Vw and business models feb 2011

© 2009 by Strategic Business Insights. All rights reserved.© 2009 by Strategic Business Insights. All rights reserved.

Virtual Worlds and Business Models

Eilif Trondsen

Director, Strategic Business Insights

[email protected]

http://www.strategicbusinessinsights.com

2© 2010 by Strategic Business Insights. All rights reserved.

Agenda

Definition

VWs and Business Models: Conceptual Framework

Demand & Use of VWs

Supply & Technology

Adoption Issues

Future


Key Characteristics of Virtual Worlds* Shared Space: The worlds allow many users to

participate at once. Graphical User Interface: The worlds depict

space visually, in styles ranging from 2-D “cartoon” imagery to more realistic 3-D environments.

Immediacy: Interaction takes place in real time. Interactivity: Many worlds allow users to alter,

develop, build, or submit customized content—but differences exist among virtual worlds.

Persistence: The worlds continue to exist regardless of whether individual users are logged in and active.

Socialization or community: The worlds allow and encourage the formation of in-world social groups like guilds, clubs, cliques, housemates, and neighborhoods.

* 3D Immersive Environments


Virtual Worlds and Business ModelsConceptual Framework

Supply Side/Enabling

Technology

Demand Side/Adoption;

Consumers/Enterprise

Create VALUE for users

through applications

Create VALUE for users

through applications

• Play games in VWs--for free or using "freemium model". With

free basic play, but pay for enhanced play or premium service,

and pay for virtual products and services• Ad model does not work as well in VWs today, as most don't

have sufficient number of users (and many of most popular

VWs are for kids)• VWs can lower operating costs, including costs of collaboration

as well as enhancing collaborative work• Open source VWs--enable building customized worlds for

particular purposes that can generate revenues• Co-creating value with customers or partners• Affordances of VWs enable "richer/deeper" forms of collaboration

• Play games in VWs--for free or using "freemium model". With

free basic play, but pay for enhanced play or premium service,

and pay for virtual products and services• Ad model does not work as well in VWs today, as most don't

have sufficient number of users (and many of most popular

VWs are for kids)• VWs can lower operating costs, including costs of collaboration

as well as enhancing collaborative work• Open source VWs--enable building customized worlds for

particular purposes that can generate revenues• Co-creating value with customers or partners• Affordances of VWs enable "richer/deeper" forms of collaboration


Emerging Applications of Virtual Worldsfor "Serious Work"

Collaborative work All industries with distributed project work (IBM, Intel, Unilever)

Meetings & Events All industries (Cisco, Oracle, IBM and others use VWs and Virtual Meeting Platforms (Unisfair, InXpo,

CGS, Digital Reactor, On24, and others)

Learning & Training Universities and industry (Silicon Image, BP, AstraZeneca, DoD, BAE)

Prototyping and Experimentation Architecture and Construction (Starwood Hotels, Phillips, Crescendo Design)

3-D Modeling and Data Visualization Data centers (computer industry and other high-tech industries) and control centers (Chevron, Statoil, NOAA, FXPAL)

Trust Building and Socialization All industries using virtual, distributed teams (IBM, Sun, Cisco, J&J)

Focus Groups with Innovators Music and entertainment (Sony BMG Music Entertainment, Viacom, Electrolux)

Branding and Promotion Consumer product companies (P&G, Pepsi, Dell, CIGNA)

Talent Discovery and RecruitingConsulting industry and hiring agencies (TMP Worldwide Advertising & Communications,

Manpower, Kelly Services)

Applications Industries and Companies (early adopters)


Many Types of Virtual Worlds

Source: http://www.secondtense.com/2009/01/virtual-worlds-game-worlds-and-user.html


Programmerfocus

(creating a world is complex)

Virtual Worlds Platforms

Suitable for consumer worlds

Suitable for enterprise worlds

End-userfocus(creating a world is simple)

MultiverseMultiverse

OpenSimOpenSim

TeleplaceTeleplaceProtosphereProtosphere

Second LifeGrid

Second LifeGrid

Active WorldsActive Worlds

Cobalt/CroquetCobalt/Croquet

WonderlandWonderland

Key:

Blink 3DBlink 3D

WebFlock *WebFlock *

Vivaty *Vivaty *

propreitarypropreitary

Web Alive *Web Alive *

open sourceopen source

*browser-based

SirikataSirikata

MoondusMoondus

PowerUPowerUNexusNexus

Vastpark *Vastpark *

CryEngine 2, Unreal Engine 2.5,nd many more

enabling newplatforms

Unity3D*Unity3D*Blue MarsBlue Mars


VW Platforms as Holistic Environments for Learning and Collaborative Work

FormalLearning• Instructor-Led

Learning• Self-Directed

Learning

Retirees and alumni serve as coaches and mentors to younger employees, enabling the transfer of experience and tacit knowledge.

