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Leveraging Virtual Worlds for Real World Results Dr. Robin Teigland, aka Karinda Rhode in SL Stockholm School of Economics www.knowledgenetworking.org www.slideshare.net/eteigland Serdar Temiz Royal Institute of Technology Photo: Lundholm, Metro December 2009

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Today’s discussion <ul><li>Introduction and some facts and figures on virtual worlds </li></ul><ul><li>A look at business opportunities in virtual worlds </li></ul>

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<ul><li>- You on Youtube? </li></ul><ul><li>No, Hulu and Itunes, but I lost the USB for my MP3. It’s MIA, so is my GPS. </li></ul><ul><li>This PDF won’t show up on my LCD. </li></ul><ul><li>Call your ISP. </li></ul><ul><li>- I could send them an SMS or look it up on the cookie wiki. So you on Google now? </li></ul><ul><li>- No, Bing. </li></ul><ul><li>- You are such a Yahoo! Oh, just got poked on Facebook. </li></ul><ul><li>From? </li></ul><ul><li>My mom wants to know if she can use Paypal for Netflix. </li></ul><ul><li>Did she ever sell her Imac on Ebay? </li></ul><ul><li>- No, but she got WiFi for the Xbox. </li></ul><ul><li>Can we have a real conversation now? </li></ul><ul><li>- Sure, can we have it in Second Life? </li></ul>NPR, Internet’s 40th Birthday, 2009

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History tends to repeat itself…. Innovation, financial crisis, industrial revolution, … Steam engine Internal combustion engine Microelectronics Late 18 th C Late 19 th C Late 20 th C Schön 2008 Third industrial revolution?

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Here comes the Immersive Internet O’Driscoll 2009

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eBay allowed people to sell their personal items in a worldwide yard sale, the Immersive Internet will allow people to sell their personal skills and abilities in much the same way. Kapp & O’Driscoll, 2009

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A growing universe of Virtual Worlds http://www.youtube.com/watch?v=wMOqI3hH9Gs http://www.youtube.com/watch?v=0CijdlYOSPc

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Around 150 virtual worlds <ul><ul><li>Q1 2009: </li></ul></ul><ul><ul><li>$68 mln invested in 13 virtual world companies </li></ul></ul>

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VWS have many different models Around 150 virtual worlds

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What are Virtual Worlds? <ul><li>Persistent , computer-simulated, immersive environments </li></ul><ul><li>Shared space/ co-presence with possibility for socialization and community </li></ul><ul><li>In some cases, ability to manipulate/ create content </li></ul><ul><li>In some cases, virtual economy and currency </li></ul>http://www.youtube.com/watch?v=wMOqI3hH9Gs

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<ul><li>Virtual Worlds </li></ul><ul><li>Open-ended–built by residents </li></ul><ul><li>Social environment, affinity groups </li></ul><ul><li>Boundaries for access and building </li></ul><ul><li>Commerce, education, innovation, and…? </li></ul><ul><li>MMOs </li></ul><ul><li>Scripted narrative – created by game designers </li></ul><ul><li>Goals and objectives, ranking systems </li></ul><ul><li>Rules for gameplay, winners and losers </li></ul><ul><li>Entertainment only? </li></ul>

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What financial crisis? <ul><li>Increasing members </li></ul><ul><li>Increasing turnover </li></ul><ul><li>Increasing companies </li></ul>Wonderland

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Number of Accounts-Age (Cumulative) 39% increase from Q1 2009

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<ul><li>40 mln members </li></ul><ul><li>135 mln members </li></ul>Two popular Kids & Tweens worlds

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Building skills in virtual environments <ul><li>My CV </li></ul><ul><li>Leading a virtual team of 30 individuals from across the globe </li></ul><ul><li>Creating and successfully executing strategies under pressure </li></ul><ul><li>Managing cross-cultural conflict without face-to-face communication </li></ul>

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“ Clearly if social activity migrates to synthetic worlds, economic activity will go there as well.” Castranova http://www.youtube.com/watch?v=-ahqjBeknT0

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Gartner’s hype cycle Virtual Worlds today?

