Impact of Virtual Worlds
The online destinationThe online destinationfor the next generation?for the next generation?
Dr. Pete MarkiewiczIndiespace/Lifecourse Associates
Topics
• What are virtual worlds?• How do vworlds differ from MMOGs?• Why are vworlds important?• Numbers and growth• What vworlds will need in 2019
– Follow the money…– Barriers to growth
• Unique features of US market• US teens – where will they go?
What are virtual worlds?
• Extend “sense of place” characteristic of cyberspace (Web, chat, MMOGs)
• Games may be present, but not a game• Virtual “land” or “rooms”• Social interaction like Web 2.0 (chat, friends lists,
exchange of virtual objects)• Customized avatars, for real-time interaction• Support for real work, education• Economic models for payment, barter, sales
Two kinds of vworldsTween and kid vworlds Adult vworlds
• ~25% of US teens• Web-based (2.5D)• Prebuilt• Social networking• PG-13
• ~3% of US adults• Custom browser (3D)• User-generated• Social networking• Commerce, Education
Cyworld Second Life
Virtual world examples (teen/adult)
Virtual World Examples (kids)
Virtual world environmentsThere
Empire of Sports
Club Penguin
Habbo
Sports-based vworlds
• Multiple sports-based worlds in development– Empire of Sports (teen/adult) multiple sports– Football Superstars (teen adult) virtual football
challenges– TechDeck Live (kids/teen) virtual skate park
Vworlds and RL “exergaming”
• Irwin Toys strap-on Me2 Hardware measures how hard kids exercise
• Plugs into computer for gameplay in the Me2 virtual world
• Kids expend as much energy in “active” games as in regular sports
SOURCE: http://www.nzherald.co.nz/health/news/article.cfm?c_id=204&objectid=10493847http://www.360kid.com/blog/?p=43
Virtual Worlds and Politics
Watching Obama in Second Life Jul 11, 2009http://foo.secondlifeherald.com/slh/2009/07/watching-obama-in-ghana-from-metaplacesecond-life.html
Virtual products
• Offered for sale or free• Used in-world
– Fashion– Buildings, furniture
• Connect to outer word– E-commerce– Teaching tools – Virtual phones
• Prototype real-world– CAD/CAM “prints” to
vworlds
Vodaphone virtual cellphone HUD
Vworld creation
• Development cycle similar to games
• Must create/maintain associated website
• 3-5 years needed to develop*
• $30-60 million required for launch of full 3D*
• ~$5-10 million required for 2.5D/Flash launch
• >200 competitors
*Mike Hirshland, Polaris Venture Partners
Google Lively
Vworlds are NOT MMOGs
• Members play “the game of life”• Members are themselves• Members define goals, scores, rank• Members reflect general population• Members may sell virtual products, own IP• Virtual economy tied to the real economy• Members can do “real” work (education, business)
Stardoll
Vworlds are not empty…
• Compared to MySpace– 300 million pageviews/day
~1 minute per page per day– 1/3600 pages being viewed at
any time– If MySpace pages are laid out
as “real estate” in a 60x60 grid, occupancy resembles the Second Life grid
– RPGs in Second Life look 10x-100x better than the average MySpace “real estate”
MYSPACE HONG KONG ISLAND
MIDIAN CITY RPG EVERWIND RPG
Take-home: Vworlds aren’t empty…they just look that way!
Vworlds are NOT MMOGs
“…The game industry may have created the idea of online entertainment, but the days of
orcs and elves ruling the online space is drawing to a close"
- Christopher Sherman, Executive director of the upcoming
Virtual Worlds Fall 2008 Conference
Vworlds versus MMOGsGoals, scores community created by members
Pre-defined goals, scores
User-created
Prebuilt
Virtual Worlds
Online Games
Goals, scores, community created by members
Pre-defined goals, scores
User-created
Prebuilt
Vworlds versus MMOGs
Second Life RPGs
Entropia
Kid & tween vworlds
(Club Penguin, Habbo, There
Gaia Online, Cyworld, Stardoll)
WoW and
Similar 3D RPGs
Kaneva
Second Life Web 2.0
MoiPal
IMVU
vSide
Kid/tween gaming(Neopets, Nicktropolis, KartRider)
Why are vworlds important?
