Virtual Worlds: at the Tipping Point at Last (part 2)
Part 2: Business
See also Part 1: Government and Part 3: Non-Profits and Others
Many organizations are excited about virtual worlds technology, and are still trying to figure out what they can do with the virtual world concept. Here is some background and here are some examples of what various business groups are doing today. Keep in mind that participation is growing faster than anyone can keep up with, so this list is by no means exhaustive! I’d love to hear about other interesting business uses or locations you have seen.
Business
Virtual business meetings - This is a common starting point for most multi-location businesses since it is far cheaper than global travel or videoconferences. IBM Business Center in SL is a creative example of how serious business meetings can be conducted in both traditional “serious” conference rooms, or more whimsical glass-floored floating ones above a sunken garden. One novel approach IBM uses is to involve its retirees. They act as volunteer mentors to new users, as well as participate in meetings of their own.
Product Showrooms - The big car manufacturers are in Second Life–Nissan, Scion, Mercedes, BMW, Pontiac and Renault, as well as brand names like Calvin Klein and Nokia. Most add interactive features, such as test drives, personal in-world models for sale, and road or track racing appropriate for their primary demographic customers. Nokia offers its phone products for sale in a product showroom. In an interesting twist, subscribers with a Nokia N800 phone can hack their phones to run a limited version of Second Life from the phone anywhere. Kraft Foods opened a virtual supermarket to build brand awareness — a reproduction of a real-world food emporium. They hold discussion groups, lectures, have food experts available in-world to answer questions, and even have in-world cooking contests for would-be celebrity chefs.
Customized Product Sales - Companies like Dell, with its virtual “build-your-own” factory for laptop computer sales, and Reebok, with its create-your-own-shoe program, are rethinking creatively about how they can do business when not in a face-to-face situation. Consumers expect customized goods today, and these types of imaginative approaches are more likely to draw online customers than the deserted traditional “big box” stores companies like Circuit City, Nokia and Sears have recreated virtually. Each company is experimenting with novel virtual experiences to attract and help potential customers. For example, Sears’ early prototype store shows basic features of what might be possible using virtual worlds to transform consumer experiences. Eventually they expect customers to use avatars to be able to replicate the exact dimensions of a room and experiment with redesigning their kitchen, garage or home theater by selecting appliances, tools and furniture that fit those blueprints. Consumers would be able to instantly change the colors, sizes and styles of refrigerators, ovens, counter tops, cabinets, televisions and more. Today most business locations are largely ghost towns, and it’s not clear whether it’s the location of their storefronts or the low level of consumer traffic or Second Life’s ineffective search tool. Maybe it’s all of those.
Utilities - Vodaphone initiated a telephone service within Second Life that lets a user dial out from Second Life to the real world. The user’s home phone rings, and when they answer, they are connected to their party. Neither phone number is displayed, so Vodaphone is actually selling anonymity and low cost long distance service using their real world system. Why not add virtual bill paying capabilities, while you are at it? In addition, Vodaphone offers “InsideOut” voice and text messaging between the real world and avatars in SL. The Electric Sheep store offers a product that bridges between AOL’s AIM instant messenger and Second Life. By purchasing SLAIM in Second Life, users can send and receive AIM text messages from within Second Life. Compatibility with the Jabber IM protocol was also said to be coming soon.
Research Platform - Virtual worlds are being discovered to be an amazing resource for research on social interaction. Researchers such as Nick Yee analyze demographics of MMORPGs and social worlds like Second Life to validate the extent to which virtual life reflects real life. Adidas sells virtual versions of its branded products to avatars in Second Life, and soon expects to test-market styles in the virtual world before rolling them out in the real world, tracking, for example, which color combos or designs prove popular among virtual users. Reebok takes it a step further and lets Second Life avatars design customized shoes in the same way as in real life on the Reebok Web site and then passes them off to a web site shopping cart to complete the purchase. Starwood Hotels sought avatar input in Second Life on its new loft hotel concept, asking visitors to make choices of architectural styles, furniture, and decor, many of which they implemented in their real world hotels. 1-800-FLOWERS launched a virtual Fields of the Virtual World campaign in Second Life to parallel its real world contest designed to find new global flower sources.
