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Virtual Worlds and the Transformation of Business: Impacts on the U.S. Economy, Jobs and Industrial Competitiveness

December 16, 2008 by 1 Comment

athenallianceAnyone who hasn’t yet grasped the momentum building in the virtual worlds sphere, hasn’t seen the ever-growing pile of white papers being released. Another example from the past week or so comes from the US-based non-profit entity, Athena Alliance.

Authored by Robert B. Cohen, Ph.D, the paper has the title of Virtual Worlds and the Transformation of Business: Impacts on the U.S. Economy, Jobs and Industrial Competitiveness. As its title suggests, the focus is the US economy and the opportunities virtual worlds may provide. Cohen has some credibility in the tech field, having advised former New York Governor Mario Cuomo on technology as well as being an economic advisor for President George H.W. Bush’s National Advisory Commission on Semiconductors.

Given his long stint in the field, Cohen is upbeat on the potential of virtual worlds for the US economy. After an initial read-through, I found there were some fascinating concepts in the report, particularly the concept of a ‘guild system’ approach to business and virtual worlds. I caught up with the author to ask him about that and the impact of the imminent change in US government:

Lowell Cremorne: From a US standpoint, do you see the imminent change of government federally causing fundamental changes in approach to virtual worlds in the short term?

Robert Cohen: Yes, I think that the desire to use technology to make government work “smarter” and more efficiently will certainly lead to more use of Virtual World technology in the US government itself. This might mean a lot of support for efforts such as the AirForce’s MyBase, where a wide range of training from basic through fairly complex, will all be done in a Virtual World setting.

It would also help bring Virtual World technology for medical care that is being offered by Forterra to the military will get a lot of support. Secondly, the emphasis on helping other parts of the economy use new technology, including Virtual World technology could mean that there
would be some effort made to help businesses and universities use Virtual Worlds for training and education and to support the creation of new
platforms that support the technology with more open standards. This is similar to what is being pushed by the Virtual World Roadmap effort.

Lowell Cremorne: You mention throughout your report the ‘guild system’ approach to business and virtual worlds. Could you summarise that approach and would you agree that it’s a significant mindset change for business?

Robert Cohen: The approach contrasts two outcomes for firms of the future. In one, the multi-industry conglomerate, firms get bigger because virtual worlds help them expand their control over more widespread and sophisticated operations in diverse but related industries. So, I might see auto and aerospace firms merge and bring suppliers that serve them under their wing.

In the other outcome, I would expect a rise of smaller, more agile and nimble “technology user” firms that build up an impressive array of expertise within their firm. These “modern” guild system firms differ from guilds because they can track and support the development of expertise within their firm and clearly define their capabilities to others. As a result, a group of these firms can partner to attack a specific project, say to design a new cancer drug. But people in the firm might also work closely with other, similar “modern guild system” firms to decode a gene with an entirely different group of partners. This kind of joining on a specific task, completing it, retaining some of the intellectual property from it, and then licensing it or producing it jointly is the way this type of firm would work. It might have a series of relationships that are built, continued, broken and then rebuilt with different partners. It is kind of a footloose consultant writ large. I would agree that it is a significant mindset change for business, but you do see some firms operating with elements of this today.

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It’s certainly a compelling vision for businesses to investigate. The need for a business to be agile and innovative and to have a heavy emphasis on intellectual capital isn’t a new concept. What Cohen’s paper does illustrate is the impact of a link between the collaborative power of virtual worlds and the current business environment where nimbleness is key.

You can read the report in full here.

Filed Under: Business, General News, Virtual Worlds Tagged With: , ,

Minding My Own Business

December 16, 2008 by 3 Comments

Today, a guest post from an Australian business owner in Second Life, Seshat Czeret. One of her major goals is to run a sustainable business in SL – one which she can continue to run, and which sustains itself financially. Anyone looking to run a small business in SL for pleasure, rather than for mega bucks, should check out what Seshat has to say about building and running a business.

seshat

I’m Seshat Czeret, and I run a business in Second Life. It’s a small business, just me handling it, but it’s bringing in the Lindenbucks.

It started almost by accident. I was in SL to help my friend Tateru Nino with her columns, doing some of the groundwork. I ran into a role-playing environment that I thought I’d enjoy, and made myself a couple of things to help myself with that. Some clothing, and a curtsey animation. Friends suggested I put them up for sale, and Tateru offered me a bit of space at her shop. So I did. And they sold.

