More from the Virtual Worlds Forum Europe, where we’re having a session giving the full statistical skinny on the area. Jess Mulligan from Cyber Sports is giving the definition side of things, before Paul Jackson from Forrester Research gets busy with the stats.
First Jess. There’s as little as 10% crossover between online games and social spaces (e.g. World of Warcraft vs Second Life), so they’re really separate areas – despite the fact that many people who don’t use either confuse the two.
Certain features are common though: they tend towards 3D first-person viewpoints, or ‘iso-linear’. Games are primarily games: players are there to do something – achievement, exploration, and a very directive experience. But for social spaces, it’s more about “hey dude, look how cool I am”.
Each type gets frequent content updates. In something like Second Life, that’s created by users, whereas for games, it’s the game developer making that content. Games are mainly paid for by monthly subscription fees and the price of the original game, while social spaces are more about item sales, and land renting or purchasing.
Jess also mentions Webkinz, a kid-focused virtual world that’s making money from merchandising – selling plushy toys. As a side note, apparently child-focused social spaces are exploding in growth, to the extent that they might soon be considered as a second category.
So, stats. He says there’s about 60 million active players of virtual world games – people who are paying money on a monthly basis. He quotes research claiming these games generated $4.5 billion in revenues last year. Some of the biggies: World of Warcraft (8 million users), Chinese game Fantasy Westward Journey (6m), Runescape (6m) and Perfect World (4m).
Social spaces aren’t making as much money – $400m last year – with 30 million active users. Biggies: Habbo Hotel (7.5m active users), Webkinz (4m), Club Penguin (700,000 subscribers, and 12 million active accounts), and Second Life, which Jess reckons has around 400,000 active users.
Trends. Asia is providing 50% of the revenue for virtual world games, but Europe and Japan are growing. And there’ll be more free-to-play games launching, funded by item sales. “We’re going to see more games under that business model than under the premium model.”
In social spaces, web-based worlds are growing, while those that rely on you downloading a client are “stagnating”. Kidspaces are growing, as he said – Mattel signed up four million kids to its Barbie virtual world in a month. Cor.
I’m interested in the idea of web-based virtual worlds taking off, and what this means for something like Second Life. Hopefully this’ll be explored during the conference.
Jess is also outlining some of the issues: copyright/trademarks, taxation, the high cost of developing and running virtual worlds – “there’s a lot of money in terms of investment, but not a lot of experience” – the increasingly crowded market, so virtual worlds are having to differentiate themselves. A whiz-bang presentation, but really good as a scene-setter.
Now Paul from Forrester, talking analysis and more trends, as well as why big companies are getting involved, despite it being still “a niche market”. Forrester apparently does a lot of work categorising Web 2.0 users, and reckons 10% of the European internet population count as ‘creators’ – who create and upload content to Web 2.0 sites.
However, Linden Lab apparently says 60-70% of Second Life users create content. “It’s a creative community, they give feedback to brands… so it’s a very interesting niche audience for companies.”
Companies also see virtual worlds as a hotbed for new business models and community engagement, and it’s not too expensive to get involved. Apparently Coca-Cola has spent $500,000-1,000,000 in Second Life, which sounds a lot, but is small beans compared with a big TV ad campaign.
Forrester has been surveying 12-24 year-olds in Europe and asking them about virtual worlds. The majority have heard of them and are interested, or haven’t heard of them. 6% belong to a virtual world. 7% belong to a virtual world and visit it often. And 4% tried it, didn’t like it, and went away. What about individual worlds?
Second Life scored highly, with 31% of people (presumably those who have visited a virtual world) having visited it within the last six months. World of Warcraft got 23%, as did Habbo Hotel, while The Sims Online had 17%, and then… oh, the slide’s gone.
Anyway, future trends. “We’re getting to the end of the first phase of consumer virtual worlds. We’re into the media backlash, and looking at what can come out of that that’s useful for future virtual worlds.”
People are looking at using virtual worlds as a proxy for things that we do remotely at the moment. For example, teaching and training, virtual conferences and events (apparently the tech industry is very keen on this), and collaboration.
“But the sexy stuff is the consumer stuff,” he says. Coke, Toyota and MTV are using virtual worlds for marketing and PR, things like Habbo Hotel and Cyworld are veering into social networking, the likes of Disney, Vivendi and EA are using them to build new revenue streams, and the likes of Sony (with PlayStation Home) and the BBC see virtual worlds as a new way to distribute media. Oh, and etailers see virtual worlds as a new way to sell us stuff – for example, iwantoneofthose’s recently opened Second Life store.
With that over, it’s time for some questions from the audience. Ooh, someone from LEGO has just asked a question – maybe they’re doing a virtual world – and she asks about an earlier comment from Lord Puttnam about whether toy firms should be getting involved with virtual worlds.
Jess says “we shouldn’t let the business aspect totally stampede over what we’ve got to do for kids”. He says there are rules in the States about trying to sell products to kids under the age of 13, so those apply just as much to virtual worlds. Paul agrees, pointing out that existing laws covering marketing to children provide a firm guide.
Anyway, are LEGO doing a virtual world? Intriguing…
Now someone’s asking a question about how Second Life scored so highly in Forrester’s research, yet other figures indicate that there are many games and virtual worlds that have many more users. I thought this when the table came up too.
Paul says Forrester’s was a prompted survey, which restricts things, and that it didn’t represent active users – just people who’d visited. So there’s a lot of people who’ve had a look, but maybe haven’t gone on to use it – the survey was from March at the height of Second Life’s hype. “The reality is it’s a small, niche and elite community of very creative people,” he says.
Another question: virtual worlds are increasingly popular in Asia, so could they end up being the leaders, and us Westerners will be using their virtual worlds? “At some point, if it’s culturally relevant, we’ll start buying that content,” says Jess. But since a lot of virtual worlds there are based on very local brands or media, they might not travel so well. “It’s a world market, but you have to understand the regional differences”.
Now a chap from Habbo Hotel asks what role they see advertising playing in virtual worlds in the future. Paul says there’s already an example of advertising within games, and that there’s money to be had there. “I think it will be a while before we see advertising acting as the core revenue pot for a game developer, rather than as a bit of icing on the cake, because of the size of the communities and the messages you can carry within those worlds. It will be significant, but it will take some time.”
Jess agrees. “Everybody in the industry knows Google are building a virtual world – they hired all our friends to work for it…”
Now someone from Cyworld’s European arm is asking a question about how popular buying items is within virtual worlds in the US and Europe. “It takes a while to get somebody to buy something, but once they do, they can’t stop,” says Jess. “It’s all anecdotal evidence though.” (the Cyworld bloke is looking for stats).