• Podcasts• Video • Blogs• Wikis• Others

CoachingFacilities

Social Networking and Informal Learning

Virtual Prototyping and Demonstrations

EntertainmentArea

Storytelling

Role-Playing Simulations

Profile

We

b L

ink

to


Potential for Engagement & Learning in VWs

ENGAGEMENTENGAGEMENT

ImmersionImmersion

InteractivityInteractivity

DramaDrama

StorytellingStorytelling

CompetitionCompetition

Social ContextSocial Context

VisualizationVisualization

LEARNINGLEARNING

• Multiple Perspectives• Situated Learning• Transfer

UGCUGC

UGC: User Generated Content

Issue: When will we have "instructional designers" who can take advantage of VW affordances and design and build learning activities in 3D immersive environments, especially learning experiences that cannot be achieved as easily or cost-effectively, if at all, in the physical world

Yes, "proof" of effectiveness of

learning/training in VWs is lacking/

insufficient


Work and VWs in an Evolutionary Context of the VW Industry

WORK

ENTERTAINMENT

LEARNING/

TRAINING

2008

Phase 1:•SL focus•Sales and Marketing•Branding

Phase 2:•Entertainment•Pre-teens and teens•Connecting toys and

traditional media to VWs

Phase 3:•Greater focus on work•Enterprises recognizing

value of VWs for work•Better integration of Web

and VWs

Phase 1

Phase 2

Phase 3

SL: Second Life

Media anduser interestand attention

Interest in non-SL platforms

Today’s Reality: Entertainment Represents “Low Hanging Fruit”

Post-2000 Evolution:

ExpectedEnterprise Use

ActualEnterprise Use

2010


Visionaries versus Pragmatists

Visionaries vs. Adventurous Early buy-in Think big Go it alone Spend big First strike capability Think Pragmatists are

pedestrian

Pragmatists Prudent Wait-and-see-attitude Manage expectations Maintain relationships Spend to budget Staying power Think Visionaries are

dangerous

Pragmatists don’t trust visionaries as references.

Source: Geoffrey Moore, Crossing The Chasm, Strategic Business Insights

Chasm


The Continuum of VWs--Towards Browser-Based VWs

Browser-Based

(no downloads)

Browser with

Plug-In

Light

Client

Heavy

Client

Relatively lower degree of Immersiveness (today)

High degree of Immersiveness

Flash Other plug-ins

Holy Grail:

3D Immersion

Easy access

Ease of navigation and use

Leverage Web tools and technologies

Benefit from browser advancement

Enable easy multi-device access


Innovation and VWs

Virtual Worlds InnovationEnhancing Human

Interaction, Communication

and Collaboration

A tool for Open Innovation

Platform for Innovation and Creativity

Collaborative tool and for learning and knowledge sharing

Technology

Applications

Business models

Innovation

Innovation

Learning &Training

CollaborativeWork


Framework for Future Scenarios

Acc

ess

Tec

hn

olo

gy

User Category

Consumers Enterprises

We

b B

row

se

rC

lie

nt/

Ap

p

Reasons for using scenario methodology:

Provides structure for analysis

Avoids excessive number of possible future states

Uses key scenario drivers

Narrative 1

Narrative 2

Narrative 3

Narrative 4

Will Linden Lab have

future role to play here

and live up to its

promise?

Will browser-based

VWs improve ease-of-

use and remove

learning curve

obstacle?

Will apps for VWs help

generate more interest

In VWs by enterprise?Will consumers shift from

browsers to apps on mobile

devices and stimulate

consumer interest?


Adoption of 3D Immersive Environments

Gartner forecast in April 2007 (at Gartner Symposium/ITxpo in San Francisco): "80% of world's active Internet users (and Fortune 500 enterprises) will be in a virtual world by end of 2011."*

* In late 2009 there were 1.7 billion Internet users (including 738 million in Asia)

How Close Are We to Gartner's Forecast?

3D Movies 3D Sports on TV

…But Immersive Environments and 3D in Entertainment have exploded in recent years…

…and will Virtual Worlds

and video games soon

also come with 3D and

navigating via gesture

recognition?


Q&A

Vw and business models feb 2011

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