Another friend asked if I’d make her an outfit, which I did, which also sold. More friends asked for variations on that outfit, and before I knew it, I had a small – very small – business I was running.

I rented a storefront, and that’s the point where I decided I’d better treat this as a real business. I’m running Ubuntu Linux on a laptop on my computer desk, so I started entering my transactions into GnuCash.

At first, I wasn’t earning enough from sales to pay the rent on the store. I entered NCI’s Show and Tell and Newbie Blitz Builds, and the winnings I made from those covered the shortfall.

As I expanded my range of products, sales improved. Eventually, I covered my rent with sales alone. I expanded into other sims, as recommended to me by my customers. Each such recommendation brought me business – when I’ve let my customers lead me to other customers, it’s always succeeded. Places I tried to find on my own have usually failed.

Another friend gave me space in her store in exchange for a copy of everything I made, which enabled me to have a major storefront. That brought another increase in sales. We recently moved to a larger plot of land: I own the parcel my store is on, though the building extends across four parcels & contains multiple stores. And I pay my own tier, now, as well.

So I now have a major store, and several smaller stores across several different parts of Second Life. The smaller stores are usually in places associated with a roleplay sim, and hold products appropriate for that role-play. It’s convenient for the customers, to have the most appropriate products for them right there.

Despite that, two core products still pay most of my tier – the curtseys, and the courtly bows I created to complement them. Whenever they’re appropriate to a store, I make sure they’re there, and prominently placed.

I started very small, and I’ve grown conservatively. I’m still a very small Second Life business – I haven’t yet earned enough money to be worth changing into atomic-world currency. But by growing the business conservatively, I haven’t acquired obligations I can’t fulfil. I can still run the business by myself, and I can afford my tier.

I’ve learned not to be shy of upload fees. I often see advice for SL businesses saying not to put the price on a product sign, because if you change it you need to upload again. I disagree. Making the price visible lets my customers browse with confidence, knowing they won’t be suffering ‘sticker shock’ when they find the things they actually want to buy. One extra sale covers the upload fees!

I’ve learned to keep close track of the business. Keeping track lets me know when a product line is selling well, and when it might need to be changed in some way. It lets me know which of the smaller stores is doing a good trade in landmarks to the main store, which in sales, and which in both. And it tells me which products my customers like, so I know which ones I should probably do more of.

But for all of that business-y stuff, I do bear in mind that even my most expensive product wouldn’t pay for a cappucino. So most of all, I make products that are fun to make. It’s nice to dream about the possibility of making a living doing this, but the realistic point of view is that it might never do more than pay for itself. So I may as well have fun.

Filed Under: Australian News, Business, Virtual Worlds Tagged With:

Gender and virtual worlds: new research

December 15, 2008 by Leave a Comment

Dmitri Williams from the University of Southern California has completed some research in conjunction with Mia Consalvo (Ohio University), Scott Caplan (University of Delaware) and Nick Yee (Stanford University). The title of the research is Looking for gender (LFG): Gender roles and behaviors among online gamers. The research employed a range of survey tools as well as some key health measures like Body Mass Index – the rigour in approach is certainly there.

Some standout points from the research (some aspects are direct findings, others are cited findings in reviewing the literature for the research):

  • The average player in the study had more than six alternate characters
  • Males were more focused on achievement as a reason for gaming
  • Female players tend to play more for social reasons and now comprise 40% of all gamers
  • Female players played the most and were the most healthy

    • There’s a lot more in the findings than the points above, but some of them alone challenge some significant stereotypes aimed at online gamers. There are obvious ramifications of research like this that turns common stereotypes on their head.

    Download the full paper here in MS Word format.

    Filed Under: General News, Metrics, Virtual Worlds Tagged With: , ,

    The Watch – virtual worlds in the news

    December 15, 2008 by Leave a Comment

    1. The Financial Times (UK) – Sony aims for a new virtual world order. “The age of the avatar has arrived for games consoles, with the launch of Sony’s Home yesterday completing the response of the big three makers to the growth in popularity of social networking and virtual worlds. The internet connectivity of the current generation of consoles is allowing Microsoft, Nintendo and Sony to build worldwide communities among owners of the more than 75m machines now sold. The addition of avatars and virtual environments is expected to open up new revenue streams, but the impact on existing virtual worlds such as Second Life , Gaia , There and Habbo is still unclear.”

