On Monday evening, I attended FountainBlue’s High Tech Entrepreneurs’ Forum at Microsoft’s Mountain View (CA) campus – the event was titled Virtual Worlds: The Hype, The Reality, The In-Between and was sponsored by Microsoft and TIPS Group. FountainBlue, a “membership-based, for-profit, collaborative organization designed to positively impact the way people, businesses and organizations work,” has organized a new sub-group around virtual worlds, which officially launched coincident with Monday evening’s event.
FountainBlue landed a true All-Star panel of Virtual Worlds visionaries and experts. Each panel member provided thoughts on virtual worlds and then took questions from the audience. A summary of each panelist’s thoughts follows.
UPDATE: FountainBlue has posted a summary of this event on their blog.
Steve Nelson – EVP, Chief Strategy Officer, Clear Ink
Steve is EVP and Co-Founder of Clear Ink, an interactive agency based in Berkeley, CA, who has many “claims to fame” in Second Life development. Among their Second Life projects was a simulcast of the 2008 TED Conference (in Monterey), an appearance by Newt Gingrich in-world, the development of a virtual headquarters for Linden Labs and an in-world island in conjunction with the popular sitcom The Office.
Steve started with his definition of “virtual world” – a social platform that’s immediate and immersive – quite a relevant and apt definition, if you ask me. Steve stressed the immersiveness of 3D virtual worlds by comparing a webinar viewed “standalone” with one viewed in-world. Steve noted higher retention and recall rates of the in-world viewing – as viewers of traditional webinars are far from immersed – instead, they’re checking their email and multitasking with other apps on their workstation.
Steve noted that Clear Ink assists companies in virtual worlds via three e’s:
In closing, Steve noted five business models for generating revenue with virtual worlds:
- Own the virtual world platform
- Sell virtual goods
- Create virtual worlds tools and utilities
- Be an agency – design, consulting, etc.
- Use virtual worlds effectively as an enterprise – save money and be a more effective company
Robin Harper – Former VP of Marketing and Community Development, Linden Labs
Robin took us back to the very early days of Second Life and noted that in the initial development stage, Linden Labs thought the platform was about facilitating entertainment. Fast forward to today and Robin believes that virtual worlds are so much more than entertainment. In the past 18 months alone, Robin notes that growth in Second Life has been driven by education and enterprise (which each have grown by 2x in that period). There is an increased use for simulation, prototyping, design and experiential learning. 60,000 residents are profitable (meaning they generate revenue that exceeds their land costs) and the top resident grossed over $1.7MM in US dollars (real money) by selling virtual shoes.
Robin notes that the power of virtual worlds lies in the collaborative tools that are provided with minimal constraints. She compared the development of virtual worlds to the development of third world countries – growth is facilitated by allowing residents to own their own land, own the intellectual property (of their land assets) and participate in an economy that fuels commerce. Important areas of development today are “behind the firewall” applications, as well as interoperability across worlds.
UPDATE from Robin Harper: I’d like to clarify the statement attributed to me above. The figures I reported were originally estimates based on one quarter of data, so should not be taken as more than an annualized estimate. In addition, my reference to the sale of virtual shoes was in the context of the types of industries that are generating return in Second Life. In the top group of earners based on the estimates, most were involved in the land business, and a couple were in other businesses like events management and retail/virtual goods, including shoes. For more information, please see my blog: http://couldtherebewhales.blogspot.com/2009/03/correction.html
Michael Gialis – New Business Development, Sun Microsystems
Michael works in Sun Labs, with a focus on online gaming and virtual worlds. Sun’s technologies in this space are Project Darkstar, Project Wonderland and Project Sun SPOT. Michael notes that the #1 barrier to virtual worlds adoption is the non-intuitive nature of the client application. Michael’s comments stirred some discussion among the panel regarding enhanced client capabilities, such as the use of sensors in lieu of keystrokes. Robin noted that Mitch Kapor is experimenting with a 3D camera – when you smile, your avatar smiles. Some panelists, however, noted that some contexts may require separation between your true feelings and your avatar’s expressions – for instance, in a learning environment, you may not always want your true emotions to be on display.
Anne-Marie Roussel – Business Development Director, Microsoft
Anne-Marie manages Microsoft’s digital media portfolio, which includes Xbox, Zune and MediaRoom. Anne-Marie noted Microsoft’s early efforts in the virtual world with its Flight Simulator game – which in turn led to the development of a product called Microsoft ESP (for 3D visualization). Anne-Marie gave the interesting example of leveraging virtual worlds for training sales staff – if you sell Ferraris, then your clientele are much different from those buying Fords, so a virtual world can train sales staff on how to interact with prospective customers and face the sorts of questions/issues that Ferrari buyers are sure to present you with. Anne-Marie spoke of Microsoft Virtual Earth and noted work being done to marry its 3D visual maps with crime scene data (to assist local law enforcement).
Susan Stucky – Manager, Service System Design, IBM Almaden Research Center
Susan noted that IBM’s involvement in virtual worlds is not to be a platform provider – instead, IBM is platform agnostic. Susan’s interest in the virtual world is to achieve results that would be harder to accomplish in the real world. One example noted was the practicing of negotiations of complex deals – reviewers (of the deal maker) could provide a virtual thumbs up or thumbs down. Trainees could then replay the segment and view the feedback as it occurred. Susan spoke of the need to capture data to better understand in-world behavior. IBM Researchers developed technology to take audio chat, utilize voice-to-text to transcribe it and then perform unstructured text analysis to decipher patterns of behavior. Susan also spoke of IBM’s Sametime 3D initiative and referenced the use of Second Life to facilitate a virtual meeting for IBM’s Academy of Technology.
If you’re interested in related events from FountainBlue, have a look at their events calendar.
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I’d like to clarify the statement attributed to me above. The figures I reported were originally estimates based on one quarter of data, so should not be taken as more than an annualized estimate. In addition, my reference to the sale of virtual shoes was in the context of the types of industries that are generating return in Second Life. In the top group of earners based on the estimates, most were involved in the land business, and a couple were in other businesses like events management and retail/virtual goods, including shoes. For more information, please see my blog: http://couldtherebewhales.blogspot.com/2009/03/correction.html
Thanks for clarifying, Robin – and my apologies for the misinterpretation.
We need to hear what the net receipts are *after paying tier*. Tier, or server maintenance fees, can take up huge amounts of your profits in SL. I could make a $100 US per day in my real estate business in SL — but then I have to pay $2000 in tier, so not billing your hours, and earning $1000 after investing $3000 and paying $2000 in costs might sound like a promising business, but I would say it also sounds like Russia. And the real estate business is hugely volatile. If your occupancy goes down to 80 percent, your profits sink to 50 percent due to the fixed costs.
Content creation and sales is a much more reliable bet, but advertising and IP theft and all kinds of costs come in, too, as well as tier. Still, Second Life represents a viable way to make a living, costs of servers will come down, and not only due to reverse-engineered “open sims” where there is no commerce or IP protection. The 3D Internet is the way of the future, micropayments do work, protecting value even if in “walled gardens” like SL is very important, as this “wall” enables people to freely enter a free economy with very little friction unlike opensource software which is very hard to use, requires paying consultants to understand, and relies on proprietary models to clone anyway.
Good points, Prokofy – though, I believe Robin was indeed referring to ‘net receipts’. In fact, on her blog, she says, “there were nearly 60K accounts that are making enough money in Second Life to cover their costs.”
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