Store Front Shopping - American Brands, Aveda, Sony, Toyota, Scion, and dozens of other household name brands (see above) are in SL trying to figure out how to drive traffic and develop a sustainable virtual sales channel. Currently the traffic is too low to make it worthwhile to make a substantial investment. Eventually, however, instead of driving to a store or ordering from websites, people might send their avatars into a 3D mall, handle merchandise, and talk with clerk avatars before making a real world purchase. American Brands was the first large company to open a store in Second Life, and hoped their online presence would increase real-world purchases through offering buyers a 15 percent discount off the same item in a real-world retail store. They launched a new denim line in SL months before it appeared in the real-world stores, and planned to hire real world clerks to work in the virtual store. Unfortunately, in 2007 they closed their SL store–although their web site says it’s not for good.
Real Estate - It’s only a short leap from having Multiple Listing Service photos and 360 degree views of rooms to building a virtual model of a property that avatars can walk through and experience. One such model has already been made in Second Life. Coldwell Banker created a model of a $3.1 million real world listing in Mercer Island, Washington on its island in Second Life, which it then advertised. Realtors will not require new licenses, and may be able to lead virtual tours with clients from the comfort of their own chairs.
Financial Services - Here are just a few examples. Some insurance companies send their claim adjusters to virtual house fires and car crashes in Second Life, where they get “experience” before they engage in real-world work with customers. About 10 years ago I suggested to my employer that we should create a virtual insurance agency in Active Worlds, using a combination of carefully scripted “chat bots” and live (avatar) agents. This week Assicurazioni Generali SpA, a major European insurer, is opening its Generali Virtual island in Second Life. It will be staffed daily with live agents. Although there are not yet plans for selling insurance through this venue, the company will be looking for new insurance products to develop, such as protection against virtual identify theft. Toyota Financial Services hosts a loan center in Whyville to help kids learn about FICO scores and interest rates in order to borrow virtual money (that they use to buy a virtual Toyota Scion to drive around the world).
Singapore startup First Meta is offering the first virtual credit card for use in a virtual community. The MetaCard offers Second Life members a virtual credit card with a L$5,000 limit (about $19.00) monthly, with no credit check. A “gold” card, with a $37 cap, must be backed by a real world credit card, and may have a monthly fee attached. As in the real world, First Meta is having to secure participation from virtual world merchants and has about 140 signed up. L’Atelier, the center of new technologies monitoring and analysis for French bank BNP Paribas’, plus several other companies in the group have joined Second Life. At this point, they say, the purpose is just to be present in this new phenomenon that they believe will have far-reaching impacts. Currently they are providing only education and communication, not banking services.
Other financial organizations are getting in on virtual transactions, too. Recent research points to vast expected growth in the age 3 to 13 market, meaning virtual worlds like Habbo Hotel and Whyville will continue to attract capital investments. Within four years, more than half of this group are expected to belong to a virtual world, according to a study from eMarketer. Whyville recently opened a bank sponsored by Bankinter, the fifth largest bank in Spain, so that kids can deposit and earn interest on their “clams.” Since it opened, one in four clams circulating in the virtual world has been deposited in the bank
Professional Services - In addition to banks and venture capital firms with store fronts in SL, many professional firms and associations are entering virtual realms — both to learn about the environments and for some real world rain-making. They are not usually in the vanguard of novelty, and stick to pretty traditional methods. CPAs have created a virtual professional association (Second Life Association of CPAs) that built an island for education, new/young professional networking, and conferencing — including a virtual CPA conference with presentations conducted last July. The AICPA also has an island which is just starting to be built. As issues such as whether VAT must be charged on transactions, the taxation of non-existent (in the traditional sense) transactions, advertising prohibitions and how they translate to a virtual world, and how real world taxing agencies can assess and collect taxes from virtual entities are debated, it’s easy to anticipate a need for professional accountants with virtual world experience. Architects are using virtual worlds as a platform for creating design prototypes for clients. A coalition of multinational architects in Second Life, called the Architecture Metaverse, meets to collaborate on professional topics related to 3D modeling at The Arch. There is also a Society for Virtual Architecture, which is creating a guide to virtual spatial aesthetics. The widely-used Autocad software has a feature that allows architectural plans built with CAD software to automatically generate a fully built house in Second Life in only a few minutes. See a video here. This opens up great possibilities for virtual showcases of an architect’s work.
