Below are my introduction slides from ad:tech 2009 earlier this week. It is such a short time (each panel is given 50 minutes) to cover such a vast area and myself, Jeff (habbo.com.au) and Mitch (SmallWorlds.com) were all struggling to impart tons of great info/examples and have enough time to get interactive. I hogged the first 15 minutes by giving a broad overview and some examples I have been involved in that fitted the brief of the talk.

Below are my slides, a little descriptive text below that and at the bottom of this post some deeper insight into SmallWorlds (given most of my readers probably know Habbo already? – If not, Why Not!? ). I included one slide from Jeff Brookes set looking at Hitwise’s stats on browser worlds and other sites in terms of session length which will no doubt raise a few eyebrows!

Virtual Worlds & Business: What’s The ROI?

Virtual worlds are maturing at a rapid rate and brands are realising there are valuable business opportunities within them. Whether the objective is engagement, research or brand presence, virtual worlds are proving to be a legitimate marketing channel. In this session our panel will look to provide insights into the business benefits of working within a virtual world.

Presenters

• Gary Hayes, Director, Laboratory for Advanced Media Production, AFTRS & CEO MUVEDesign (Australia’s leading SL developer!)
• Jeff Brookes, Regional Director – Asia Pacific, Sulake Corporation (habbo.com.au)
• Mitch Olson, Co-Founder, SmallWorlds.com

There were several important messages in my introduction. Firstly making sure we all understand the different platforms social virtual worlds are operating on so I briefly described

1. Layered or Parallel worlds – cute 2D type avatars that move over the top of 2D web
2. Browser Worlds – walled garden that run inside web browsers, often as isometric views as flash or shockwave
3. Client Worlds – anything from 20MB to 3GB downloads of data and the world is obviously much richer than browser worlds but do need higher spec computers
4. Console Worlds – a relatively new kid on the block, social spaces that exist on games consoles. All the rendering grunt is there and the avatars are often linked to the PS3, Wii or XBox360 real life account. PS3 Home is the easiest way to match to worlds like Habbo or There.com
5. Note there are hybrids of the above and I would put ExitReality down as a hybrid of 1 and 3 as it turns a web page into a client style world

Here are the images of the above part of the presentation

I decided that a good ‘spine’ to hang the introduction on was the sort of negative questions floating around from those who don’t really understand what’s happening with web 3.0, the live virtual world space. This includes the paranoid printed press, a few out-of-touch businesses, and digital media companies/consultants more interested in iPhone/mobile games or Facebook widgets which is something they can truly explain (read: make money off).

Press hyperbole or myths?

• Virtual Worlds are on the decline?
• There’s no one in them?
• & people don’t spend long there?
• They are for kids or social ‘games’ not business?
• There are no marketing models?

But I then addressed each question in turn showing real world stats and examples. Obviously in recession investment in new tech/services are going to be hit and recent reports do suggest a consolidation of investment into kids worlds, hinting at a lowering of VC in the ones I highlighted in my presentation, but this whole area is still something education & business are advised to R&D and understand fully – as a minimum. As we know it will be new ways of doing business, more immersive and efficient ways to collaborate and alternate forms of entertainment that will be partly what will bring us out of recession.

I finished the talk with a quick overview of the main models that virtual worlds (and most online games) can be monetized. Items 1, 3 and 4 were picked up in a talk on the 2nd day of ad:tech looking at how Nike engaged with console ingame campaign experts Massive across a few platforms.

1. Static Advertising
2. Promotions & Sponsored events
3. Virtual Goods & Product Placement
4. Dynamic InWorld Advertising
5. Branded Spaces
6. AdverWorlds & AdverGames

After my talk some great examples from Jeff Brookes from Habbo followed by Mitch from Smallworlds. I am always fascinated by the methods Habbo engages with its loyal and large community and was equally fascinated by Small worlds thinking too and how they are ‘integrating’ themselves with the existing 2D social networked web. This video by the infamous Robert Scoble features Mitch Olsen and Ted of SmallWorlds

They talk about the main traditional world features but then go onto the interesting areas of embeddable worlds (the Google Lively Killer app – not exploited), API integration with almost anything (twitter feeds, YouTube vids, FB updates on walls anyone) and the most interesting ‘missions’. You are encouraged to explore, meet folk, shop and basically get involved – Mitch says this is like the LinkedIn profile thinking, until your profile is 100% filled in you feel like you are missing out. I likened it much more like World of Warcraft, set players tasks, set them group tasks, give them rewards. This to me could be SmallWorlds real killer applet. At the moment they have around 400 000 users and that looks set to take off in the next months.

