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Fad or Future -Fad or Future -What Do Virtual Worlds Have to What Do Virtual Worlds Have to
Offer?Offer?
Dr. Robin TeiglandDr. Robin TeiglandStockholm School of EconomicsStockholm School of Economics
[email protected] @hhs.sewww.knowledgenetworking.org www.knowledgenetworking.org
Second Life & Virtual Worlds November 2007
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Today’s discussionToday’s discussion
BackgroundBackgroundWhat are organizations doing in virtual What are organizations doing in virtual
worlds?worlds?−Second LifeSecond Life−Other worldsOther worlds
The future The future −Four scenarios for 2012Four scenarios for 2012−What should you do? What should you do?
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Today’s discussionToday’s discussion
BackgroundBackgroundWhat are organizations doing in virtual What are organizations doing in virtual
worlds?worlds?−Second LifeSecond Life−Other worldsOther worlds
The future The future −Four scenarios for 2012Four scenarios for 2012−What should you do? What should you do?
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A world of rapidly growing knowledge A world of rapidly growing knowledge ….….
>A person’s lifetime
18th centuryOne week
2007
Fischbowl 2007
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……that becomes quickly outdated ….that becomes quickly outdated ….
50%knowledge
relevant
50%knowledgeoutdated
First year of technical-based
educationThird year
of education
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Growth
Time
Output of information and knowledge
Human absorptive capacity
..making it more difficult to keep up..making it more difficult to keep up
Junks 1989
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””No one knows everything, No one knows everything,
everyone knows something, everyone knows something,
all knowledge resides in humanity.”all knowledge resides in humanity.”
networks.
Lévy 1997
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Numerous networking possibilities!Numerous networking possibilities!
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Today’s discussionToday’s discussion
BackgroundBackgroundWhat are organizations doing in virtual What are organizations doing in virtual
worlds?worlds?−Second LifeSecond Life−Other worldsOther worlds
The future The future −Four scenarios for 2012Four scenarios for 2012−What should you do? What should you do?
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What are real world companies What are real world companies doing in Second Life?doing in Second Life?
Marketing, Branding, & Sales− Adidas, BMW, Dell, IBM, Sun, Cisco, Coldwell Banker, Adidas, BMW, Dell, IBM, Sun, Cisco, Coldwell Banker,
Reebok, Nissan, Pontiac, Starwood, Leo Burnett, Reebok, Nissan, Pontiac, Starwood, Leo Burnett, Vodafone Vodafone
External Communications− BMW communicates its clean energy conceptBMW communicates its clean energy concept− Coca-Cola holds competitionsCoca-Cola holds competitions
Product & Concept Development− Philips Electronics, Starwood, Toyota, PA Consulting Philips Electronics, Starwood, Toyota, PA Consulting
(for its clients)(for its clients) Recruiting
− Job fairs and anonymous contact Job fairs and anonymous contact − ABN Amro, PA Consulting, IBM, Dell, etc.ABN Amro, PA Consulting, IBM, Dell, etc.
Internal Communications, Training, & Education− Springtime
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““Catalogue” sales Catalogue” sales
Sears (in collaboration with IBM)Sears (in collaboration with IBM)•Enables customization of kitchen, garage,
home bio•Links to Sears.com for purchase
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Product developmentProduct development
ToyotaToyota•Launches real and virtual products simultaneously
•Enables avatars to customize vehicles in SL
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RecruitingRecruiting
Job Fairs
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SpringtimeSpringtime Training with avatars from Shanghai, Training with avatars from Shanghai,
Beijing, Stockholm, and GotlandBeijing, Stockholm, and Gotland
Internal communicationsInternal communications
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In-house training and educationIn-house training and education
IFL at SSE and Duke Corporate IFL at SSE and Duke Corporate EducationEducation
Co-developing and running virtual Co-developing and running virtual team building exerciseteam building exercise
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But, is anybody out there?But, is anybody out there?Visitors
10:15 pm, Tuesday, Sept 4, 2007
(GMT+1)ABN Amro -0ABN Amro -0
Adidas – 0Adidas – 0Cisco - 18Cisco - 18BMW - 0BMW - 0Dell – 6Dell – 6IBM – 23IBM – 23
Nissan – 0Nissan – 0Reebok - 0Reebok - 0
Sun Microsystems - 1Sun Microsystems - 1Vodafone - 2Vodafone - 2
Insead – 0Insead – 0BMW In-world
Wells Fargo, Starwood Hotels, Wells Fargo, Starwood Hotels, American Apparel are pulling outAmerican Apparel are pulling out
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Critical mass is restricted due to Critical mass is restricted due to technologytechnology
LocationLocation PopulationPopulationLand Land area area (km(km2)2)
Density Density (people per (people per
kmkm2)2)
Freebie Freebie PlanetPlanet#1 popular #1 popular sitesite
9898Online, Mon, Sep Online, Mon, Sep
3 8:15 pm 3 8:15 pm (GMT+1)(GMT+1)
0.060.06 1,4791,479
ParisParis 2,153,6002,153,600 8787 24,75924,759
New YorkNew York 8,143,0008,143,000 786786 10,31610,316
Stockholm*Stockholm* 782,890782,890 188188 4,1644,164
Richmond, Richmond, VAVA
195,250195,250 138138 1,3911,391
Gothenburg*Gothenburg* 489,760489,760 450450 1,0831,083
* Municipality (kommun)* Municipality (kommun) wikipedia.org
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0
50
100
150
200
250
300
350
400
450
500
February March April May June July
> $5,000 USD
$2,000 to $5,000 USD
And is anyone making money?
