Trends In The Virtual Worlds Industry

September 28, 2010

How do you keep up with industry trends?  You hear from the people setting the trends.  On September 24th, FountainBlue held its annual virtual worlds conference on Cisco’s campus in Milpitas, CA.  The event featured a session titled “Trends in the Virtual Worlds Industry: An Update on What’s New and What’s Coming.”

The panel:

  1. Facilitator Jeff Pope, Founding Partner, Spark Sky Ventures
  2. David Helgason, CEO and Co-Founder, Unity
  3. Chris Platz, Creative Director and Art Lead, Stanford Sirikata Labs
  4. Eilif Trondsen, Research and Program Director of the Virtual Worlds @ Work Consortium at Strategic Business Insights, SRI International
  5. Mark Wallace, Conversation Manager, Linden Lab

Related News: From Virtual Worlds News, “Unity Launches Unity 3, Wins Innovation Award

Terminology

The panel agreed that the term “virtual worlds” may no longer be applicable.  Eilif Trondsen noted that many technologies (e.g. Teleplace, Protosphere), provide virtual spaces (for corporations), rather than an entire virtual world.  Interestingly, at a Stanford Media X event, IMVU noted that they’re “NOT a virtual world“, either.  Chris Platz noted that he refers to the technology as a “real-time 3D collaborative spaces.”

Adapting to a changing user community

Platz noted that many virtual worlds technologies were designed for an older audience – one that will soon give way to a younger generation (e.g. Gen Y).  The technologies will need to adapt to a user base who grew up in a “virtual world” – they will have a different set of expectations.  An audience member noted that for some kids, their first experience online is in Club Penguin (or a similar “world”) – before they experience the broader web.

Platz encouraged virtual worlds to tear down the “walled garden” (e.g. closed system) in favor of an open system that integrates with Facebook, Twitter and other systems.  Platz developed and experimented with a Flash-based MMORG (massively multi-player online role-playing game) that ran as a Facebook app.  He predicted that some time soon, someone would develop a fully functional 3D virtual world embedded in Facebook – one that users interact with while on Facebook.com.

Avatar or no avatar?

The panel had an interesting debate on the use of avatars.  The debate was spurred from a point made about someone’s notion of an “ideal corporate learning environment”, which listed the following attributes:

  1. Ability to give presentations
  2. Virtual whiteboard
  3. Document collaboration
  4. Desktop sharing
  5. Use of avatars is secondary

What the debate really boiled down to is not “avatar or no avatar”, but “immersion or no immersion?”  Mark Wallace from Linden Lab took the “avatar stance”, noting the deep association between a user and her avatar – and the resulting impact of that connection.  Wallace noted that Second Life residents whose avatars participate in virtual weight loss programs actually lose weight in real life.

Audience member Laura Kusumoto noted that Wallace’s example referred to “Club One Island” on Second Life – I wrote about Club One in a posting about a Stanford Media X event in which they presented.

For me, it’s useful in a group learning environment to receive signals about the other members of the group (e.g. are they paying attention, are they engaged, are they asking questions, etc.).

There are non-immersiveness tools that can be leveraged (e.g. webcams, text chat, message boards, etc.).  However, I do see the value of immersiveness for learning – I’d compare it to an in-person team meeting vs. an audio-only conference call.

Augmented social graph reality

David Helgason made an interesting prediction with regard to augmented reality.  Helgason believes that the future of augmented reality includes your social graph overlaid onto your AR experience.  In the near future, your smartphone may be able to perform facial recognition on a person – and overlay your social graph connections to that person (on your smartphone’s display).

Perhaps the more immediate opportunity is already happening – via location based services as opposed to augmented reality.  For example, I arrive at a restaurant and find reviews from people in my social graph.  Reading my friends’ reviews lets me know whether I should go in to grab a table.