Tony Fendall blogged about a particularly cute feature that allows (his words) -

One important thing which was missed is that they didn’t have time to talk about all the cool micropayment features (which Ted alludes near the end) such as Gambit, OfferPal and Zong. Gambit and OfferPal are both services which allow users to earn SmallWorlds currency by completing tasks. These tasks include things such as answering surveys and give amounts of currency proportional to the amount of effort put in. This is a great way for players (who may not have a credit card) to still be able to earn a premium SmallWorlds experience. Zong is a simple cell phone payment service, where by users can pay for a premium SmallWorlds experience using their mobile phone. For an excellent look at how we have integrated Zong into SmallWorlds, check out this YouTube video created by the developers at Zong:

Note a cross post from Gary’s other main blog personalizemedia

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I received an email from Karen iReport (Second Life name obviously) that CNN have now moved on from a small ‘hub’ presence in Second Life and onto their own island – which now includes a ‘classic’ automotive theme. It is great to see a positive growth move from CNN given the exit of Reuters not so long ago – I quote from her press release / email to me.

As a matter of fact, CNN is no longer a hub within SL, we have moved to our own island!

The new space features ‘in-world’ geographic elements and meeting spaces, including a virtual drive-in theater, complete with a snack bar and vintage cars where visitors can view recent in-world iReports, pick up iReport gear to dress their avatars and check out the iReport.com/secondlife page.

As you can see, as others are abandoning their presence in the SL community, CNN’s mission for iReport within Second Life remains as it did upon launch in 2008: to provide Second Life residents a way to identify and share news and events happening within their virtual community through the submission of ‘SL iReports’.

To celebrate our expansion, please join the in-world iReport staff and SL residents on Tuesday, Feb. 3rd, from 12 noon ET noon to 6 p.m. ET (9am SLT – 3pm SLT). We’re going to have an open house including some very special guests, and island tour (click here to view screen shots of the enhancements) and even some dancing!

Hope you can make it…

and more from the official release on the CNN site

Building upon the popularity of iReport in the virtual world of Second Life, CNN has relocated to its own island. This island features new ‘in-world’ geographic elements and meeting spaces, including a virtual drive-in theater complete with a snack bar and vintage cars. CNN’s mission for iReport within Second Life remains as it did upon launch in 2008: to provide Second Life residents a way to identify and share news and events happening within their virtual community through the submission of “SL iReports.”

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I was looking for one place on the web that had a list of the mix of male and females across the ‘game/virtual world’ space. I have actually found it useful to quote many of these stats to clients who still believe console games, online ‘quest’ based games and virtual worlds are still the domain of twenty something, slightly overweight, couch potato, anti-social males. Nothing could be further from the truth. There are lots of Australian centric insights (eg: SMH here “Never too old to play“) But these are more global or US based. Read on and in no particular order!

“Games Women Play” Sep 08  from the Edge

• Online casual games bring in 150 million women every month– roughly half the population of the United States.
• Nearly two-thirds of women casual players online are over 35.
• Women play casual games 5 to 10 hours per day – significantly greater than the 7.4 hours per week by a survey by the Casual Gaming Association.
• Competition, rather than simple relaxation or escapism, motivates them to play.
• Female players who are 18 and older represent one third of the game-playing population while male players who are 17 or younger represent only 18 percent of casual gamers
• Playing casual games is often the first thing women do after waking. They check their ranking and play for on average of 2 ½ hours every morning.
• Women engage in trivia games with the family members but play action games alone.
• Most women players are married or in a relationship and have children.

Online Gaming Popularity Grows Among Youngest and Oldest Female Segments in the U.S. ComScore report.