What are these individuals selling?Real estate & land rentals
Simulation & training environments, gamesClothing, accessories, skins, animations
Art, design, furniture SL, Sept 3, 2007
Total of 424
>$5000$2000-5000
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What about Return on Investment in What about Return on Investment in SL?SL?
We have a long-term approach to costs and RoI. We have
qualitative goals, to expand and develop
our presence.- BMW
We have no targets for
RoI. -ABN Amro
There needs to be some RoI eventually, but this is a long-term
project and we are just looking at the
potential.- Vodafone
Financial Times, May 2007
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So, what do people do?So, what do people do?
Most popular places (total time spent
there)−Freebie PlanetFreebie Planet−Money Island Money Island −HippiePay.comHippiePay.com−Welfare IslandWelfare Island−Cote D’Azur WestCote D’Azur West−ApfellandApfelland−Money Tree IslandMoney Tree Island−Life is LifeLife is Life−Phat Cat’s Jazzy Blue Phat Cat’s Jazzy Blue
LoungeLounge−Japan ResortJapan Resort
SL, Sept 3, 2007
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What can we do that What can we do that we “we “cannot”cannot” do in do in
real life?real life?
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Improving skillsImproving skills
Learning to sail with the Starboards Yacht Club
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Training for natural disastersTraining for natural disasters
A tsunami simulator by National National Oceanographic and Atmospheric Oceanographic and Atmospheric
AdministrationAdministration
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Collaborating and co-creatingCollaborating and co-creating
Open source museum with open source art
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Experiencing the “impossible”Experiencing the “impossible”
UC Davis Medical Center has UC Davis Medical Center has simulated schizofreniasimulated schizofrenia
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What is happening in What is happening in other virtual worlds?other virtual worlds?
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Secure virtual workplacesSecure virtual workplaces
•Completely private virtual business worlds offering tools to conduct business and
collaborate•Fortune 500: Johnson & Johnson, Novartis,
Motorola, Intel
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Disney pays $350 mln for Club Disney pays $350 mln for Club Penguin Penguin
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•Kids 6-14 in Canada•700,000 paying users
•Virtual goods and online merchandise
paidcontent.org
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Cyworld - A world where Cyworld - A world where “MySpace meets Second Life”“MySpace meets Second Life”
•40% of entire population
•$96% of 20-30 yr olds in Korea regular users
•120 mln 2006 in Korea •More video traffic than
YouTube
Computer Sweden, June 2007
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Entropia Universe = MMOG + Entropia Universe = MMOG + MMORP?MMORP?
Today•600,000 users
•$360 mln in-gaming turnover 2006
•Real cash economy
Tomorrow•Won bid over SL/others to be China’s “first homegrown virtual world where millions will work, communicate, and
be in love”•7 mln local + 150 mln overseas
Chinese•Five virtual banking licenses
auctioned for $404,000 May 2007Financial Times, June 2007
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MMOGs still dominateMMOGs still dominate
World of Warcraft•374,000 hours played each
day or 50,000 man days each day
•8.5 mln players worldwide
Xfire.com, MMPORG.com, June 2007
Korean Free to Play (F2P)•4 of top 10 MMOGs in Western world
•Silkroad Online #1 in West•MapleStory with >50 mln players
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Where are we Where are we todaytoday with virtual with virtual worlds?worlds?
