Business Innovation: Powered by World of Warcraft

January 21, 2009

They’re called massively multiplayer online games (“MMOG”).  Hundreds (if not thousands) of users connect and “collaborate” in a game that’s held not just on the individual’s device, but online – where that individual is connected to all other players simultaneously.  World of Warcraft (aka WoW) is one of the more notable MMOGs out there.  In a BusinessWeek article titled “How World of Warcraft Promotes Innovation“, authors John Hagel and John Seely Brown discuss design features of the popular MMOG and apply those features towards business opportunities around innovation.  The authors list the “bottom-line lessons for executives”:

  1. Reduce barriers to entry and to early advancement
  2. Provide clear and rich metrics to assess performance
  3. Keep raising the bar
  4. Don’t neglect intrinsic motivations
  5. Provide opportunities to develop tacit knowledge, but do not neglect broader knowledge exchange
  6. Create opportunities for teams to self-organize around challenging performance targets
  7. Encourage frequent and rigorous performance feedback
  8. Create an environment that rewards new dispositions

For each “lesson” (above), the authors describe how it is applied in WoW – and, how the lesson can be applied to business innovation.  Now, let’s move from the world of MMOGs to virtual worlds and virtual events.  I’m a believer that if these same principles are applied to business-oriented virtual “communities”, that we can significantly empower (and generate) untold amounts of business innovation.

On the web, we already have communities of individuals who coalesce around any number of topics and interests – everything from iPhone enthusiasts in a Facebook group to a discussion forum about Tandy’s TRS-80 desktop microcomputer.  Members of these communities are quite engaged in their area of interest and tend to spend a lot of time online.  If provided with a platform that’s also engaging and online, it’s safe to say that they wouldn’t need much convincing to participate.

As such, it seems to me that the bulletin boards, discussion forms, chat areas (and even Facebook or Yahoo groups) of today may migrate (in the near future) to a hybrid virtual world/event, with more real-time interaction and engagement.  Let’s consider a business example.  Take any large corporation that sells its products and services via a “partner ecosystem”.  Much of this company’s revenue is generated from sales that are directly sourced by its partners.  But, how well are partners connected – and how often do they partner up (on their own) to create unique and compelling solutions?  If the answer is “not too often”, then an online medium, using principles drawn from WoW, may be a big win.

As seen in WoW, if a venue allows individuals to assemble, collaborate and generate actions (with a built-in reward and recognition system to motivate the participants), you find that progress, development and innovation fall out naturally.  Create the foundation and a house gets built.  Companies can leverage these online communities (aka virtual worlds) to tap into the Wisdom of Crowds and be able to crowdsource the next great product.  The crowd may give your next product the true WoW factor.

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Posted by Dennis Shiao

Real Growth in The Virtual World

December 26, 2008

With a recession stifling business activity across the globe, what economy is expected to generate growth in 2009?  The virtual world economy, of course!  I believe that with consumers affording less these days, they’ll naturally spend an increasing amount of time online (in social networks and virtual worlds) and in video games.  Consider the following chart from Linden Lab:

Monthly User Hours from Second Life residents is at an all-time high.  Linden Labs’ data also shows that User to User Transactions had strong growth in 2H 2008 totalling over $100MM in Q3 2008 alone.  Strong growth should continue through 2009 for Second Life and other virtual worlds.  The virtual world platforms will benefit both from new member sign-ups, as well as increased activity from existing members.  We should see a network effect take place, where new users sign up via encouragement from their in-world friends.

Sale of virtual goods will also see strong growth.  Jeremy Liew of Lightspeed Venture Partners estimates that Facebook is generating virtual goods sales at a clip of $35MM per year.  That’s pretty good – and I expect that virtual worlds platforms can benefit from similar volume/revenue.  After all, virtual worlds are a natural venue to exchange virtual goods.  Linden Labs tracks user to user transactions and I think a trend in 2009 will be user to merchant transactions, in Second Life and elsewhere.

Another area of interest is in video games, where in-game advertising and commerce seem to be a natural fit.  I believe that gamers are more engaged in their activity compared to virtual worlds users or social networkers.  And while that may result in sensitivity to advertising, I think that relevant and useful ads can receive significant response rates and that in-game commerce can be huge.  We’ll want to watch this area in 2009 and beyond.

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Posted by Dennis Shiao

The Effect of “Online” on the Event Industry

December 18, 2008

Newspapers and other print-focused publications have been hit hard by the migration of readers to the Internet.  Is the event industry facing a similar challenge?  It seems so, especially in today’s economic climate, when travel costs are receiving heightened scrutiny from the CFO.  In a previous blog post, I predicted that 2009 would be the Year We Go Virtual, as we witness a very sharp decline in the number of face-to-face events.