• 2009– 15% of Internet users MMOG or vworld members (Mark Kern, team
lead, WoW)– Growth Q1 => Q2 2009: 39%– Average user age: 14 year old (Kzero)– MMOGs and S/N web make the most money– Vworlds populated by older early-adopters– Vworlds offer limited value compared to Web 2.0
• 2019– 80% of Internet users in virtual worlds by 2011 (Gartner)– Average user age: >20 – Vworlds make the most money– Vworlds replace the web for the new (“Millennial”) generation– Vworlds become Web 3.0
Vworld accounts in Q4 2008Virtual World Registered Users Monthly logins Technology Demographic
Yahoo 500 million 300 million Web S/N General audience
Facebook (web) 120 million 124 million Web S/N College students
MySpace (web) 150 million 114 million Web S/N Teen and adults
Neopets 60 million 12 million Web Flash Kids and teens
Cyworld (Korean) 30 million 21 million Web Flash Teens and adults
World of Warcraft 12 million ??? (high engagement) 3D Client Adult
Habbo Hotel 100 million 10 million Web Flash Kids and teens
Stardoll 18 million 6 million Web Flash Kids and teens
Gaia Online 15 million 7 million Web Flash Kids and teens
Webkinz 10 million? 6 million (high recurring) Web Flash Kids
Club Penguin (Disney) 17 million 4.5 million Web Flash Kids
Zwinky 16 million 4.5 million Web Flash Kids and teens
Barbie Girls (Mattel) 13 million 2.3 million Web Flash Kids and teens
Home 7 million ??? (high engagement) 3D Client Teens and adults
Nicktropolis 6 million 1 million Web Flash Kids
TOTAL VIRTUAL WORLD
~300 million (330 million in 2009)
~90 million
Virtual world simultaneous users
• Second Life (3D)– 150 users/island– ~70,000 simultaneous during Q3 2008 (up from
about 2,000 in early 2006)
• Gaia Online (2.5D)– 100,000 simultaneous (2007)
‘Kid worlds’ have high trafficMonthly Unique Visitor (millions in 2008)
0 1 2 3 4 5 6 7
WebkinzClub Penguin
ZwinkyNeopets
IMVUBarbiegirls
Gaia OnlineHabbo
RedlightcenterKaneva
Second Life
SOURCE: Patrick Collins of Brand Architecthttp://www.collings.co.za/2007/11/the-march-of-th.html
Vworld members skew younger
SOURCE: Kzero Blog - http://www.kzero.co.uk/blog/?p=2793
Predicted growth of “kid” vworlds
0%
10%
20%
30%
40%
50%
60%
2006 2007 2008 2009 2010 2011
Child &TweenVisitors
Percentage of US child/tweens (3-17)
Expected to visit a virtual world at least once a month
SOURCE: http://www.emarketer.com/Article.aspx?id=1006166
Time spent in vworlds
SOURCE: http://www.emarketer.com/Article.aspx?id=1006166
Provided to eMarketer by Linden Labs
0
5
10
15
20
25
30
35
Time Spentin SL
Total time spent logged-in by Second Life Users,
March 2007-March 2008 (millions of hours)
Growth was unaffected by
negative media stories in
Fall 2007, and economic
slowdown in “real” economy
Vworld members are engaged
• Wow (Aug 2007)– ~80-100 hours/month(!)
• Second Life (Aug 2007)– 24 hours/month (counting actual monthly logins)– 3.7 hours/month (counting unique accounts)
• MySpace (Aug 2007)– ~ 30-90 minutes/month per page (depending on how you
count)
• Habbo (Sept 2008)– 40 minutes/month
Take-home
Vworld audiences are small, but their members are MUCH more engaged
than Web 2.0 users
Second Life classroom
Monetization
• 2008 Dollar revenue, monthly users per month– Second Life: $9.30/mthly user/month
(higher due to virtual land sales)– Club Penguin: $1.62/mthly user/moth– Habbo: $1.30/mthly user/month– Runescape: $0.84/mthly user/month– Puzzle Pirates: $1.50/mthly user/month
• Average $1.40/mthly user/month*. • Excluding Second Life, $1.25/mthly user/month
SOURCE: Lightspeed Partners Bloghttp://lsvp.wordpress.com/2008/06/09/successful-mmogs-can-see-1-2-in-monthly-arpu/
Monetization sources
• Free Sites, optional subscription (“freemium”)– Virtual products – up to 85%– Subscription – 10%– Advertising – 5%
• Paid Sites– Subscription – 75%– Virtual products – 25%
• Coupled Sites (need real-world product to join)– Subscription – 50%– Real-world product – 50%
Virtual products are the key
• Emulate a real-world thing– Seeds– clothing– Housing– Pets
• Reproduced electronically– Near-zero costs
• Sold for real money– “Game money” bought with real currency– Direct credit card purchases
• Secondary barter economy– Users swap vproducts– Users design and sell custom vproducts
Virtual Products overview• In July 2009, analyst firm Frank N. Magid that found that 12%
of Americans had purchased a virtual gift within the past 12 months
• Most sales (around 80%) of sales occur within online games
• Over half of players in online games purchase virtual products
• Thirtysomethings purchase the most by revenue, while teens and twentysomethings purchase the most per user
• Players in online games typically purchase $60-75 dollars in virtual products each year.