Business opportunities limited?−Many real world firms have virtual world presence, but Many real world firms have virtual world presence, but
difficulty turning it into an effective, profitable sales channeldifficulty turning it into an effective, profitable sales channel Primarily for marketing or learning experiencePrimarily for marketing or learning experience No RoI success stories for real world firmsNo RoI success stories for real world firms Required resources outweigh short-term benefitsRequired resources outweigh short-term benefits
−Limited number of individual success storiesLimited number of individual success stories ~150 other individuals making >$5000 per month~150 other individuals making >$5000 per month
− ““Trapped” in real world activities?Trapped” in real world activities? Virtual worlds overhyped?
−Growth lower than appears, small compared to MMOGsGrowth lower than appears, small compared to MMOGs−Reality vs. fantasy? Reality vs. fantasy?
Disconnect between real world companies/products and SL fantasy Disconnect between real world companies/products and SL fantasy avatarsavatars
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Today’s discussionToday’s discussion
BackgroundBackgroundWhat are organizations doing in virtual What are organizations doing in virtual
worlds?worlds?−Second LifeSecond Life−Other worldsOther worlds
The future The future −Four scenarios for 2012Four scenarios for 2012−What should you do?What should you do?
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So, what about the So, what about the future of virtual future of virtual
worlds?worlds?
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By the end of 2011, 80% By the end of 2011, 80% of active Internet users of active Internet users
(and Fortune 500 (and Fortune 500 enterprises) will have a enterprises) will have a “second life”, but not “second life”, but not necessarily in Second necessarily in Second
Life.Life.
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How can we look into the future?How can we look into the future?
Forecast−How we think the future will beHow we think the future will be
Vision−How we want the future to beHow we want the future to be
Scenario−What the future can beWhat the future can be
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Two underlying questionsTwo underlying questions
In 2012…1.1. HowHow advanced will the usage of virtual worlds will the usage of virtual worlds
be?be? Widespread use across all dimensions, high user Widespread use across all dimensions, high user
demands demands Forces: Economic development, digital divide, Forces: Economic development, digital divide,
environmental pressuresenvironmental pressures
2.2. How How integrated will virtual worlds be? will virtual worlds be? Cooperation between different worlds, VW & RWCooperation between different worlds, VW & RW Forces: Security, technology, legislative, politicalForces: Security, technology, legislative, political
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Four scenarios for 2012Four scenarios for 2012
Fragmentatedworlds
Integratedworlds
Advancedusage
Less-advanced
usage
Digital Divide•Ease of mobility•Self-governance
•Dominance by gaming generation•Traditional vs virtual business
One Converged Universe•High penetration
•Easy avatar & asset mobility•High scalability & security•Business transformation
Wild Wests•Individual “MMOGs” dominant
•Virtual vandalism•Security problems
•Retreat
Virtual Silos•Many competing, limited worlds•Difficult avatar & asset mobility
•Limited scalability•High security
•New business models
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What should you do in virtual worlds?What should you do in virtual worlds?
Experiment, “play”, and learn Stay on the look-out
Consider creating independent operations
V ice P re sid e n tR e se a rch /D e v l.
P ro du c t A P ro du c t B P ro du c t C
V ice P re sid e n tM a nu fa c tu ring
V ice P re sid e n tM a rke ting
P re sid e n t
Don’t forget other emerging media
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“I think there’s a world market for maybe five
computers.”Thomas Watson, Chairman
of IBM, 1943
“There is no reason anyone would want a
computer in their home.”
Ken Olson, President, Chairman and
Founder of Digital Equipment
Corporation, 1977
“Heavier-than-air flying machines are impossible.”
Lord Kelvin, President, Royal Society, 1895
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We digitized audio and video, why can’t we just
digitize, you know, Earth”
Philip Rosedale, CEOLinden Lab
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Further informationFurther information Australian Communications Authority
(www.acma.gov.au)− Vision 20/20: Future Scenarios for the
Communications Industry: Implications for Regulation Christenson, C., The Innovator’s Dilemma, 1997 Gartner Group Press Release
− http://www.gartner.com/it/page.jsp?id=503861 Gullers Group
− The Future of eGovernment: Scenarios 2016 (www.vinnova.se)
Moore, G., Crossing the Chasm, 1991 Tapscott, D. & Williams, A. Wikinomics, 2006
− http://video.google.com/videoplay?docid=5065262745272895737&q=wikinomicsXfire.com)
More information: http://ssesecondlife.blogspot.com/ www.knowledgenetworking.org
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AppendixAppendix
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The number of unique users in Second Life The number of unique users in Second Life has increased exponentially within one has increased exponentially within one
yearyear
0
1000000
2000000
3000000
4000000
5000000
6000000
June 2006 June 2007
SL, September 3, 2007
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Who’s in world in Second Life?Who’s in world in Second Life?