Someone once said, the United States may be losing a lot of occupations offshore, but we crank out new occupations like no one else! That is certainly true in the realm of cyber law. Intellectual property lawyers now can become a “Second Life Lawyer” and specialize in the types of transactions that occur virtually. They typically use a hybrid approach, using Second Life as a meet-and-greet area for new clients, who then take their real-world legal needs offline. The American Bar Association is setting up an island in Second Life, and about 30 real world attorneys have created the virtual Second Life Bar Association. A US Circuit Court of Appeals Judge considers virtual worlds to be laboratories for studying the emergence of rules. As more people get involved and more money is at stake, the more rules you need to regulate interaction between people. Any type of commercial dispute that can occur in real life could potentially arise in a virtual world. Canadian law firm Davis LLP claims to be the first to establish an office on Second Life. The firm Field Fisher Waterhouse notes that with the increasing amount of business being conducted in Second Life will come legal disputes, such as the one earlier this month in which a Florida businessman sued another Second Life resident for copyright infringement after the rival began selling a virtual bed similar to his own.
Auctions - There and Second Life both have auction features to help members buy and sell items and land. Second Life’s is powered by eBay. Gaming worlds like Everquest and World of Warcraft have internal auction functions where participants can post items to sell and others can buy them with game currency by bidding (usually for a lower price) or outright purchase.
Business Consulting - The active participation of large, global consulting firms such as Accenture, IBM and Booz-Hamilton adds an aura of seriousness to the virtual agenda. Not only that, but Second Life has spawned a plethora of small, real world consulting businesses, such as Electric Sheep Company, that have grown up in the past two years to support virtual business activities. Architectural firms can create quick, professional and novel structural designs, and this work is likely to take off as more and more realtors want to produce 3D models of homes they are listing for sale in virtual environments. Graphic designers provide interesting textures and animations for a unique appearance for items and avatars. Strategists are working with large organizations to identify the most effective ways to gain value from a virtual presence. Educators are training a broad spectrum of people and organizations in how to use the tools to work and train in virtual realms. Social coaches are teaching people how to interact effectively in a virtual form. Media relations and PR professionals are engaging in virtual promotions and brand enhancement. It’s a new kind of wild West with everyone scrambling to stake a claim while they figure out how to deal with and sculpt the unknown.
IBM - IBM is the most visible big company investing in virtual worlds, with at least 14 “islands” in Second Life, and an active presence in other realms, such as There, Entropia Universe, and Habbo Hotel. Their island complex shows an amazing diversity of experimental constructs, from an elaborate Visitor Information Center to observation towers with telescopes to high-rise apartment buildings to floating conference centers to teleportation devices. Different IBM businesses and locations have their own islands, for example, Lotus products has its own island with a break room containing floating awards and an online presence indicator wall for all its builders, and IBM Italy’s island was the center for virtual labor demonstrations last week. They use virtual worlds to connect with their alumni population in Bloc Parties, and for on-boarding and educating new and current employees. IBM has more than 230 researchers, consultants and developers using virtual worlds to experiment with everything from social networking tools, to the design of hospitals, schools, and businesses. IBM builders were also responsible for building a marvelous reproduction of the Chinese Forbidden City, a Wimbledon Tennis Court from which the tennis matches were shown to a virtual audience, and it is currently exploring how certain types of maladies can be treated using telemedicine in a virtual space.
Monetary Exchange/Money Markets - Most virtual worlds now, unless they are for turn-based or arcade style games, feature some sort of economy. Linden Labs took it a step further with Second Life, encouraging users to exchange Linden $ for U.S. $ (and vice-versa) on its Lindex currency exchange. The SL Capital Exchange, a product of JT Financial Investments and Savings, is another currency exchange business. It enables “customers” to speculate on the value of Linden dollars (L$) in an effort to beat the rates established on the Lindex. While the SLCapEx is fictitious, it’s not far-fetched to imagine a real world financial exchange offering a virtual trading floor and licensed traders.
Recruiting/Job Fairs - Many large companies are creating a “presence” in Second Life to actively recruit new employees there. Most conduct preliminary screening interviews and accept resumes from candidates in avatar form. The State of Missouri’s education office has opened in Second Life, and anticipates holding its own job fair in a few months. Companies like Microsoft, Accenture and IBM are experimenting creatively with this medium, especially for recruiting technical staff. An interesting twist is that the country of Luxembourg is holding a virtual job fair in Second Life next month to attract new professional talent to the duchy. Recruiting firms like TMP Worldwide conduct interviews on behalf of large organizations for real world jobs.
Business Partnering - SAP will soon launch its Partner Portal in Second Life. It will be a central information hub for SAP’s Solution Extension Partners and Endorsed Business Solution Partners. It will feature overviews about the companies and their solutions, as well as linking residents to more information via an interactive Partner Catalog.
New Hire Orientation - Companies like Accenture and IBM are using virtual worlds for orientation programs for new employees. In addition to learning about organizational values, new hires can be aided through benefits signups and completing expense reports. To the millenium generation, virtual interactions will be as natural as sleeping, and businesses can save a lot of training expense, with little loss in effectiveness, by conducting some of their orientation virtually.
