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© 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
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
3© 2010 by Strategic Business Insights. All rights reserved.
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
4© 2010 by Strategic Business Insights. All rights reserved.
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
5© 2010 by Strategic Business Insights. All rights reserved.
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)
6© 2010 by Strategic Business Insights. All rights reserved.
Many Types of Virtual Worlds
Source: http://www.secondtense.com/2009/01/virtual-worlds-game-worlds-and-user.html
7© 2010 by Strategic Business Insights. All rights reserved.
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
8© 2010 by Strategic Business Insights. All rights reserved.
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
9© 2010 by Strategic Business Insights. All rights reserved.
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
10© 2010 by Strategic Business Insights. All rights reserved.
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
11© 2010 by Strategic Business Insights. All rights reserved.
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
12© 2010 by Strategic Business Insights. All rights reserved.
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
13© 2010 by Strategic Business Insights. All rights reserved.
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
14© 2010 by Strategic Business Insights. All rights reserved.
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?
15© 2010 by Strategic Business Insights. All rights reserved.
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?
16© 2010 by Strategic Business Insights. All rights reserved.
Q&A