0
20000
40000
60000
80000
100000
120000
140000
United S
tate
s
Germ
any
Brazil
United K
ingdom
Franc
e
Japa
nIta
lySpa
in
Nether
lands
Austra
lia
Canada
Number of
activeavatars
SL, September 3, 2007
Sweden is #17
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US avatars spend the most hours in US avatars spend the most hours in world world
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
United S
tate
s
Germ
any
Franc
e
United K
ingdom
Nether
lands
Japa
nIta
lySpa
in
Brazil
Canada
SL, September 3, 2007
Total number
of hours
in world
Sweden is #17
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25-34 year olds spend most time in 25-34 year olds spend most time in worldworld
SL, September 3, 2007
Total number of hours in world
~40% Female
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“We think it has potential as a way of doing business. We’re
just experimenting with it ourselves but we see massive
potential in the human interaction you can bring. It’s a
big browsing environment in many ways.”
- IBM Director
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Is there critical mass on Second Life?Is there critical mass on Second Life?
LocationLocation PopulationPopulationLand area Land area
(km(km2)2)Density Density (people per (people per
kmkm2)2)
Second LifeSecond Life 44,75044,750Online, Mon, Sep Online, Mon, Sep
3 8:35 pm 3 8:35 pm (GMT+1)(GMT+1)
712712 6363
Motala*Motala* 42,06042,060 988988 4343
SwitzerlandSwitzerland 7,252,3307,252,330 41,28441,284 177177
* Municipality (kommun)* Municipality (kommun) wikipedia.org
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Toyota educates teenagers on creditToyota educates teenagers on credit
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Marketing and salesMarketing and sales
American ApparelAmerican Apparel•Sells items of clothing
•Offers 15% discount if buy same item in real world
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Man-made disastersMan-made disasters
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Are businesses anywhere else?Are businesses anywhere else?
Active Worlds•2 mln users
•Branding•Wells Fargo left SL for
AW
Habbo Hotel•7 mln users (mostly
teens)•Digital goods and
marketing•Target, Wal-Mart,
Kellogg, Nintendo, Walt Disney
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External communities are External communities are growing in importance!growing in importance!
Onlinecommunities
Schoolmates
Avatars
Previous work colleagues
Large portion of new ideas and formal collaboration relationships come from
external contacts
Organization
PhysicalNetworks
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Encourage an open innovation Encourage an open innovation attitudeattitude
Not all the smart people work for us. We need to work with smart people inside and outside the
company.
The smart people in our field work for us.
If you create the most and the best ideas in the industry, you will
win.
If you make the best use of internal and external ideas, you
will win.
Closed attitude Open attitude
Chesborough 2003
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The wisdom of crowds (Surowiecki The wisdom of crowds (Surowiecki 2004) 2004)
ClosedExpensiveComplexAccurate
OpenInexpensive
SimpleClose enough
Hinton 2007
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Crowdsourcing: Crowdsourcing: Capturing the wisdom of crowdsCapturing the wisdom of crowds
What is it?What is it?−Customer participation in business and Customer participation in business and
business developmentbusiness development
Why the interest?Why the interest?−ExperienceExperience−OwnershipOwnership−EngagementEngagement−LoyaltyLoyalty
Brayrie 2007
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What can organizations do?What can organizations do?
InnovationProduct developmentContent generation
Decision makingFunding
Sales & marketingDistribution
Brayrie 2007
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Innovations - www.innocentive.comInnovations - www.innocentive.com
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Problem solutions - The Goldcorp Problem solutions - The Goldcorp ChallengeChallenge
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Product development - Product development - www.ideastorm.comwww.ideastorm.com
Brayrie 2007
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CommunitiesCommunitiesA driving force in crowdsourcingA driving force in crowdsourcing
ParticipationParticipationEngagementEngagementCommitmentCommitmentOpennessOpennessConversationConversationConnectednessConnectedness
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What should you do?What should you do?
Approach as a disruptive technology−Enables a new strategy or new business modelEnables a new strategy or new business model−Enables a larger population of less skilled, less Enables a larger population of less skilled, less
wealthy people to do things in a more wealthy people to do things in a more convenient, lower cost settingconvenient, lower cost setting
E.g., Telephone, digital photography, PCs, LinuxE.g., Telephone, digital photography, PCs, Linux
Think wikinomics and peer-to-peer exchange−Mass collaboration by free individual agents to Mass collaboration by free individual agents to
improve a given operation or solve a problem improve a given operation or solve a problem E.g., Boeing, Chinese motorcycle industry, P&GE.g., Boeing, Chinese motorcycle industry, P&G
Christenson 1997, Tapscott & Williams 2006