Leadership Development - For almost a generation, the concept of guilds or clans in MMOGs (multiplayer online games) has been a staple. A group of people who share common interests within a specific game typically come together, choose a name, and begin to set up all the trappings of a society, including laws, government, communications, shared activities, and creation of assets. That all these are virtual and the people who are participating rarely meet the real persons in the guild is the norm. Yet real world leadership is trained and real leaders emerge. With the anonymity of the keyboard as a great equalizer, anyone with management talent, social skills and knowledge of the environment can emerge to lead. Psychologists and educators are using guilds to train leadership skills, and management consulting firms and the military are starting to accept “Guild Officer” in a major virtual world as a credential. They expect successful guild leaders to be successful real world leaders, and the testing to-date is proving it true.
Team/Community Building - Virtual worlds are equalizers in that young knowledgeable or personable people can have as much authority and respect as older people. Some corporations are experimenting with behavioral change simulations where groups of people with a shared objective must work together to achieve it. There are promising results showing that strong real world bonds are created, increasing loyalty to the organization and reducing employee turnover. Everyone wants to be a worthwhile member of a worthwhile organization, even if the organization is virtual.
Cultural/Seasonal Events - The biggest social event ever hosted in Second Life was NBC’s virtual Rockefeller Center Christmas Tree Lighting last December. Participants in virtual worlds want to do the unexpected and unusual, so organizations that stretch themselves creatively to both entertain and promote brand awareness can be highly successful.
Media - Media companies have traditionally used virtual characters or worlds as subject matter, but a new trend is emerging to blur the lines between the virtual and the real. In this week’s episode of CBS-TV’s CSI:NY, the lead character must enter a world like Second Life as an avatar and pursue, not a suspect, but another avatar, in order to track down a real world murderer. Reality TV shows are appearing in Second Life, too. Survivor:SL and Big Brother US select avatars to participate in virtual versions of the shows for an extended period and offer real world prizes. Showtime took its “The L Word” to Second Life, where fans can watch episodes of the show, engage in discussions with the show’s stars, visit virtual DJs and attend special events hosted by DJs. MTV created a faithful replica of Laguna Beach. Another interesting Showtime approach was a joint venture with the Alliance Second Life Library to show episodes one and two of its series “The Tudors”, which were shown on Second Life Library Renaissance Island. “The Tudors” provides a new spin on the early life of King Henry VIII of England and debuted on Showtime last May.
Now this is where everything starts to blur. MTV photographed Second Life avatar models for a fashion show on MTV’s Overdrive Internet channel. The avatars and environment were displayed in a visually-spectacular but highly unrealistic manner on the TV channel that may have led some watchers to disappointment. There is a disparity between fake virtual reality as show on MTV and real virtual reality (Second Life)…if you can call the virtual real. Berlin based Schaubuehne Theater produced a play based upon Lewis Carroll’s Alice in Wonderland, with a novel twist. Nine avatar characters interacted live from Second Life with a human actor before a live audience. The Gate is also blurring the barriers between the real and virtual, and could give rise to new art forms. Some entrepreneurial souls are offering podcasts and radio programs created within Second Life for broadcast in the real world. Most of the content is related to SL experiences, but virtual podcasting could become a viable media relations channel for virtual and real businesses. Want to know how that changes everything? This sums it up: “A newspaper may be easier to read on today’s Web, but you can’t click through a story to launch a 3D version of the place where the events occurred, and then walk around it in the company of other people who are reading the story at the same time.” That’s powerful.
Publishing - The same is true for books. Virtual worlds can play a role in book launches as authors push the boundaries of new marketing. For example, online marketing author Pat O’Bryan hosted a celebrity studded online party in Second Life to celebrate the release of his new book, Your Portable Empire — How To Make Money Anywhere While Doing What You Love. The affair was rather traditional in concept despite its execution in a virtual environment. Science-fiction novelist JC Hutchins, on the other hand, turned book launches on their head by releasing his novel as a “podiobook” to build a fanbase, with chapter by chapter podcasts weekly to 10,000 subscribers. Together with a friend from “Podcast Island”, he created 3D “sets” from the novel in Second Life and to parallel the story line. The sets are huge — four rooms, lots of hallways, multiple stories, and with massive customized constructions in each. They also created special avatar versions of the main characters, ones that fans could put on and wear for the event. Then Hutchins invited his subscribers to come to a book party in the walkthrough environment and experience the book more fully as characters. It’s a richer way to experience a novel, and the closest an author can get to observing the experience of readers interacting with the novel in a kind of live performance. Publishers could find virtual book tours much cheaper than the real world versions. IM, forums, email, voicemail, Second Life, all of these things give fans instant access to an author. Authors who don’t develop relationships through all those channels will be left behind. And finally, live performance art is being shown through a portal in Second Life called The Gate. The real time performance presents the live performer to the virtual worlds in real time, while avatars appear in SL to watch the performance through the portal and the performers see the avatars.