• Significant user growth among teenage girls between the ages of 12 and 17 and women between the ages of 55 and 64.
• Growth in the 12 – 17 age range was 55% compared to the total female online gaming audience rate of 27%
• The over-55 age range grew 43%.

BBC 23 December 2008 “Battle of the Sexes”

• It found that the most hard-core players are female, that gamers are healthier than average, and that game playing is an increasingly social activity.
• Despite gaming being seen as a male activity, female players now make up about 40% of the gaming population.
• The study (detailed link here from Wiley interscience) looked at gender differences in more than 2,400 gamers playing EverQuest II.

Industry Facts from Entertainment Software Association ESA

• The average game player is 35 years old and has been playing games for 13 years.
• The average age of the most frequent game purchaser is 40 years old.
• Forty percent of all game players are women. In fact, women over the age of 18 represent a significantly greater portion of the game-playing population (33 percent) than boys age 17 or younger (18 percent).
• In 2008, 26 percent of Americans over the age of 50 played video games, an increase from nine percent in 1999
• Sixty-three percent of parents believe games are a positive part of their children’s lives.

Women Embrace Casual Games from RedHerring “Casual Gamers Anything But”

• Spend as much as 20 hours each week playing their favorite games.
• More than 70 percent said they play at night, and 58 percent have no children living at home.
• Results from the Harris research reveal that 67 percent of the women over 40 who play games do so at least four times per week. Nearly half play every day.
• Some 60 percent say they would rather play a casual game than talk on the phone or do projects around the home, while nearly 50 percent said they would rather play a casual game than go to a movie.

PDF report by Pew Internet. “Adults and Video Games”

• More than half – 53% – of all American adults play video games of some kind
• Independent of all other factors, younger adults are still more likely to play games.
• Among older adults 65+ who play video games, nearly a third play games everyday, a significantly larger percentage than all younger players, of whom about 20% play everyday.
• Gaming consoles are the most popular for young adults: 75% of 18-29 year old gamers play on consoles, compared with 68% who use computers
• Computers are the most popular among the total adult gaming population, with 73% of adult gamers using computers to play games, compared with 53% console users, 35% who using cell phones, and 25% using portable gaming devices.

BBC 17 Sep 2008 “Online gamers are not unhealthy“

• The “couch potato” image of computer gamers is unfounded, with many in better than average shape, claim US researchers.
• More than 7,000 players of the online game EverQuest II were quizzed about their health by scientists.
• They found gamers’ body mass index (BMI) tended to be lower than the US average – with many taking “proper” exercise more than once a week.

Driving Force in Video Gaming: Women and Baby Boomers. Reported on PC World Aug 2008.  IBISWorld claims that:

• 38 percent of US gamers are women
• The average player is 35 years old
• 24 percent are over 50.
• The percentage of female video gamers climbed from 33 to 38 percent in five years bolstered in part by Nintendo’s Wii, but also “interactive group games” such as Singstar, Rock Band, and Lips, as well as The Sims, The Movies, Nintendogs and NeoPets.

Demographics of the top 3 games on Facebook – from Bret on Social Games

• Scramble which is the only game among the top three developers dominated by women(63%).
• The age of Zynga players is spread more evenly among the three age segments, but with ~50% in the 22-25 age bracket.
• Blake Commagere’s Monsters games also have ~50% of their users in the 22-25 age bracket.
• They also have a fairly even male-female ratio.

Second Life demographics and usage – reported by Lost in Bananaverse

• 83.79% of the population is 25 years and older, and the older users spend far more time in Second Life than younger users
• Females spent nearly twice as long online in Second Life as males. Females make up 45.5% of the Second Life population.
• Total user hours for April totaled 29,069,684 hours
• Those 45 and older continuing to be the heaviest users on average.
  • 45 and older: 70.17 hours per user per month
  • 35-44: 66.06 hours per user per user per month
  • 25-34: 55.55 hours per user per user per month
  • 18-24: 37.84 hours per user per user per month
  • Teen grid: 24.67 hours per user per user per month

The demographics of World of Warcraft (useful but old 2005 data from Nick Yee)

• The average age of the WoW player is 28.3
• 84% of players are male
• 16% are female. Female players are significantly older (32.5) than male players (28.0)
• On average, they spend 22.7 hours per week playing WoW.
• There are no gender differences in hours played per week.