• Virtual good buyers are often sellers – Playspan estimated that 31% of its buyers also sold virtual products
• Asia leads the virtual goods market, with the largest share coming from China
SOURCES: Frank M. Magrid 2009 Media Futures StudyLightspeed Partners blog, Virtual Goods News
Growth of virtual product sales
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
2007 2008 2009 2010
US SalesBillions
Global SalesBillions
SOURCES: Frank M. Magrid 2009 Media Futures StudyLightspeed Partners blog, Virtual Goods News
vProduct case studies• Zanga (October 2009
– FarmVille Players bought $500,000 virtual seeds, 50% of revenues were used to buy real seeds for nonprofits in Hati
• Ning (October 2009)– A new Virtual Gifts Incentive program will allow anyone creating a Ning site to sell virtual
products, with a common currency between all Ning networks• Facebook (June 2009)
– $75 million/year from sales of ~100 million digital gifts, or about 10% of total sales
• Stardoll (September 2008)– 1.8 million virtual products were purchased from the Kohl's “back to school” store within its first
16 days • Zwinky (August 2008)
– Sears sold more than 850,000 vproducts in Zwintopia during the first 16 days after launch • Habbo (Sept 2008)
– 2.5 million US users spend $18/month– 85% of revenue from sale of virtual products, only 15% from advertising
• Nexon (creators of KartRider) June 2007– Worldwide revenues of $230 million in 2007, – 85% of it from sale of virtual items
• IMVU (Sept 2008)– $4 million/month revenue – 90% comes from a “cut” from sales of virtual products between members
SOURCES: Lightspeed Partners blog, Business Week, Virtual Goods News
What teens buy in virtual worlds
0
5
10
15
20
25
30
35
Anything
Fun
Express
Myself
Give Me
More
Access
Make Me
Look Good
Not
Everyone
Can Have
Send To
Friends
SOURCE: WeeWorld Member Surveyhttp://www.virtualworldsnews.com/2009/07/weeworld-survey-teens-still-spend-girls-are-major-influencers-.html#more
For teens, branding in virtual worlds is effective
Media Type Millennial GenX Boomers Matures
Interactive web ads 66 68 68 73
Banner Ads 52 58 63 71
Video preroll ads 36 30 27 28
Video postroll ads 21 19 19 17
Embedded video ads 22 22 12 9
Ads in virtual worlds 23 19 14 7
Ad in videogames 23 16 8 8
SOURCE: http://www.emarketer.com/Article.aspx?id=1006166
Deloitte Development and Harrison Group, “The State of the Media Democracy Second Edition”
Link to K-Zero’s age breakdown:http://www.kzero.co.uk/blog/wp-content/uploads/2008/04/kids-world-ages001.png
By 2019, vWorlds will become the place the next generation lives and works…
…Web 2.0 and classic MMOGs will decline in importance
Take-home
There.com
What will virtual worlds need to succeed in 2019?
• Fit the audience– My generation, age group, gender, lifestyle, politics– I’m special here– My friends are all here– It’s a regular, normal part of my life
• Give the audience what it wants– I have control– I can find out what I need to know– I can buy anything I can find on the web– I can do my work here
Follow the money…
• Near-term– Virtual products NOW!!!– Flat-fee subscriptions– Advertising – Market research
• Long-term– Real product prototyping– MMOGs inside larger vworlds– Virtual education– Government/military use– Business work environments
Vproduct Store in Second Life
Barriers to growth
• User interface is hard to learn (key commands and complex HUDs)
• If users are impeded from creating their own content, they don’t (Philip Rosendale)
• Flat fee structure assumed
• Massive infrastructure needed
Avatar configuration HUD,
Entropia Universe
Barriers to growth - US market
• Most users log in from home (less sense of community)
• Backlash from Second Life hype
• Limited mobile power precludes use of mobile vworlds
• Internet connections in US are slow
Where will US teens go?