    2. CNN (USA) – Virtual world, real emotions: Relationships in Second Life. “Nina Allam was nervous. She was about to meet someone she had been chatting with online since February. Nina Allam and Sean Barbary were married on the virtual world of Second Life before meeting for the first time. “I was terrified on the train. Very, very nervous. I remember sending him a text saying ‘Last chance to back out,’ when I was at the station ready to get on the train.” Though meeting Sean Barbary in person for the first time, Allam was already married to him in the online virtual world of Second Life.”

    3. BBC News (UK) – Virtual world for Muslims debuts. “A trial version of the first virtual world aimed at the Muslim community has been launched. Called Muxlim Pal, it allows Muslims to look after a cartoon avatar that inhabits the virtual world. Based loosely on other virtual worlds such as The Sims, Muxlim Pal lets members customise the look of their avatar and its private room.
    Aimed at Muslims in Western nations, Muxlim Pal’s creators hope it will also foster understanding among non-Muslims.”

    4. Ars Technica (USA) – Griefers attack Muslim virtual world already awash in users. “The idea for a virtual world focused on the Islamic lifestyle began five years ago, when CEO Mohamed El-Fatatry moved from Dubai to Finland in order to attend university. Raised in Dubai, El-Fatatry wanted wider horizons and a chance to see more of life. American universities were generally expensive, so El-Fatatry sat down at his computer, Googled for “media technology studies in Europe,” and found a Finnish university as his third hit. Finland offers free higher education, even for foreigners, so El-Fatatry applied, enrolled, and only then headed to his new country for the first time.”

    5. Indiatimes (India) – Beware, your avatar under threat. “Imagine filing a complaint in a local police station to free your gaming character, worth hundreds of dollars, stolen online. As it is it was very difficult to get hostages released from terrorists hands, now local cops have another problem to handle – to release your virtual identity from cyber terrorists. And unfortunately, the NSG or Marcos are not trained in that. The online gaming world is becoming increasingly lucrative. In countries like China, US, South Korea, many companies are employing hundreds of youth to play free games in their parlours. These kids are then asked to make their characters, powerful and arm them with magical virtual weapons.”

    6. exduco (Italy) – Research aims to make ‘virtual worlds’ as world wide as the Web . “If you haven’t yet been invited to send a digital representation of yourself to a business meeting or a family reunion in a “virtual world,” it may be because these richly graphical online environments are hamstrung by technical and economic limitations that constrain their reach. So far, virtual worlds have been built by just a few companies, using proprietary technologies that cannot grow in the same free-flowing way as the traditional Web. As a result, while millions of enthusiasts see them as providing unprecedented richness to online interaction, they’re stuck in niche status. ”

    7. TechCrunch (USA) – JumpStart’s Virtual World Teaches Kids While They’re Busy Having Fun. “When it comes to educational software, the trick is to make kids think they’re just playing a traditional escapist game, while they’re really being surreptitiously fed facts and logic problems that put their brains to work. But while many games have done this for years, the technique hasn’t really made the jump to online virtual worlds – most of the kid-friendly virtual worlds are more focused on socializing and having fun than learning. Now JumpStart, a best-selling educational software developer, is looking to fill this niche with its new JumpStart Virtual World, which launched this week in public beta.”

    8. Gamer.Blorge (Australia) – PS3 Home is surprisingly quite fun. “The PS3 Home open beta just launched recently and I had the chance to try out the latest version of the software (1.03). Even though I have been in the beta for some time, the latest version feels like a completely new experience. If you read my previous article, I did talk down the value of the PS3 Home calling it useless. During my time within Home prior to 1.03, I felt like the whole experience was uneventful and almost forgettable. However, after version 1.03 the whole experience changed within Home. For starters there are now lots of people everywhere. Previously, the Home square was a desolate place, because there was nothing to do there. Now the square is bustling with Home users everywhere. The square received a complete redesign, with a new saucer based game smack right in the middle of the area.”

    9. The Industry Standard (USA) – Virtual worlds patent battle brewing? “A controversy is brewing over patent licensing plans by Worlds.com. The General Patent Corporation, which handles Worlds.com’s patent licensing and enforcement, announced Thursday it had retained the law office of Lerner David Littenberg Krumholz & Mentlik for its client. No litigation plans were announced, but Virtual Worlds News reported that GPC would be contacting other companies regarding “licensing opportunities” for its patents.”