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Virtual world revenues USD 3bln in 2009 US spending on virtual goods passes USD 1 bln in 2009

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Microtransactions business model <ul><li> </li></ul>http://www.businessweek.com/technology/content/apr2009/tc20090429_963394_page_2.htm Zynga: - Majority revenues comes from 2% to 10% of users who pay $1 an hour to play premium games or buy virtual goods - Annual sales of about USD 100 mln Playdom: - Estimated USD 50 mln in sales per year from virtual goods Social Gaming Network: - Estimated USD 50 mln sales mainly from virtual goods Weeworld: - Estimated 2008 revenue USD 10 mln+ mainly from virtual goods Habbo: - Estimated 2008 revenue USD 50 mln from virtual goods - 10% monthly players pay $10.30/month

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800,000 users USD 420 mln turnover 2008

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Entropia Universe by MindArk <ul><li>Virtual universe with real cash economy </li></ul><ul><ul><li>Fixed exchange rate to US Dollar, 1 USD = 10 PED </li></ul></ul><ul><ul><li>Five banks auctioned for USD 404,000 in 2007 </li></ul></ul><ul><ul><li>Real life bank license granted by Swedish Government to Mind Bank in March 2009 </li></ul></ul><ul><li>Ability to develop skills and sell virtual goods </li></ul><ul><ul><li>Asteroid space resort sold for USD 100,000 in 2005 </li></ul></ul><ul><ul><li>Jon “Neverdie” Jacobs – Self-made millionaire </li></ul></ul><ul><ul><li>Clothes Against Violence – limited edition virtual jackets sold for more than same model of real world jackets </li></ul></ul>

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Entropia uniquely positioned

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Second Life by Linden Lab <ul><ul><li>1.4 million residents logged in/60 day period </li></ul></ul><ul><ul><li>71,200 logged on Monday, Nov 30 </li></ul></ul><ul><ul><li>Average age=32, 43% female, 55% non-US </li></ul></ul><ul><ul><li>Grew 33% in one year to 126 mln at end of 2Q 2009 </li></ul></ul><ul><ul><li>Economy grew by 94% 2Q 2008-2009 </li></ul></ul><ul><ul><li>270 Linden dollars ≅ USD 1 </li></ul></ul><ul><ul><li>350,000 hours of use per day </li></ul></ul><ul><ul><li>68,000 people making profit </li></ul></ul>IT Businessedge, Linden Lab, 2009

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Some things to do in SL <ul><li>Take a guided tour at the IBM Business Center </li></ul><ul><li>Visit a nuclear power power plant at Science School (Univ of Denver) </li></ul><ul><li>Experience a tsunami at Meteora (NOAA) </li></ul><ul><li>Learn and experience the holocaust at the Holocaust Museum </li></ul><ul><li>Test your health literacy at Healthinfo Island (Group owned) </li></ul><ul><li>Diagnose patients at the Respiratory Ward at Imperial College </li></ul><ul><li>Fly a plane at Boyington Airfield (Group owned) </li></ul><ul><li>Experience schizophrenia at UC Davis </li></ul><ul><li>Learn English at ESL (English as a Second Language) </li></ul><ul><li>Help make the world greener at Univ of Innsbruck </li></ul><ul><li>Join the innovation team at Philips </li></ul><ul><li>Play basketball at Ballers City (Group owned) </li></ul>

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Self-made millionaires http://www.youtube.com/watch?v=Mg4TwOqVprw&feature=related <ul><li>Jon “Neverdie” Jacobs </li></ul><ul><li>Paid USD 100,000 for asteroid space resort </li></ul><ul><li>Bank owner in Entropia </li></ul><ul><li>Anshe Chung </li></ul><ul><li>Started with < USD 10 </li></ul><ul><li>Community developer </li></ul><ul><li>Bank owner in Entropia </li></ul>

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What business opportunities are there outside VWs? <ul><li>Products: </li></ul><ul><ul><li>Consultation </li></ul></ul><ul><ul><li>VW construction </li></ul></ul><ul><li>Examples: </li></ul><ul><ul><li>Grönstedt Group </li></ul></ul><ul><ul><li>Electric Sheep </li></ul></ul><ul><ul><li>Millions of Us </li></ul></ul><ul><ul><li>Rivers Run Red </li></ul></ul><ul><ul><li>Virtual Italian Parks </li></ul></ul>Cisco Hospital of Future – Palomar Hospital in SL

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What about making money inworld? SL, Sep 2009 Total of 593 Number of individuals Monthly USD profit SL net profits

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How do people make money inworld? <ul><li>Services: </li></ul><ul><ul><li>Hosts, dancers, personal shopping assistants </li></ul></ul><ul><li>Virtual goods: </li></ul><ul><ul><li>Furniture, fashion, skins, scripts, anything that can be designed </li></ul></ul><ul><li>Professionals: </li></ul><ul><ul><li>Educational instruction, training, simulations, consulting </li></ul></ul><ul><li>Property management/ownership: </li></ul><ul><ul><li>Clubs, shops, recreation sites </li></ul></ul><ul><li>Real estate: </li></ul><ul><ul><li>Developing, brokering, management </li></ul></ul>

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SL Marketplace: Buying and selling goods http://www.xstreetsl.com/

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Buying and selling Linden Dollars https://www.xstreetsl.com/modules.php?name=Currency http://www.crossworldsxchange.com/

