Leveraging Virtual Worlds for Real World Results Dr. Robin Teigland, aka Karinda Rhode in SL Stockholm School of Economics

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 September 2009

Todays discussion Some facts and figures on virtual worldsSome facts and figures on virtual worlds A look at virtual entrepreneurshipA look at virtual entrepreneurship Some real life benefits of virtual worldsSome real life benefits of virtual worlds BreakBreak A look at some of my virtual world activitiesA look at some of my virtual world activities A tour of Second LifeA tour of Second Life

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 Schn 2008 Third industrial revolution?

Towards 3D Internet Level of Interaction Time Individual - Web 1.0 Thinking Mosaic, Prodigy, Compuserve, AOL, Netscape Connected Web 2.0 Thinking Facebook, Friendster, Yahoo, Blogger, Wikipedia, eBay, Typepad, LinkedIn. Amazon, MySpace, Textamerica, Delicious, HubPages SENSORY 3D Internet Thinking SecondLife, Active Worlds, There, SimsOnline, Club Penguin, World of Warcraft, 3D planets, ToonTown, Habbo, VSlide, Protosphere Hamilton 2008

A growing universe of Virtual Worlds

What are Virtual Worlds? Persistent, computer-simulated, immersive environments Persistent, computer-simulated, immersive environments Shared space/co-presence with possibility for socialization and community Shared space/co-presence with possibility for socialization and community In some cases, ability to manipulate/create content In some cases, ability to manipulate/create content In some cases, virtual economy and currency In some cases, virtual economy and currency http://www.youtube.com/watch?v=0CijdlYOSPc

Virtual Worlds Open-endedbuilt by residents Open-endedbuilt by residents Social environment, affinity groups Social environment, affinity groups Boundaries for access and building Boundaries for access and building Commerce, education, innovation, and? Commerce, education, innovation, and?MMORPGs Scripted narrative created by game designers Scripted narrative created by game designers Goals and objectives, ranking systems Goals and objectives, ranking systems Rules for gameplay, winners and losers Rules for gameplay, winners and losers Entertainment only? Entertainment only?

What financial crisis? Increasing membersIncreasing members Increasing salesIncreasing sales Increasing companiesIncreasing companies Wonderland

Why VWs ? Is there any market? Today around 150 virtual worldsToday around 150 virtual worlds Q1 2009: US$68 million invested in 13 virtual worlds-related companiesQ1 2009: US$68 million invested in 13 virtual worlds-related companies Q2 2009: Total number of accounts at 579 million, 39% increase from Q1 2009Q2 2009: Total number of accounts at 579 million, 39% increase from Q1 2009 End 2009 US$ 2bln revenues from subscriptions, marketing, and microtransactionsEnd 2009 US$ 2bln revenues from subscriptions, marketing, and microtransactions Virtual Worlds News, KZERO

Around 150 virtual worlds Q1 2009: $68 mln invested in 13 virtual world companies

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

40 mln members40 mln members 135 mln members135 mln members Two popular Kids & Tweens worlds

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

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

Gartners hype cycle

Virtual World revenues USD 2bln in 2009

Microtransactions business model 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 - Estimated USD 50 mln in sales per year from virtual goods Social Gaming Network: - Estimated USD 50 mln sales mainly from virtual goods - 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 http://www.businessweek.com/technology/content/apr2009/tc20090429_963394_page_2.htm

780,000 users USD 420 mln turnover 2008

Entropia Universe by MindArk Ability to develop skills and sell virtual goods Island sold for USD 26,500 in 2004 Asteroid space resort sold for USD 100,000 in 2005 Clothes Against Violence limited edition virtual jackets sold for more than same model of real world jackets Virtual universe with real cash economy Fixed exchange rate to US Dollar, 1 USD = 10 PED Five banks auctioned for USD 404,000 in 2007 Real life bank license granted by Swedish Government to MindArk Bank in March 2009 A business model like the real world Raw materials and skills required to build / create Goods deteriorate and need to be replenished

Jon Neverdie Jacobs in Entropia http://www.youtube.com/watch?v=Mg4TwOqVprw&feature=related USD 100,000 for asteroid space resort USD 90,000 for bank license

Entropia uniquely positioned

Virtual currency and a virtual economy 1.4 million residents logged in/60 day period 1.4 million residents logged in/60 day period 70,500 logged on Sunday, Sept 20 70,500 logged on Sunday, Sept 20 Average age=32, 43% female, 55% non-US Average age=32, 43% female, 55% non-US 270 Linden dollars USD 1 270 Linden dollars USD 1 350,000 hours of use per day 350,000 hours of use per day 87,500 hours devt time/day 87,500 hours devt time/day $1.6 bln worth of free work / year $1.6 bln worth of free work / year 68,000 people making profit 68,000 people making profit Joe Miller, Linden Lab, 2009

What do these virtual entrepreneurs sell? Real estate & land rentals Real estate & land rentals Simulation & training environments, games Simulation & training environments, games Clothing, accessories, skins, animations Clothing, accessories, skins, animations Art, design, furniture Art, design, furniture SL, Sep 2009 Total of 593 Number of individuals Monthly USD profit

