For the last little while my interest in virtual worlds has been growing. Having spent countless hours playing games like The Sims when I was younger, I can easily understand their appeal on a gaming and entertainment level. My real curiosity, however, is whether they will play a key role in the next phase of social media.
My original inclination was heavily weighted towards ‘No’. There have been a number of companies, law firms, and banks experimenting and opening offices in virtual worlds, namely Second Life. To the best of my knowledge, many of these have since shut down because their virtual offices were too timely to maintain and, after the initial buzz had died down, they failed to see any inherent value in keeping them open.
That said, the more I learn, the more I understand how virtual spaces may become extremely valuable going forward.
About a month ago I attended Digital Theory’s “Playing to Win: Broadcasting and Social Media event, which featured a presentation by Valerie Williamson, VP of Marketing and Business Development for the Electric Sheep Company. Electric Sheep built a name for itself by creating virtual worlds for a number of different companies. Valerie explained that instead of using two dimensional applications like Twitter and Facebook, younger generations have been raised on virtual games where they create 3D avatars to co-exist with their ‘friends’. She believed strongly that this was the future of social media and online engagement, and the direction in which we are headed.
If what she claims is true, what will the future look like? To begin answering this question I looked at what organizations are currently doing to tap into this market.
Some brands such as Disney’s Club Penguin and Webkinz have built their own virtual worlds, and experienced success by providing a new, rewarding form of entertainment to children. These sites are able to monetize without the help of advertisers, leveraging product sales and/or membership fees.
Other brands such as PepsiCo. are using the popularity of worlds that already exist to market their products . This can take the form of advertising within the VW, or selling virtual products to benefit the world’s citizens. PepsiCo. launched into this model last year by sponsoring vMTV’s Virtual Hills. They have since reaped branding and reputation benefits both on and offline (further outlined in Ad Week’s Case study: vMTV’s Virtual Hills Makes Pepsi Cooler).
Role playing and video games such as World of Warcraft, Counterstrike, and the Halo Trilogy have maintained popularity with slightly older generations (many of my friends included). These games have made significant earnings through subscriptions and virtual product sales. WoW alone makes up half of Activision/Blizzard’s earnings, proving VWs to be a highly profitable model.
Although the above examples are largely entertainment focused there are many other useful applications of virtual worlds being explored.
At Mesh09 the #MeshLearn session focused on education. Although virtual worlds were strangely absent from the conversation, the panel did state that the education sector in the US is larger than both the military and finance sectors combined. If this statement holds true, it is certainly a huge market. In response to growing demand from educators, Activeworlds launched educational settings a few years ago, betting that virtual worlds will start to play a larger role in the development and education of children and university students. With this tool, teachers will be able to develop new concepts and learning theories not possible in a regular class room setting.
Virtual worlds are also being used for collaborative learning, allowing
students and/or professionals to engage, learn, and share over large distances. In 2003 students from three universities developed a fashion line (Ratava’s Line) and show rooms using collaborative VWs. In a final report, students described it as “a perfect medium to marry culture, collaboration, visuals, 3D, and social spaces” . Collaborative VWs can easily translate into other business settings as well ie. training, safety, architectural design, business strategy, etc.
As the economic downturn continues to rear its ugly head, we will likely see more companies taking advantage of VWs to host job fairs. Dennis Shiao’s Blog Post “Economic Downturn to Spur Virtual Job Fairs” does a good job of outlining reasons for this growth.
Given their collaborative nature, popularity with younger generations, and ability to adapt to a wide array of applications a strong argument can be made that virtual worlds are here to stay (and may even be highly profitible).
I’m interested to hear any of your thoughts on the business of virtual worlds – do you see them as the next wave for social media? Or just a lot of hype?
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My company, Trombly Ltd. (www.tromblytld.com) has employees in China, India, the US, and Europe. Lately, we’ve put up a virtual region and are using our new offices to hold staff meetings. I on-board new team members here, for example.
There are tools to bring voice and video into our region, which runs on the open-source OpenSim platform, and once we get those installed the degree of interaction will go up substantially.
I also enjoy attending networking events. For example, the Hypergrid Entrepreneur Group (http://www.facebook.com/group.php?gid=87030777540), which brings together business owners and venture capitalists from around the globe, meets in the OSGrid’s Business Center, also hosted on an OpenSim platform.
Today, hundreds of colleges and universities are offering classes or programs in Second Life, and on their own OpenSim-based worlds. And hundreds of companies are quietly holding meetings and training events.
I see a future not too distant in which many of the Web-based collaboration tools we have grown to know and love move to virtual 3D-environments.
And for people who think this is just a game: people used to think that a mouse and the point-and-click graphical user interface was a game, too. Technology has a habit of moving from kids and students to mainstream acceptance amazingly quickly.
The two most promising signs that this is happening in the virtual words are two developments that have been mostly missed by the media. First, ReactionGrid has released a virtual world appliance — plug it in, and you’re the owner of your own virtual world. It runs OpenSim, which looks and feels pretty much like Second Life, except that you’re in control. No need to spend millions on developing a virtual world platform.
The other development, which has actually happened over a month ago, is that people are now able to link up their OpenSim worlds, and allow avatars to jump between them — the same you can go from one website to another. Better yet, you look the same in every world you go to, and can access your belongs (though a link back to your home world). So if I want to leave my company’s offices, and visit my client at his office on his grid, I can wear my nice suit, and bring a presentation for him, and leave the presentation there with him at the end of the meeting.
It’s already a reality. I regularly hypergrid between my office, the OSGrid (the largest grid in the hyperlinked universe), ReactionGrid (focusing on education and business), my person home region (where I practice my design skills), my kids’ region (where they’re building a virtual spaceship with their dad, who’s in Shanghai), Grid4Us (run by a German company) and many other virtual worlds. I can shop for virtual goods on the OSGrid, and, if I have the rights, share them with friends on other grids, or just put them down to use and enjoy them on my work or personal regions.
– Maria