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Virtual credit http://www.firstmeta.com/consumers

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Redgrave – One virtual boutique <ul><li>Numerous stores selling all kinds of wares and services in-world </li></ul><ul><li>International customer base </li></ul><ul><li>Easy payment scheme: Microtransactions </li></ul><ul><li>Global work force: Microemployees </li></ul>

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Virtual Things for Real Money

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New Citizens Inc – A successful non-profit <ul><li>Provides services for SL residents </li></ul><ul><li>Est. 2005 </li></ul><ul><li>Staff of 150 </li></ul><ul><li>Raises more than USD 13,000 / year to cover costs </li></ul><ul><li>Its instructors and event hosts are paid </li></ul>

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Showcasing current products IBM’s Green Data Center

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Developing training & education programs Play2train <ul><li>New employee training, eg policies, organizational culture </li></ul><ul><li>Skills training, eg sales </li></ul><ul><li>Virtual teaming </li></ul>

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Facilitating the virtual workforce <ul><li>Completely private virtual business worlds offering tools to conduct business and collaborate </li></ul><ul><li>Fortune 500: IBM, Intel, Johnson & Johnson, Motorola, Novartis, Unilever </li></ul>

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Training and education IFL at SSE and Duke Corporate Education Co-developing and running a virtual team building exercise

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Co-creating solutions Philips Design Group Lead-user innovation workshops

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Creating a new fashion brand <ul><li>With Florida State University fashion design </li></ul><ul><li>New brands designed and showcased on catwalk during annual Miss Calypso on Planet Calypso </li></ul><ul><li>Users / players vote on designs </li></ul><ul><li>Clothing potentially produced in real life </li></ul>

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Finding and recruiting talent globally <ul><li>Amazon.com job fair </li></ul><ul><li>Benelux job fair </li></ul><ul><li>Accenture island </li></ul><ul><li>IBM island </li></ul><ul><li>Entrepreneurs </li></ul><ul><li>Microemployees </li></ul>

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Our innovation workshop area

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“ Flow” leads to creativity <ul><li>Four steps </li></ul><ul><li>Getting inspired </li></ul><ul><li>Knowledge sharing </li></ul><ul><li>Brainstorming </li></ul><ul><li>Voting </li></ul>Giovacchini, Teigland, Kuhler, & Helms 2009

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The upside of VW business <ul><ul><li>Low entry barriers, software often free </li></ul></ul><ul><ul><li>VWs humanize technology </li></ul></ul><ul><ul><li>Young generation already there, “grown virtual” </li></ul></ul><ul><ul><li>International reach </li></ul></ul><ul><ul><li>Microtransactions </li></ul></ul><ul><ul><li>Microemployees </li></ul></ul><ul><ul><li>The only limit is your own imagination </li></ul></ul>

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The downside of VW business <ul><ul><li>Some hardware and internet requirements </li></ul></ul><ul><ul><li>Poor “user friendliness” </li></ul></ul><ul><ul><li>Real world skepticism </li></ul></ul><ul><li>Security – theft of IP, scams </li></ul><ul><li>Inworld vandalism – griefers </li></ul><ul><li>Not regulated </li></ul><ul><li>Difficulty in creating attraction </li></ul><ul><li>No seamlessness between worlds </li></ul><ul><li>Which world tomorrow? </li></ul>

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One view of business models in SL http://dusanwriter.com/index.php/2009/07/13/in-world-business-models-and-second-life/

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The future of 3D internet Before the first plate of aluminum is even bent for production, the passengers will have flown the plane, the crew will have serviced the plane, and the pilots will have flown the plane. CEO of Boeing supplier

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What are the implications for traditional industries? “ Soon all fashion designers will be originating their designs and managing the production in virtual worlds ….Why such a dramatic change? Economics, pure and simple .” Shenlei Winkler, Director Fashion Research Institute Learn how to become an SL Fashion Designer at Fashiontech.wordpress.com/

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Which professions will be revolutionized?

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Will the playing field for SMEs be leveled? Giovacchini et al. 2009 Innovation workshops bring together users from across the globe

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From the mobility of goods to the mobility of financial capital to … ...the “mobility” of labor?

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China is making efforts in virtual worlds “ The real China is only a piece of land. We believe that there must be a China in the virtual world and the real world.” Robert Lai, Chief Scientist, CRD “ Here in China the value of such items is taking off as teens can’t afford the real world items and are compensating by getting a virtual item that has more ‘online’ status.” -KZERO blogger

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We digitized audio and video, why can’t we just digitize, you know, Earth” Philip Rosedale, Chairman Linden Lab

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DN Aug 20, 1996

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Thanks and see you in world! Karinda Rhode aka Robin Teigland [email_address] www.knowledgenetworking.org www.slideshare.net/eteigland