Gaming ->Themed Shopping -> Social NetworkingDre
ssup
->
Vpr
oduc
ts -
>U
ser-
crea
ted
Second Life (Social)
KanevaMost tween &
teen 2.5 vworlds,
e.g.Stardoll, Habbo,Whyville, Club Penguin,
Virtual pet sites
Entropia
WoW
IMVU
MySpace
There
Moove
User-C
reated <- V
products <-D
ressup
Second Life (RPGs)
Second Life (shopping)
Sources for Virtual Worlds
• Virtual Worlds News – general newsfeedhttp://www.virtualgoodsnews.com/
• Virtual Goods News – virtual productshttp://www.virtualgoodsnews.com/
• Virtual Economy Research Networkhttp://virtual-economy.org/
• Pearl Research – China & Asian markethttp://www.pearlresearch.com
• Kzero - #1 virtual vorlds consultancyhttp://www.kzero.co.uk
• Thinkbalm – “The Immersive Web”http://thinkbalm.com/
References• Virtual Economy Research Network
http://virtual-economy.org/ • LightSpeed Partners Blogs• http://lsvp.wordpress.com/?s=RPG+Second+Life&searchbutton=go! • http://lsvp.wordpress.com/2008/09/02/facebook-selling-digital-gifts-at-a-35m-run-rate/ • Business Week
http://www.businessweek.com/magazine/content/07_13/b4027047.htm?campaign_id=rss_daily• Virtual Goods News
http://www.charleshudson.net/?p=512 http://www.virtualgoodsnews.com/2009/11/asia-driving-the-virtual-goods-marketplace-.html#more http://www.virtualgoodsnews.com/2009/09/over-half-of-gamers-purchasing-in-freemium-games.html http://www.virtualgoodsnews.com/2009/10/ning-launches-virtual-gifts.html#more
• Online traffice at compete.comhttp://siteanalytics.compete.com
• Cnet - Neilsen 2008 results for social networking siteshttp://news.cnet.com/8301-13577_3-9948219-36.html
• Why virtual worlds are overtaking the game industryhttp://www.virtualworldsnews.com/2007/10/why-virtual-wor.html
• New World Notes - New World Notes' True Community Search: Top Twenty Popular Second Life Sites, September 20http://nwn.blogs.com/nwn/2007/09/new-world-notes.html
• “Total minutes” netratings for web 2.0 siteshttp://www.netratings.com/pr/pr_070710.pdf
• MySpace real pageviewshttp://www.mikeindustries.com/blog/archive/2006/04/myspace-click-factory
• Fun with numbers: Do New Ratings Mean New Valuations?http://voices.allthingsd.com/20070712/robert-seidman/
• Second Life statisticshttp://secondlife.com/whatis/economy-graphs.php
• Second Life engagement “Second Grade Math”(Oct. 5th 2007)http://blog.secondlife.com/category/economy/
• Kid’s worlds poised for growth spurthttp://www.emarketer.com/Article.aspx?id=1005410&src=article_head_sitesearch
• Harvard Business School Conference, Nov 2007http://www.gamasutra.com/php-bin/news_index.php?story=16326
• There.com demographics (2004)http://findarticles.com/p/articles/mi_m0PJQ/is_6_2/ai_114573226
• Daedalus Project - The Psychology of MMORGshttp://www.nickyee.com/daedalus/archives/001369.php http://www.nickyee.com/daedalus/archives/pdf/3-4.pdf
• Comparing virtual worldshttp://www.kzero.co.uk/blog/?p=978
• Virtual World Growth Projectionshttp://www.slideshare.net/nicmitham/virtual-world-growth-projections/
• Round-up of 50 virtual worldshttp://fabricoffolly.blogspot.com/2007/10/second-life-in-perspective-round-up-of.html
• eMarketer report on virtual worldshttp://www.emarketer.com/Article.aspx?id=1005410&src=article_head_sitesearch