ESSENTIAL FACTS ABOUT THE COMPUTER AND VIDEO GAME INDUSTRY 2008 SALES, DEMOGRAPHIC AND USAGE DATA (full report from ESA at Scribd)

• 13 is the average number of years adult gamers have been playing computer or video games. Among most frequent gamers, adult males average 15 years for game playing, females for 12 years.
• 59% of gamers play games with other gamers in person. This is a rise from 56% in 2007 and from 51% in 2006.
• The average age of the most frequent game purchaser is: 40
• 56% of online game players are male 44% are female.
• What is the One Type of Online Game Played Most Often?
  • 12% Other
  • 47% Puzzle/Board/Game Show/Trivia/Card
  • 16% Action/Sports/ Strategy/Role-Play
  • 14% Downloadable Games Such as Bejeweled and Diner Dash
  • 11% Persistent Multi-Player Universe

Women are hardcore gamers from bNet in 2006

• Electronic Arts’ casual game site Pogo.com draws 11 million unique users per month. Fifty-five percent of those are women.
• On the subscription side, 75 percent of the more than 1 million subscribers are women over the age of 35.

Study: Women Gamers Outnumber Men in 25-34 Age Group – from GameDaily 2006

• Consumer Electronics Association study found that 65 percent of women in the 25-34 age bracket play video games, while only 35 percent of men in that group said that they play video games. The key factor involved with these findings is the increasing popularity of casual games, especially among women. (These casual titles are typically found on web portals like Yahoo!, AOL Games, PopCap Games, EA’s Pogo.com and elsewhere.)
• Women were found to be slightly less likely than men in the 25-34 bracket to play traditional console games on systems like PlayStation  or Xbox.

Old (2000) but interesting item on ‘gender bending’ in games from womengamers.com

• 6% of subjects play female characters for 25% or less of their gaming time
• 24% play females for 26-50% of their gaming time
• 15% play females for 51-75% of their gaming time
• 42% play females for 76-100% of their gaming time
• 12% did not answer this question

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We are well into 2009 and there is a lot of news popping about the likely growth of social virtual worlds and their adoption. As a tangent game based virtual worlds are also still in relative growth as covered in SMH’s post Video games thrash movies and DVD, referring to the shift in Australia and reflected in the rest of the world, of more money spent on interactive vs passive entertainment ” video games industry is now double the size of the box office and more than 40 per cent larger than the movie disc industry in Australia”.

But back to social virtual worlds and I have quickly mapped some dates and SVW events (most are recent) onto a slightly modified Gartner ‘hype cycle’ curve. For the uninitiated here is a brief wikipedia definition.

Since 1995, Gartner has used hype cycles to characterize the over-enthusiasm or “hype” and subsequent disappointment that typically happens with the introduction of new technologies. Hype cycles also show how and when technologies move beyond the hype, offer practical benefits and become widely accepted.

Of course in reality we have really been through a sine wave quite a few times since 1987 through 2005 but since the relative maturity of services like Second Life, There and others true and robust applications are emerging, beyond the traditional ‘gamer/entertainment’ use. MUVED created a post a few weeks ago showing widespread investment in a range of niche virtual worlds and this trend is seemingly continuuing apace. Raymond de Villiers, CEO of Wisdom Games is very bullish about the use of these worlds for business communication in a post entitled Growth of Virtual Environment Expected in 2009…

Throughout 2008 the corporate world was exposed to the reality of virtual worlds, which has seen a growing influence on how companies train, market, advertise and communicate. This is a trend that is expected to continue into 2009 as organisations begin to recognise the merits of incorporating gaming into their basket of communication tools.

Raymond makes some mature philosophical points about how the corporate world is now host to a new generation of employee who don’t see these spaces as for geeks and timewasters

For those who have never played a computer game in their lives, virtual worlds look foreign, sinister, scary, and like a waste of valuable corporate resources. However, for those who grew up in a world where they played virtually, their expectation of being able to apply the consequent life lessons will be expressed in their expectations of the work environment. Computer gaming, and the associated virtual worlds, will, as a result, be seen as an increasingly important infrastructural consideration.