Second Life Enterprise

Linden Lab’s Mark Wallace was asked to comment on future plans for Second Life Enterprise.  Wallace noted that Linden Lab is taking a holistic approach to the entire platform – looking to make improvements to the user experience that apply to all users.  Wallace would not comment specifically on Enterprise, noting that the improvements underway would benefit everyone.

Conclusion

This isn’t your father’s virtual world any more.  From hearing this panel, I’d say that virtual worlds technologies (or, real-time 3D collaborative spaces) will continue to morph and blend immersive experiences with the social graph, social gaming and augmented reality.  As facilitator Jeff Pope noted, it will be interesting to gather again in 12 months to re-assess where the trends have taken us.


Stanford Media X Event: IMVU’s Online Community

August 23, 2010

Brett Durrett (@bdurrett), VP Engineering at IMVU, gave an interesting presentation at a Stanford Media X virtual worlds event.  IMVU achieves a $40MM annual run rate, primarily from the sale of virtual goods.  Several virtual worlds entrepreneurs were in attendance at the event, which meant that Durrett’s talk received a lot of attention and interest.

IMVU is NOT a Virtual World

Durrett began the presentation by stating that IMVU is not a virtual world.  Instead, they are an online community “where members use 3D avatars to meet new people, chat, create and have fun with their friends.”  Many members of the early management team came from There.com (including Durrett) and their experience told them that an expansive “world” may not be the best solution.

Instead, the team considered connecting (with one another) the core function of the experience, so they built rooms and spaces where members can meet, connect and chat.  IMVU has achieved large scale usage.  At any time of the day, there’s usually 100,000 (or more) users logged into the system.  And while there’s no single “world” connecting them all, a user can find and connect with any other user who’s online.

User Generated Content as Key Enabler

How has IMVU achieved their current run rate?  User generated content.  IMVU generates very little of the virtual goods for sale in their marketplace.  Instead, it’s the community that creates the virtual goods for sale.  Durrett noted that IMVU could have hired a staff of developers to create the 100,000+ pairs of womens’ shoes available in IMVU.  But at the end of the day, they wouldn’t know if users liked those shoes.

And, that would have covered just shoes.  The way to scale to the wide assortment of goods now available is to open up the creation to the users.  With so many goods available, how do users find the items they want to purchase?  Durrett noted that like any online retailer with a large inventory, intelligent tools need to be built, a la Amazon’s recommendation service.  IMVU can recommend new items to you based on your past purchase patterns.

Competition Drives Engagement

Durrett described how IMVU creates daily contests based on pre-determined themes.  Users dress up their avatars in the particular theme and then submit a snapshot (image) of their avatar.  The community votes and the top avatars are displayed on a leader board.

To appear on the leader board, the reward is “virtual” (i.e. recognition, rather than cash, virtual credits, etc.).  And yet, the contest creates an intense amount of interest and competition from the community – a great thing from IMVU. If members happened to admire a particular user’s outfit, they could purchase all the items in that outfit with a single click.

Expanding the Inventory

Expansion of virtual goods inventory will be a key driver to IMVU’s continued growth.  They already make user generated music available (in MP3 form) and they recently launched games.  For games in particular, it will be interesting to see if IMVU creates inventory items around game status and advancement, as is common in many of today’s social games (e.g. FarmVille).

While IMVU does not support user generated games today, that could  be an interesting avenue of growth.  They’d probably want to review and certify submitted games, to prevent malicious activity from occurring.  In this manner, they could create a sort of iTunes App Store for games.

Related Links

  1. Interesting and related presentations from Brett Durrett (SlideShare)
  2. TechCrunch: IMVU’s Virtual Cash Cow: Doubling Revenues, Focused On Gaming (Video)
  3. Virtual Worlds News: IMVU Hiring, Anticipates $60M Run Rate

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Stanford Media X Event: Virtual Worlds Entrepreneurs Show The Way

August 20, 2010

Introduction

Media X at Stanford University hosted a workshop titled “Cashing In on Virtual Worlds: Entrepreneurial Insights for the Healthcare Industry.” The workshop was organized by Parvati Dev and Laura Kusumoto, who combine leading edge research, expertise and hands-on experience with virtual worlds and virtual worlds platforms.