Redgrave

SLs first millionaire Started with < USD 10Started with < USD 10 Buys and develops virtual real-estate in Linden DollarsBuys and develops virtual real-estate in Linden Dollars Develops communities in SLDevelops communities in SL Develops 3D copies of real life buildings e.g. Dresden GalleryDevelops 3D copies of real life buildings e.g. Dresden Gallery Employs almost 80 people in real lifeEmploys almost 80 people in real life Bank owner in Entropia UniverseBank owner in Entropia Universe http://acs.anshechung.com/index.php

Virtual Things for Real Money

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

Todays Discussion Some facts and figures on virtual worldsSome facts and figures on virtual worlds A look at virtual entrepreneurshipA look at virtual entrepreneurship Some real life benefits of virtual worldsSome real life benefits of virtual worlds BreakBreak A look at some of my virtual world activitiesA look at some of my virtual world activities A tour of Second LifeA tour of Second Life

Showcasing current products IBMs Green Data Center

Developing new products The Innovision Awards by Electrolux

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

Developing training & education programs Play2train New employee training, eg policies, organizational cultureNew employee training, eg policies, organizational culture Skills training, eg salesSkills training, eg sales Virtual teamingVirtual teaming

Facilitating the virtual workforce Completely private virtual business worlds offering tools to conduct business and collaborateCompletely private virtual business worlds offering tools to conduct business and collaborate Fortune 500: IBM, Intel, Johnson & Johnson, Motorola, Novartis, UnileverFortune 500: IBM, Intel, Johnson & Johnson, Motorola, Novartis, Unilever

Finding and recruiting talent globally Amazon.com job fairAmazon.com job fair Benelux job fairBenelux job fair Accenture islandAccenture island IBM islandIBM island EntrepreneursEntrepreneurs MicroemployeesMicroemployees

Todays Discussion Some facts and figures on virtual worldsSome facts and figures on virtual worlds A look at virtual entrepreneurshipA look at virtual entrepreneurship Some real life benefits of virtual worldsSome real life benefits of virtual worlds BreakBreak A look at some of my virtual world activitiesA look at some of my virtual world activities A tour of Second LifeA tour of Second Life

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

Our innovation workshops bring together users from across the globe Partners Utrecht UniversityUtrecht University University of InnsbruckUniversity of Innsbruck

Creating a new fashion brand With Florida State University fashion designWith Florida State University fashion design New brand designed and showcased on catwalk during annual pageant on Planet CalypsoNew brand designed and showcased on catwalk during annual pageant on Planet Calypso Users / players vote on designsUsers / players vote on designs Potentially produced in real lifePotentially produced in real life

Pros & Cons +Low entry barriers, software often free +VWs humanize technology +Young generation already there, grown virtual +Microtransactions +Microemployees +International reach Some hardware requirements User friendliness Not regulated Real world skepticism Creating attraction Which world?

Increasing effectiveness in 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/

Revolutionizing professions

Four scenarios for 2015 Fragmentatedworlds Integratedworlds Advancedusage Less-advancedusage Digital Divide Ease of mobilityEase of mobility Self-governanceSelf-governance Dominance by gaming generationDominance by gaming generation Traditional vs virtual businessTraditional vs virtual business One Converged Universe High penetrationHigh penetration Easy avatar & asset mobilityEasy avatar & asset mobility High scalability & securityHigh scalability & security Business transformationBusiness transformation Wild Wests Individual MMOGs dominantIndividual MMOGs dominant Virtual vandalismVirtual vandalism Security problemsSecurity problems RetreatRetreat Virtual Silos Many competing, limited worldsMany competing, limited worlds Difficult avatar & asset mobilityDifficult avatar & asset mobility Limited scalabilityLimited scalability High securityHigh security New business modelsNew business models

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

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 cant afford the real world items and are compensating by getting a virtual item that has more online status. -KZERO blogger

We digitized audio and video, why cant we just digitize, you know, Earth Philip Rosedale, Chairman Linden Lab

47 Thanks and see you in world! Karinda Rhode aka Robin Teigland robin.teigland@hhs.sewww.knowledgenetworking.orgwww.slideshare.net/eteigland

LPSO.com Littlest Pet Shop Online Littlest Pet Shop OnlineLittlest Pet Shop OnlineLittlest Pet Shop Online http://www.youtube.com/watch?v=1DwL1JIv Ghc http://www.youtube.com/watch?v=1DwL1JIv Ghc

Connect the World Through Games Connect the World Through Games Company makes money by Selling Virtual GoodsCompany makes money by Selling Virtual Goods FarmVille:"Grow delicious fruits and vegetables and raise adorable animals on your very own farm!"FarmVille:"Grow delicious fruits and vegetables and raise adorable animals on your very own farm!" If you don't visit your farm, your vegetables, animals will die.If you don't visit your farm, your vegetables, animals will die. Relased in July 2009 and till the end of August 2009:(In 2 months)33 million people played it.Relased in July 2009 and till the end of August 2009:(In 2 months)33 million people played it.

Success of Zynga Success of Zynga

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Leveraging Virtual Worlds for Real World Results Dr. Robin Teigland, aka Karinda Rhode in SL Stockholm School of Economics