In a blog post titled “Are bloggers & social networks killing the big shows?“, Robert Scoble (@scobleizer) presents a similar view.  To quote Robert:

My sponsor, Seagate, told me they are reducing their spend this year at CES. AMD and Delphi are doing the same thing and I’m hearing about many other companies who will either stop going, or reduce the size of their booths, either this year, if they could, or in 2010 (contracts make it tough to shrink booths as fast as companies might want).

And here’s one reason why:

What’s killing them? The Internet. You can launch a product live now from a living room. Thanks to Stickam, Ustream, Qik, Kyte, YouTube, Flixwagon, Viddler, Vimeo, SmugMug, etc and blogs.

I agree with Robert, though I’d add that in the B-to-B space, you might want to launch a product from a studio (vs. your living room) and extend the reach of social networks by partnering with B-to-B publishers in your space.  The fact remains, though, that there are low-cost means for capturing, publishing and distributing video and related multimedia for launching and evagenlizing your products and services.

And, with active social nets like Facebook and Twitter, you have a cost effective publishing system for quickly spreading the word, assuming you’re spreading the right message to the right people and not spamming the universe.  I’ve seen Virtual Tradeshows as a great vehicle for handling product launches – they include the live keynote video from an executive, the follow-on presentations (Webcasts/Videocasts) and the discussions/networking (online) that you’d typically see at a physical launch event.

Of course, when you’re online, everything can be tracked and reported on.  And, you extend the reach of the content/event beyond geographical boundaries.  As Robert said, I can pitch my product from my living room.  And an IT Pro in Hong Kong can be on the receiving end of my pitch!  Another benefit of online is passalong, which can make a video, podcast or virtual event go viral.  With physical events, that’s just not possible.

While the newspaper industry is still seeking a magic potion to shift their revenues from print to online, I think the event industry should consider 2009 as the year where complementary versions of their events get launched online.  After all, that’s where we all are.

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Posted by Dennis Shiao

Leverage Twitter for Virtual Tradeshow Outreach

December 15, 2008

When Sarah Lacy interviewed Mark Zuckerberg on-stage at South by Southwest Interactive this past March, rumblings spread throughout the audience regarding Lacy’s interview style.  A few in the audience extended the rumblings online via Twitter – and from there, Twitter’s network effect quickly spread the commentary across the globe.  The power of Twitter (and related social networks) can be a real boon to B-to-B events, precisely because of the network effect:

So let’s imagine I’m logged in to a Live Virtual Tradeshow (VTS).  I’m visiting exhibitor booths, viewing Live Webcasts and interacting with peers.  All in all, I’m enjoying myself.  I want to spread the word to friends and colleagues.  One quick (and efficient) way to do that is to post a message to Twitter.

Twitter home page

Twitter home page

I can “tweet” about the Virtual Tradeshow and pass along a URL to my 141 followers.  If any of those followers likes the recommendation, they can “retweet” my message to their followers.  If 5 of my followers spread the word and they each have an average of 100 followers, then my message had a potential audience of 141 + (5 * 100) = 641.  And that doesn’t even count any downstream distribution via my followers’ followers.  If my tweet happens to be picked up by a Twitter power user, my message could be seen by her 10,000 followers!

You can see how quickly and efficiently information is published.  And that’s the beauty of the network effect.  As I amass more followers – and, as more users sign up with Twitter – the potential audience of my “tweets” grows exponentially.  The result is a powerful tool for B-to-B marketers and publishers, if used right.  Publishers need to grow their audience in order to grow their revenue – new audience results in more page views, more ad impressions delivered, more online sales leads.  Where can you find that audience?  On social networks like Twitter.

VTS platform providers may want to consider:

  1. A “post to Twitter” utility within the VTS – make it convenient for VTS attendees to post a message to Twitter, including an auto-shortened URL (so their followers can access the event)
  2. A “Twitter reflector” that takes selected chat messages from the VTS and posts them to Twitter.  Imagine a user engaged in a “group chat” area who wants to share her insight simultaneously to the VTS attendees and her Twitter followers.  Allow her an easy way to do that.  Again, include a shortened URL that points back to the event

Of course, Twitter is not the only social network out there (I haven’t even mentioned Facebook and its 130MM users).  So while I’ve outlined a few ideas that are specific to Twitter, the bigger picture concept is about integrating the VTS platform with an assortment of networks.  The trick will be to pick the right ones.

You can follow me on Twitter here: http://twitter.com/dshiao

2 Comments | Virtual Tradeshows (VTS) | Tagged: , , , , , , | Permalink
Posted by Dennis Shiao

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