    10. The Guardian (UK) – Games can have a serious role to play. “People have been saying for years that it was about time that computer games grew up. All that awesome technology being wasted on escapist fantasies – why couldn’t it be used to generate interest in learning maths or something? Well, whisper it quietly, it might be starting to happen. It is, of course, a bit of a libel on the still-booming videogames market to say it isn’t educational. You can’t play Entropia Universe or Eve Online without learning skills that are useful in a capitalistic world, nor Football Manager without acquiring organisational skills. But they were unintended consequences rather than the game plan.”

    Filed Under: General News, Virtual Worlds, Virtual worlds in the media Tagged With:

    Australians in Second Life Update – small gains locally, declines overall

    December 15, 2008 by Leave a Comment

    The Linden Lab metrics up until end of November 2008 have been released, showing a jump in total number of Australian user hours to 747,158.40 (2.04% of total), up from 686,872.48 in September although a small drop to 2.04% of worldwide user hours. Not that number of hours means a whole lot without knowing the number of users creating those hours.

    Tateru Nino as always summarises the stats nicely, and the news is far from good. The Second Life economy isn’t declining anywhere near as much as the real-world ones are, but it’s declining all the same.

    Filed Under: Australian News, Virtual Worlds Tagged With:

    Twinity: 100K users and Mac version on the horizon

    December 14, 2008 by 4 Comments

    Twinity has just in the past hour passed one hundred thousand registrations. That was the reason I headed to Twinity’s website. What caught my attention were four new words:

    twinitymac

    It’s obviously unclear on how progressed Twinity are with Mac development (something we’ve now sought clarification on), but if things are progressing in that regard, kudos to Metaversum. That, and the regular growth in registrations bodes well for Twinity at this stage.

    Update: I’ve misinterpreted the message on 100K – the actual number is 95K and “approaching 100K” – apologies.

    Filed Under: Alternatives, General News, Virtual Worlds Tagged With:

    Sex in Sony’s Home?

    December 14, 2008 by 4 Comments

    The YouTube video below has been doing the rounds of the social media sites. If very close dancing and the odd suggestive comment equals sex, then indeed Sony’s new virtual world for the PlayStation 3 is a hotbed of fornication:

    Thanks to numerous sources for the link, including Dizzy Banjo and Pavig Lok.

    Filed Under: General News, Humour / Satire, Virtual Worlds Tagged With: ,

    Weekend Whimsy

    December 14, 2008 by Leave a Comment

    1. Second Life: Porcelain and Pink

    2. Pipedream @ Hambone Flux

    3. Anthrocon 2008 Masquerade – Furs on Second Life

    Filed Under: General News, User-generated, Virtual Worlds Tagged With:

    Marketing and Second Life: Linden Lab podcast

    December 11, 2008 by Leave a Comment

    The third podcast in the “Stories from Second Life” series is now live. The topic this time is marketing, with an extensive discussion with Joni West from This Second Marketing.

    I’ll say it again – how on earth can it be that these podcasts can only be listened to directly from the Linden Lab blog?

    Filed Under: General News, Virtual Worlds Tagged With: ,

    Forester Research: building engagement in virtual worlds

    December 11, 2008 by 1 Comment

    In the past week, Forester Research have released a paper titled ‘Consumer Engagement In Virtual Worlds’. The report was commissioned by a consortium of virtual world companies including Metaplace, Inc., Doppelganger (vSide), Gaia Interactive, Inc. (Gaia Online), IMVU, Inc., Linden Lab (Second Life), Donnerwood Media (Meez), PHD, Sony Computer Entertainment America (Home), Sulake Corporation, Oy. (Habbo Hotel), MTV Networks Inc. (Virtual MTV), Vivaty and WeeWorld.

    The 19-page report covers some familiar ground around brand awareness and engaging audiences in virtual worlds and actually provides some guidance along those lines, differentiated by the types of virtual worlds (gaming worlds, structured worlds and unstructured / open worlds). Reported negatives from those initial marketing forays into virtual worlds included low numbers of users and inappropriate brand associations. Positives included the global reach, internal enthusiasm for initiatives and tapping new creative options.

    The three conclusions drawn by Forester are that

    • The period of experimentation and ad hoc virtual world marketing is over
    • Engagement, community, and tapping creativity should be the virtual world mantra
    • Planning and measurement are lacking

    The findings of the report won’t be a surprise to the commissioning consortium but it does provide a useful overview of the ROI challenges for business in virtual worlds and some broad strategies on developing effective engagement strategies.

    Filed Under: Business, General News, Virtual Worlds Tagged With: ,

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