Posts Tagged ‘virtual worlds’

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Another world bites the dust – There.com to close

Wednesday, March 3rd, 2010

Virtual worlds are having a tough time thus far in 2010. You’ll remember that as of January 1st, Raph Koster’s Metaplace closed it’s doors, and now virtual world There.com has announced that they’re pulling the plug as of March 9th.

avatar_couple_2A project of Makena Technologies, There.com announced that they will continue on with “some exciting educational projects in process, which [it] will continue to service,” but that the entertainment arm will close. What’s striking about the announcement is that, at least from afar, the company looked to be on track – inking deals with Coca-Cola, CosmoGirl, Bebe, K-SWISS, and SPIN. There.com garnered revenue through both these brand partnerships as well as virtual goods sales. In the official announcement, CEO Mike Wilson says that although There.com worked to maintain a broadly accessible platform, it’s users were hit hard by the recession.

“While our membership numbers and the number of people in the world have continued to grow, there has been a marked decrease in revenue, which, in these economic times, is no surprise. At the end of the day, we can’t cure the recession, and at some point we have to stop writing checks to keep the world open,” comments Wilson. “There’s nothing more we would like to avoid this, but There is a business, and a business that can’t support itself doesn’t work. Before the recession hit, we were incredibly confident and all indicators were ‘directionally correct’ and we had every reason to believe growth would continue. But, as many of you know personally, the downturn has been prolonged and severe, and ultimately pervasive.”

Ironically, just over one year prior, Wilson had a completely different view, “Despite tough economic times, the virtual goods market continues to flourish as people look for inexpensive forms of entertainment.”

“NBC and our new partners understand both the expanding opportunity in the virtual goods category and the importance of branded merchandise as a form of self-expression for our members.”

What a difference a year makes.

As of the release of the announcement, There.com has suspended new registrations, billing, and member program upgrades. Developer submissions have been shut off, and the company is now in the process of refunding any virtual currency (Therebucks) purchases that were made between February 1st and March 2nd. Again, as of 11:59 PM PST March 9, 2010, There.com will be no more.

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Linden Labs acquires social networking platform Avatars United

Monday, February 1st, 2010

This past Friday, Linden Labs, creators of the virtual world Second Life, announced that they’d successfully completed the acquisition of Swedish Firm Enemy Unknown. The Swede’s jewel-in-the-crown Avatars United is also now a part of Linden Labs, and is a social network for users of multiple virtual worlds.

avatars unitedCurrently, the site supports a number of virtual worlds, including popular online titles such as World of Warcraft and EVE Online, and according to Linden Labs CEO Mark Kingdon, they will continue to do so. “We’re committed to keeping this ideal of a place where avatars from multiple worlds and games can come together.”

So what does this have to do with Second Life you might ask? Well, first and foremost, Second Life is supported within Avatars United, as well as a number of other virtual worlds. However, over the past year, we’ve seen a number of advancements that point directly to Linden Labs’ entry to the social networking scene. They rolled out the web-based dashboard, which included some social networking (type) features, but didn’t really go the distance. A little bit down the line in 2009, recently hired “conversation manager” Wallace Linden posted an article relating to managing multiple Internet identities, yet another signal that Linden Labs have been keenly watching what’s going on around them. In other words, they’re keen on the power of content sharing that social networking platforms provide, but don’t really want to commit to a “real name” based platform; one that might compromise a virtual world resident’s “real world” privacy.

However, with this in mind, Linden Labs have found themselves in a bit of a bind. With so many online destinations integrating cross-login possibilities, Facebook Connect, Twitter, OpenID, etc., Linden would be foolish not to offer users the same functionality. This, in turn, then opens up the “real world – real name” privacy concerns. Addressing this issue, Linden Labs states, “We are not going to force anyone to reveal any private or personal information. But for those who want to connect their various online identities, we do want to offer that option.”

Real names or not, Avatars Unlimited is an interesting, although perhaps a bit late to the party, platform. With the rise of other social networking sites that Second Life users general flock to, Facebook, Twitter, Flickr, etc., can Linden Labs really provide a platform enticing enough to draw these users away from already established giants? Avatars Unlimited is also nothing new in concept or premise, as I’ve been testing Raptr.com since Christmas. Noting the strong similarities between the two, I put Avatars Unlimited through minor functions (account creation, login, application installation, etc.). and my personal experience in a word was: meh. Not only did the site move along at a snail’s pace, but I was unable to find any areas where I might enter my character and realm info, a necessary component for a number of applications (WoW Armory, for example), a definite sign of “Needs Improvement”.