Virtual Worlds News puts more of a realistic spin as regards raw investment (tracked over at VirtualWorldsManagement also) into new ventures with a decline (albeit way ahead of the global recession) of venture capital put into worlds – around $101m in q4 2008. In its item $101M Invested in 13 Virtual Worlds-Related Companies in Q4 2008 VWNews believes that there is a move into older generation worlds and those with much more of a niche focus.

With the harsh economy looming larger than ever, it seems like more and more focus is being put on unique niches and markets, established business opportunities, and quick-to-market strategies.

Around the world there are major government and state agency investments looking at the efficiencies and cost savings of using Virtual Worlds. Close to home (Australia) we have the MDA in Singapore committing overall around $70 million to project and services in the virtual world education space, creating around 300 jobs in the process too. I could go on with many examples of global investment in the public sector but we are also seeing expansion of existing services in the private sector a good example being Linden Lab buying two Virtual Goods companies XStreet SL and OnRez. As reported by Venture Beat the micro economy around Second Life is still in growth and Linden Lab will need a slice of that pie (in small rev share of the user to user transaction) to continue its own growth. This is long overdue by the Second Life creators and Venture Beat were keen to state the obvious also

Virtual goods have expanded to become a $1.5 billion market, but Second Life was engineered in the days before the business model was fully proven. Linden Lab residents exchanged more than $360 million worth of virtual goods and services in 2008, making the virtual economy and the ability to make a living one of the big draws of the virtual world. Top merchants in Second Life have made more than $500,000 in real money in 2008.

So there is definitely something afoot at the moment even in serious global recession there is a kind of exodus into virtual alternatives happening. The most important message is that developing on a reasonably stable and mature platform is not a big investment and companies, education departments and entertainment property owners should still see this investment as two key returns in the ‘real time, immersive arena’  – how to create experiential services and how to engage with a community. I leave you with a diagram I created nearly 3 years ago that shows a transition from web 1.0 to web 3.0 and let you decide if and how it maps onto my mapped Gartner hype curve above.

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The Metaverse… the Final Frontier. These are the voyages of  Search Engine, Meta-mole. Its five-year mission: to explore strange new worlds, to seek out new life and new civilizations, to boldly google where no search engine has gone before.

OK the folks at University of Teeside will probably not be calling to get me to write their taglines yet what they are doing with Meta-Mole is pretty adventurous and most importantly critical at the moment to glue the discontinuous metaverse. The Meta-Mole in simple terms from their press release is:

The Meta-Mole, created by the Centre for Design in the Digital Economy (D-LAB) based within the University’s Institute of Digital Innovation, will ultimately be a dedicated searchable online resource for the 350 plus virtual worlds currently existing on the Internet.
Philip McClenaghan, Deputy Director of D-LAB explains: ‘We were analysing virtual world platforms and realised that there doesn’t appear to be a comprehensive service offering to list and compare key data for major 2D and 3D environments. This surprised us considering the current popularity of virtual worlds. We intend to fill the gap with the Meta-Mole.’

The metaverse as we know is the entity that forms when all virtual worlds have useable interoperability, you are able to move inventory between them, have a common profile (to a degree) and be able to communicate across worlds – even teleport between them (Habbo to vSide anyone!). At the moment it is all about walled-gardens, locked in economies/commerciality/currency and propriety tech – basically the metaverse doesn’t yet exist, it is disconnected. So to build a dedicated VW search engine that will trawl and spider as many as “350″ worlds is an ambitious vision – down this long and winding road. The benefits particularly to business and education is obvious (finding consumers or interest groups) but also making many social virtual worlds, more social – finding a long lost friend in IMVU whose into football, then setting up a match in Football Superstars, followed by a bit of post match role playing in Second Life – all ‘fueled’ by one search engine – means social activity will increase. Sadly the Meta-Mole is only digging around a few lower level worlds presently (see below) and I would encourage everyone to support such an initiative -  as long as it isn’t sold to a commercial entity who start advertising all over the search pages!  I would also suggest to the team they look at the open API’s of the big 2D social networks also – migration from 2D to 3D will be far quicker if the 2D (FB, MySpace, Twitter)  folk could actually sample the wonders of 3D social space

“Meta-Mole.com is a comprehensive database of Virtual World environments designed for public, corporate and government use.

