer focus (creating a world is complex) Virtual Worlds Platforms Suitable for consumer worlds Suitable for enterprise worlds End-user focus (creating a world is simple) Multiverse OpenSim Teleplace Protosphere Second Life Grid Active Worlds Cobalt/ Croquet Wonderland Key: Blink 3D WebFlock * Vivaty * propreitary Web Alive * open source * browser-based Sirikata Moondus PowerU Nexus Vastpark * Unity3D* Blue Mars CryEngine 2, Unreal Engine 2.5,nd many more enabling new platforms

8. VW Platforms as Holistic Environments for Learning and Collaborative Work Formal Learning Instructor-Led Learning Self-Directed Learning Retirees and alumni serve as coaches and mentors to younger employees, enabling the transfer of experience and tacit knowledge. Podcasts Video Blogs Wikis Others Coaching Facilities Social Networking and Informal Learning Virtual Prototyping and Demonstrations Storytelling Role-Playing Simulations Entertainment Area Profile Web Link to

9. Potential for Engagement & Learning in VWs Issue: When will we have "instructional designers" who can take advantage of VW affordances and design and build learning activities in 3D immersive environments, especially learning experiences that cannot be achieved as easily or cost-effectively, if at all, in the physical world ENGAGEMENT Immersion Interactivity Drama Storytelling Competition Social Context Visualization LEARNING Multiple Perspectives Situated Learning Transfer UGC UGC: User Generated Content Yes, "proof" of effectiveness of learning/training in VWs is lacking/ insufficient

10. Work and VWs in an Evolutionary Context of the VW Industry WORK ENTERTAINMENT LEARNING/ TRAINING 2008 Phase 1: SL focus Sales and Marketing Branding Phase 2: Entertainment Pre-teens and teens Connecting toys and traditional media to VWs Phase 3: Greater focus on work Enterprises recognizing value of VWs for work Better integration of Web and VWs Phase 1 Phase 2 Phase 3 SL: Second Life Media and user interest and attention Interest in non-SL platforms Today’s Reality: Entertainment Represents “Low Hanging Fruit” Post-2000 Evolution: Expected Enterprise Use Actual Enterprise Use 2010

11. Visionaries versus Pragmatists Visionaries vs. Adventurous Early buy-in Think big Go it alone Spend big First strike capability Think Pragmatists are pedestrian Pragmatists Prudent Wait-and-see-attitude Manage expectations Maintain relationships Spend to budget Staying power Think Visionaries are dangerous Source: Geoffrey Moore, Crossing The Chasm, Strategic Business Insights Pragmatists don’t trust visionaries as references . Chasm

12. The Continuum of VWs--Towards Browser-Based VWs Browser-Based (no downloads) Browser with Plug-In Light Client Heavy Client Relatively lower degree of Immersiveness (today) High degree of Immersiveness Flash Other plug-ins Holy Grail: 3D Immersion Easy access Ease of navigation and use Leverage Web tools and technologies Benefit from browser advancement Enable easy multi-device access

13. Innovation and VWs Virtual Worlds Innovation Enhancing Human Interaction, Communication and Collaboration A tool for Open Innovation Platform for Innovation and Creativity Collaborative tool and for learning and knowledge sharing Technology Applications Business models Innovation Innovation Learning & Training Collaborative Work

14. Framework for Future Scenarios Will Linden Lab have future role to play here and live up to its promise? Will browser-based VWs improve ease-of- use and remove learning curve obstacle? Will apps for VWs help generate more interest In VWs by enterprise? Will consumers shift from browsers to apps on mobile devices and stimulate consumer interest? Access Technology User Category Consumers Enterprises Web Browser Client/App Reasons for using scenario methodology: Provides structure for analysis Avoids excessive number of possible future states Uses key scenario drivers Narrative 1 Narrative 2 Narrative 3 Narrative 4

15. Adoption of 3D Immersive Environments Gartner forecast in April 2007 (at Gartner Symposium/ITxpo in San Francisco): " 80% of world's active Internet users (and Fortune 500 enterprises) will be in a virtual world by end of 2011 ."* * In late 2009 there were 1.7 billion Internet users (including 738 million in Asia) How Close Are We to Gartner's Forecast? 3D Movies 3D Sports on TV … But Immersive Environments and 3D in Entertainment have exploded in recent years… … and will Virtual Worlds and video games soon also come with 3D and navigating via gesture recognition?

16. Q&A