Screen shot 2010-02-01 at 11.16.55 AM

What IS quite interesting about Avatars Unlimited in it’s current state is that it features a built in virtual currency system. Their own virtual currency system. Not Linden Dollars. This virtual currency may be used to present other users with virtual items via gifting (again, another tip o’ the hat to Facebook). If Linden Labs wants to maintain the support of other virtual worlds, it should be interesting to see what they do with the virtual currency platform. Do they keep it as it is, and use it only across the platform? Will the convert it all to Linden Dollars? Or…and my money is riding on this option – will they maintain the current currency and build it out, while still incentivizing users from other platforms to join the Second Life party, i.e. offer matching Linden Dollars credited to their Second Life account, or discount purchases, or special items exclusively available to Second Life players?

All in all, the acquisition makes sense for Second Life, but as the platform stands right now, Linden Labs is going to have to put a whole lot of time and effort into the project if they hope to provide a platform that can not only stand head and shoulders with current market competitors, but draw current users of alternate platforms over to the other side.

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Virtual Worlds platform Metaplace to pull the plug in 2010

Wednesday, December 23rd, 2009

It might just be the biggest loss to the virtual world space yet, as San Diego based Metaplace announced recently that they’re shutting down operations as of the 1st of the year.

Metaplace, which provides a platform for anyone to create their own web based virtual world made the closure announcement via email, stating, “Today we have unfortunate news to share with the Metaplace community. We will be closing down our service on January 1, 2010 at 11:59 pm Pacific. We will be having a goodbye celebration party on January 1st at noon Pacific Time.”

The business model itself sounds fairly solid, with users creating virtual worlds ranging from the simple to the relatively complex. Metaplace users could also attend live concert events, watch movies and view art shows together, as well as a host of other virtual events. However, as a revenue generating machine, it simply wasn’t working out. “Unfortunately, over the last few months it has become apparent that Metaplace as a consumer user-generated content service is not gaining enough traction to be a viable product, requiring a strategic shift for our company.”

Moving forward, Metaplace said that it’s shutting down billing immediately, and will refund any virtual item purchase costs and subscriptions for the month of December. Metaplace will leave the doors partially open for virtual world creators to grab their virtual commodities, presumably to allow them to move these creations to other virtual worlds.

The loss of this platform won’t go unnoticed, as approximately 70,000 virtual spaces will disappear as of 11:59 pm on January 1st PST. Moreover, Metaplace was founded by former SOE games vet Raph Koster. Even more interesting, as late as November, Metaplace was still developing the platform, announcing an audio chat feature, as well as investigating ways to integrate with Facebook.

The company Metaplace itself will not be dissolved, but future plans are yet to be determined.

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Planet Calypso and Florida State set out to study virtual buying habits

Monday, November 23rd, 2009

Swedish developer First Planet Company (part of MindArk) – makers of the virtual world Planet Calypso recently announced that they’ve partnered with researchers at the Florida State University College of Business as well as the Stockholm School of Economics to study the far reaching implications of virtual buying preferences in MMO’s and Virtual Worlds.

CalypsoBoasting the world’s largest real money economy within an MMORPG, Planet Calypso is the perfect setting for a study that will primarily focus on determining if a player’s experience with a product in a virtual world influences their intention to purchase a products and how that experience can affect the brand – either positive or negative.

Slated to commence during the upcoming ‘Miss Calypso’ contest, the study will seek to understand how the mental state of a virtual world user influences his/her attitude toward a product, and measure the effectiveness of in-game/world placement has on either real world or virtual purchase of said item. The ultimate goal of the study will help scientists better understand the mental states of players, and how these ‘moods’ affect consumer behavior, with an obvious focus on purchasing power. Results are expected in Q1 2010.

“Despite the increasing attention that virtual worlds have seen with respect to marketing by companies, little is known about the perception of products within virtual worlds. Even less is known about how a consumer’s cognitive state resulting from an experience with a product in a virtual world may influence his or her intention to purchase a product,” said Rob Hooker, a doctoral candidate who is conducting an independent study in the College of Business at The Florida State University. “This study is the first chance to determine if people will buy products in real life that they see on avatars, and what influences them to buy those products for their own avatars as well.”