Created by d|lab at the University of Teesside in 2008, Meta-Mole.com provides users with a total solution that includes:

• comprehensive search facility
• generalised and detailed technical information for a wide array of platforms
• images and streaming video media
• dynamic matrices for comparative analysis of environment functionality

The Meta-Mole.com application has been built from the ground up as a unique service offering for Virtual World users, developers and researchers to increase the profile of the market, ensure environment/consumer compatibility and enable new development of Virtual World markets through corporate education, relationship building and continued innovation.”

The advanced search, is not very functional or all encompassing yet, but suggests a lot about where they are heading with this. It will need to be pretty generic and high level to be able to map & interrogate elements such as scripting support or development tools. One thing it may bring about is a wisdom of the crowds ‘standard’ – just think for example if (on the development side) 8 out of 10 worlds allow importing from Blender or uploading of AIFF stereo sound then the other 20% might get busy on their backend! Lets hope so. The other key area is being able to link in existing out of world databases, especially from a eCommerce perspective the likes of SLExchange (a big out of world catalogue for Second Life consumers) and where searching for a world that lets you drive an Aston Martin is made easier for Mr Mole as databases such as SLEX are already half way there.

The Meta-Mole will initially be released as a Beta version focussing on 3D virtual world platforms. Forterra, Blink 3D and Twinity are among those who have already uploaded their details. Future developments will cater for all platforms, including 3D, 2D and MMO environments. Platform developers are able to participate in the Meta-Mole by contacting developers@Meta-Mole.com or visiting www.meta-mole.com.

For more information contact:
Philip McClenaghan
Deputy Director (D-LAB)
Tel: 0044 1642 738103
Email: p.a.mcclenaghan@tees.ac.uk

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Senor Hontar: “We must work in the world. The world is thus.”
Father Altamirano: “No Senor Hontar…thus have we made the world. Thus have I made it”
Final lines of the film ‘The Mission’

As well as the increase in venture capital investment across all virtual worlds, the time spent in them, measured in user hours, is growing too. While this is partly due to existing users spending longer it is often the about the typical new user who after the initial log-in hurdles becomes highly engaged for 3-18 months or longer with a particular personally resonant virtual world service. Virtual worlds that offer something beyond mall-like activities (PS3Home springs to mind) or just a glorified chat channel (there are quite a few in this category) will obviously increase engagement. The personalization factor, to make the virtual space YourSpace either by customising other community members work or by creating it from scratch yourself, naturally increases your personal investment. Second Life has always been about Your World and one of the major driving factors is aspirational lifestyle and peer appraisal.

We partly escape, we are often out to impress, we love the control but most importantly we like to co-create and communicate with those we like on our terms and in areas we make.

Linden Lab who run Second Life have just published figures looking at 2008 and as in several presentations I have been giving around the world, it shows that SL and other worlds are far more ‘sticky’ than traditional 2D social networks such as Facebook and MySpace. From the Linden Lab (second life creators) Blog:

Second Life Residents logged nearly 400 million hours in 2008, growing 61% over 2007
Thursday, January 15th, 2009 at 12:33 PM by: Zee Linden

Linden Lab is pleased to announce results for Q4 and 2008.  User hours increased by 61% over 2007, highlighting the tremendous growth rate in user engagement that Second Life maintained throughout 2008.  User hours increased steadily each quarter, culminating in a record-setting 112 million user hours in Q4.  In addition:

• Peak concurrent users were up 31% over 2007
• Land owned by Residents increased 82% over 2007
• Exchange Volume increased 33% over 2007
• User-to-user transactions in Q4 increased 54% over Q4 of 2007.

Financially 2008 was an outstanding year for the company from a profitability and cash flow perspective. We are in a strong position to weather the economic downturn while continuing to invest in the Second Life platform.