In her introductory remarks, Ms. Kusumoto provided a perspective on the current state of virtual worlds. While the consumer-focused virtual worlds have seen notable platform closures (e.g. Google Lively, Metaplace, There.com, etc.), there has been positive activity on the enterprise side of virtual worlds, including virtual events and virtual trade shows.

Virtual Worlds: On An Upswing?

Kusumoto referenced a recent Gartner Hype Cycle Report that positioned “public virtual worlds” in a phase of “Trough of Disillusionment.”  The good news is that the subsequent phases are called “Slope of Enlightenment” and “Plateau of Productivity.”  Web 2.0, Tablet PCs and Wikis are positioned in this “Slope of Enlightenment” phase in Gartner’s cycle.

In the afternoon, we heard 5-minute pitches from entrepreneurs who were looking to launch virtual worlds businesses related to health care. These entrepreneurs showed me how virtual worlds (and notably, the surviving virtual worlds platforms) can embark on an upward path towards enlightenment.  Here’s my view on how virtual worlds are evolving:

Circling back to the Gartner Hype Cycle, I look back at the following progression:

  1. Technology Trigger: Artists and Hobbyists discover this technology for self-expression
  2. Peak of Inflated Expectations: Fortune 500 brands enter the mix, expecting a transformation of marketing and advertising
  3. Trough of Disillusionment: An assortment of virtual worlds platforms fold
  4. Slope of Enlightenment: Entrepreneurs develop innovative businesses that ride on top of virtual worlds platforms

The entrepreneurs who presented are leading the way towards enlightenment and the virtual worlds platforms (e.g. Second Life, Unity, OLIVE, etc.) stand to benefit.  The new business model is the purchasing of virtual land (or, the licensing of virtual world platform technology) that entrepreneurs leverage to drive monetization and revenue.

In a sense, this is similar to the smartphone app store – the entrepreneur creates intellectual property that rides on top of a “platform”.  The entrepreneur then leverages that platform to drive revenue to a direct sales channel (customers).

Noted Entrepreneurs

I’d like to highlight some of the presenting entrepreneurs (and their businesses).

Club One Island

Lose weight in a virtual world, on Club One IslandCeleste DeVaneaux gave a fascinating overview of how participation in a virtual world program can facilitate habit change.  It’s one thing to urge people to eat slower – it’s another thing to show them how.  And, to have their own avatars practice the habit of doing so.  Club One Island runs on top of the Second Life platform.

Related: How I lost 20 pounds in Second Life (featuring Club One Island – by Hypergrid Business)

CliniSpace


CliniSpace is a collaborative virtual medical environment created by Innovation in Learning, Inc. (the company led by Parvati Dev, one of the event’s organizers).  The goal of CliniSpace is to provide virtual world-based training to physicians, nursing students, etc.  A virtual patient can start out completely healthy, but then be programmed to worsen, such that s/he requires CPR within 15 minutes.  The service runs on top of the Unity platform.

InWorld Solutions


InWorld Solutions “incorporates a wide range of avatars, content and features specifically designed to facilitate clinical and educational applications.”  InWorld can facilitate treatment for substance abuse by having patients in a virtual world, with their doctors observing from the same physical space – or, from within the virtual world.  Patients can experience peer pressure (virtually) and be advised and coached on how to respond.  InWorld runs on top of Forterra’s OLIVE platform.

Conclusion

These were just a few of the innovative business concepts brewing in one particular industry (health care) around virtual worlds.  As more entrepreneurs launch virtual worlds businesses, the platform vendors (e.g. Linden Lab / Second Life, Unity, Forterra / OLIVE) stand to benefit.  And importantly in this vertical, another entity stands to benefit: the human condition.

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