Advertising/Public Relations - Ad agency Leo Burnett was a leader in creating a Second Life location. Termed an “idea space”, it is not a showcase for client projects, nor an attempt to drum up business within the virtual world; it is a meeting place for Burnett’s 2000 global creative professionals. They see it as a lounge of sorts where Burnett employees and the general public can work on informal artistic collaborations within a social setting. Other agencies, however, like Bartle Bogle Hegarty have opened virtual advertising agencies. They employ traditional brand building activities, and look to influence younger customers, conducting client meetings and presentations virtually. On the PR side, world press conferences are now the norm when new companies enter Second Life. All the CEOs sport 3D avatars and give PowerPoint presentations to assembled audiences of avatars and virtual reporters. Text100 opened a fully functioning virtual office in Second Life. Groups like New Media Consortium are pushing the boundaries of influence peddling with their NMC international campus designed to bring real world leaders together virtually so they can discuss challenging issues. A small number of virtual PR agencies exist, i.e., small firms and independent promoters who exist only in the virtual world and promote virtual businesses. It’s still not clear whether having a virtual world presence will result in real world business for any of the agencies.
Education - Educator Edward Castronova is author of Synthetic Worlds, and he is creating Arden, a virtual world based upon the works of William Shakespeare, to teach literature to college students. Reportedly, Arden started on the Metaverse 3D platform, and then shifted to NeverWinterNights gaming platform before running into some financial snags. It costs a lot of money to develop and build a 3D game for any purpose. 3D worlds are perfect for immersive learning. Archeologist Aura Lilly (in SL) has no formal training in 3D modeling, yet she has created a very detailed and accurate Second Life representation of artifacts and architecture of ancient Egypt called Themiskyra. Others have built an underwater ruin of a Temple to Anubis. Using maps drawn by one of Napoleon’s artist engineers, Aura Lilly has evolved an accurate recreation of temples and buildings on the island of Philae. These two examples show the rich educational potential to use virtual worlds as an immersive way to explore ancient architecture, culture and history is limitless. Education is seen as one of the “killer apps” for virtual worlds, and some of the articles I have written previously about virtual worlds and simulations can be found here. Many universities and large companies like Cisco have built educational activities in Second Life that are open to the public. Cisco’s main goal is to provide an online forum where customers can ask Cisco’s experts questions regarding products and also receive technical support from trained specialists. They intend to have employees, including technical-support staff, with hours in Second Life as part of their everyday routine.
Games Using Games - Investor and VP at Technorati, Joi Ito is an avid World of Warcraft player, and his guild uses conferencing capabilities in Second Life to plan its raiding strategies and battle activities for WoW. The conference room on Ito’s island has map reproductions of WoW locations that are annotated with Second Life objects. Many virtual worlds have gaming functionality built into them, too, such as chess in Everquest and Texas Hold’em poker in Yo! Ho! Ho! Puzzle Pirates. The USC Center on Public Diplomacy recently introduced its Public Diplomacy and Virtual Worlds project in Second Life, a research project examining new technology and public diplomacy in relation to the role of video games and multiplayer online games (MMOGs). They want to explore the social impacts of people from different cultures playing together in the same game, and the impact on a community when a game is framed for a community in another country.
Virtual worlds are in the early stages of development, with great potential to come. According to IBM’s Colin Parris, some key actions that will help accelerate the adoption and mainstreaming of this technology are:
* Improve user experience
o Easy to use interfaces, improved graphics, faster response, better tools, more robust systems.
* Manage trust and identities
o Address issues related to human interaction and developing community norms.
* Integrate immersive worlds with each other and the web to foster widespread adoption and innovation
o Move towards open standards to reduce interoperability challenges.
* Drive more business and societal applications
I’d also like to see improved security and greater scalability so that it’s possible to have more than 50-60 avatars attending the same event without bringing the server to its knees!
Be sure to read the other two parts of this series: Part 1: Governments and Part 3: Non-Profits and Others.