Looking at Q4 in more detail:

Q4 user hours grew 47% from the same quarter last year. In Q4, Residents spent 112 million hours in Second Life which was an increase of 9% from Q3. Peak concurrent users of 76,000 grew 6.7% over Q3 and approximately 30% over Q4 of last year.

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…and a little end of 2008 Virtual Worlds, State of Play… it has been suggested several times recently that games & social virtual worlds especially will really suffer in this economic downturn and may not survive. Which leads to the point of this post to put things in a little perspective.

IS THERE REAL INVESTMENT?

First lets look at investor confidence in them. From Virtual Worlds Management Reports there was $1 billion US invested in 35 virtual world companies between Oct 06-07 – and since Oct 07 to the present day there has already been $918 million trusted to the success of this particular industry. This breaks down roughly as:

• Q3 08 – $148.5 million invested in 12 VW companies
• Q2 08 – $161 million in 16 VW companies
• Q1 08 – $184 million in 23 VW companies
• Q4 07 – $425 million in 15 VW companies

As a topical reference, and to put things into heritage media perspective the total spend on all film and tv drama in Australia in 07-08 was $420 million US (at current exchanges). Now the majority of these worlds invested in are youth based but many specialised ones aimed at the Gen Y hole (see kzero.co.uk charts for more info) that are focusing on key niches. These start to fill in the gaps that ‘generic’, jack-of-all-trades, social virtual worlds such as Second Life cannot truly cut the mustard as sub-builds inside the service. So we have recently had in the last week the to user launches of a dedicated real life buy with real cash Virtual eShopping just in time for XMas and what will be a real winner in my view (having just tried it finally) the social sports virtual world, Football Superstars which combines EA-like footy with there.com-like social activity and even has a bit of WoW-like quest giving challenges.

The social aspect of virtual worlds are not lost on the big consoles either with the Launch of XBox and PS3 virtual worlds that I covered in a recent post and also the Inquirer’s article Sony, Microsoft begin battle of Virtual Worlds. I was going to talk a lot about how during hard economic times people turn to escapist activities. In the past it used to be film or TV, but now there are many more choices and as we haven’t seen a global economic downturn of this scale since the 2nd world war – the escapism of choice is now immersive interactive media. This will not be lost on advertisers who also need to optimise their spend across the many variants of shared social worlds.

BUSINESS WAKES UP

Savvy businesses have now moved beyond the hype bubble of Second Life’s superficiality and realise the power of social collective collaboration. As well as education and science virtual worlds as ‘tools’ are developing into major economic government initiatives. The Athena Alliance have released a report called “Virtual Worlds and the Transformation of Business” with some optimistic summary lines.

“The rise of the collaborative enterprise that is likely to result from the successful deployment of Virtual World technologies will usher in a new era of business. It will change the way firms compete with one another for customers in both goods and services industries. It is our firm belief that if our nation accelerates the development and maturation of Virtual Worlds, it will encourage a more collaborative and enterprising form of business. This will lead to greater innovation, sustained productivity, and competitive growth in the world economy.. the companies and workers can use the tools of Virtual Worlds to transform the United States into a collaborative enterprise-driven economy.”

The use of virtual worlds for simulation is not lost on the military either. This goes way beyond using first person shooter games to train late teens for an army life using well, first person shooter game technology in war zones. Last week the largest global simulation conference ever was held “The Interservice/Industry Training, Simulation and Education Conference (I/ITSEC)” focused on the use of more social virtual worlds for training and education for military and scientific use. It was keynoted by General Wallace, the Commander, United States Army Training and Doctrine Command who talked with other big government players about the likely hundreds of billions of dollars that will be invested in virtual simulation technology. As we know most media developments have come about from love and death, porn and war. So this growth as always will resonate in the commercial entertainment industry. An example of how military and education are mixing here is The University of Florida recently announced too that it will be spending $1.25 million on building a Second China for the US Foreign Service and Military to understand the culture without the need to go there and fail-forward.

“The goal of the federally funded research project: To educate and prepare foreign service or other government professionals to arrive in the country prepared and ready to work.”

SHOW ME THE VIRTUAL MONEY

On the money side there is a great deal of research now going into how virtual world economic models and currencies will evolve from a range of closed systems to a state that may become viable alternatives to ‘real world’ currencies. The Virtual Economy Research Network just had an interesting article on the VW freemium model – free-to-play but encourages the adoption of the inworld currency rapidly, for example.

A brief look forward and in terms of users of these worlds there is going to be a big acceleration over the next 3 years with a recent Instat report suggesting that “registered users of virtual worlds are expected to exceed 1 billion” by 2012 and total revenue is expected to exceed US $3 billion. The majority of this revenue is not from an expected subscription or advertising but “90% of their revenue from the sale of virtual items, currency, land, and fees associated with these items”. Finally a reason why there is even more investment in youth worlds “70% of the more than 300 million registered users of virtual worlds are younger than 18.”

Forester and MillionsOfUs have just published a report looking at how traditional corporate business will begin to flourish in these spaces and to quote their executive four point summary:

1. It grants unprecedented depth of engagement with consumers. Second only to inperson
   consumer meetings, virtual worlds allow marketers to get up close and personal
   with individual consumers. Using these interactions to allow for feedback, creative tasks,
   and just plain fun creates brand and product advocates in the user base who go far beyond
   in-world influence.
2. It taps into an audience that is difficult to reach via other channels. Today’s virtual
   world users are seen as a minority vanguard for future usage, but they are also difficult to
   reach via other channels. This is especially true of youth groups and deeply creative
   communities supported by various virtual worlds.
3. Newer worlds offer better opportunities for cross-channel tracking and more
   targeted audiences. Early virtual worlds, while technically groundbreaking and providing
   the necessary foundation for future worlds, often lacked audience-tracking tools and were
   open playgrounds without a specific purpose. New, recently launched worlds or those just
   around the corner will offer better tools for customer tracking and tend to target gamers,
   youth, conversation, or other specific tasks, rather than just being open. This allows better
   brand alignment and campaign integration.
4. Virtual merchandizing resonates with youth — and can be very cost-effective. Virtual
   items and other digital assets resonate with Gen Y consumers far more than with older
   (physical-media-loving) consumers. They appreciate novel, unique items and accept brand
   involvement in these items and their distribution — provided it has been thought through.
   Needless to say, the creation, storage, and distribution of virtual items can be very costeffective
   compared with traditional merchandise like t-shirts and caps.

There is no decline happening. So journos, nay sayers, please look at your own industries please. To reiterate the above examples are social or simulation virtual worlds and there are around 78 currently being used by 360 million people. I haven’t touched on online game worlds or offline games which starts to turn the whole affair into a $40-50 billion industry overtaking movies (including home entertainment elements too). All suggestions are that VWs and Games will be the dominant entertainment form and a widely used tool for business and education and revenues will start to match that of the $300 billion TV industry within five years time. A big issue for me is the lack or real courses in higher education in this space too. Most training is on how to use software to make fps console-type games, there needs to be a paradigm shift otherwise media education will be irrelevant as the heritage media linear form falls into the background.

Now tell me again that these wacky 3D worlds are about to disappear?

To finish I will be adding a presentation I gave at the Online Distribution and Business Collaboration Conference two weeks ago as it contains many references to the above post…hold your breath…

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My slides below from my presentation at one of Australia’s industries leading advertising conferences yesterday which I had previously blogged about “The Advertising and Marketing Summit” It was a jam packed room with around 400 attendees of marketing movers and shakers. I closed the second day with the talk on ‘engaging in virtual communities’ followed by a great talk on Word of Mouth Marketing from Piers Hogarth-Scott, CEO, Yooster & Trustee.

The general tone of the two days seemed to be the usual big broadcast ‘dry-up’, mobile is not quite here and the ramp up of ‘online’ marketing. Sadly online, as a platform, which to me is a multi-faceted beast (basically it is everything that has been before and much more) is still seen by this particular segment of the industry as only about search and web 1.0 push.

SilkCharm at least raised some questions at the end about making sure companies seriously consider Social Media Marketing at executive level and my key points at the end were get in there, spend time and really understand the culture in the vast range of virtual worlds before making a decision to do any R&D or full blown campaigns.

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