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China says ‘No Way José’ to foreign investment in online games industry

Tuesday, October 13th, 2009

It’s quite possible that the Chinese government would like to keep this one on the down low, it’s been revealed that they’ve officially cut off foreign investments in their lucrative online gaming industry. Apparently, the move is to strengthen the governments’ control and oversight of virtual worlds.

g228586_chinese-flag-640The General Administration of Press and Publication (GAPP), China’s video game industry regulator and overseer, released a paper on Saturday stating that the government will now prohibit the investment of foreign funds and interest in domestic online gaming operations. This ban is includes joint ventures, wholly owned enterprises and cooperatives.

If the phrase ‘joint venture’ and China rings a recent bell, you’ll recall that the holdup for millions of Chinese World of Warcraft players was due in part to Chinese regulators that were concerned over publisher Blizzard’s provisions of technical support to NetEase, the Chinese game developer that earlier this year won the lincense to operate the title within China. This new directive seeks to cover this issue but also stating that foreign firms will no longer be allowed to “influence Chinese gaming firms through agreements or technology support.”

With China having one of the world’s fastest growing online gaming markets, with, according to the GAPP, growth estimates projected at anywhere between 30 and 50 percent this year to a whopping 24 – 27 billion yuan ($3.5 – 4 billion), it’s easy to see why investors would want to get involved.

What’s important to keep in mind here is that the timing of this announcement couldn’t be better for the Chinese government. With the GDC: China taking place in Shanghai, China is currently playing host to some of the most important and influential decision makers in the industry. A coincidence that they chose the day prior to the official opening day of the GDC to make the announcement? Highly suspect.

Ultimately, as the decree states, foreign investment has been cut off to games and publishers that operate in the Chinese domestic market.  It’ll be interesting to see how this effects gaming powerhouses such as Shanda, which have a number of partnerships and joint ventures currently in operation.

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Researchers study virtual economies to track and model real world economies

Friday, October 2nd, 2009

In what very well be the beginning of a full circle trend, researchers at Indiana University are now studying and analyzing trends in virtual economies in hopes of better understanding real world economies. MMO’s that attract huge numbers of players, think WoW, Aion, and EverQuest II, all present users with both basic, and sometimes complex economic situations and simulations. As a result Indiana University professor of telecommunications Edward Castonova is now studying these economies, hoping to gain insight into human societies in games, as he believes this response to virtual stimuli closely mirrors that of real world situations.

EverQuest2 2007-08-05 12-44-45-93“We can do controlled experiments in virtual worlds, but we can’t do that in reality,” said Castronova.

“Controlled experimentation is the very best way to learn about cause and effect. We are on the verge of developing that capacity for human society as a whole.”

Taking Sony’s long running EverQuest series, specifically EverQuest II, as it’s case study, Indiana University researchers found that the average age of EQII players is 31, whereas the overall population average is 35. 80 percent of players are male, contrasting to the average of 50 percent, and players skew more Caucasian than the general population. And while the average household income of EverQuest II players is above the average, $84,000 vs. $57,000, this difference should hold no barring on how players react to and instigate financial decisions and actions within the virtual world.

Researchers studied 314 million transactions within EverQuest II’s virtual economy, albeit on only one server, by which they were able to calculate the populations’ GDP. Notably, researchers found that as more accounts were created and the server population, i.e. the mirror of the real-world population, the virtual world saw an inflation spike of over 50 percent in a 5 month period. Fellow researcher Dimitri Williams, assistant professor at the USC Annenberg School for Communications points out that this run of inflation may not be directly related to the economy being virtual, but much like a real world economy, the game has volatile elements.

“We have seen that kind of volatility during times of war and in developing nations in the real world,” said Williams. “Our own economy has turned out to be less stable than we’d all assumed.”

A number of valuable lessons and analysis can certainly come from studying virtual economies, and researchers are beginning to see their value. However, what’s notable about this research is that academics have chosen a subscription based virtual world as their platform. If real world lessons are to be applied, wouldn’t it make far more sense for free-to-play/microtransaction supported titles to be chosen as the case subjects? The last time I checked, I didn’t have to lay down $20.00 a month to participate in the economy. By studying the free-to-play genre, I argue that this would be a far more realistic simulation of economic situations, with users creating and selling their own content on a virtual marketplace, a situation that more closely resembles what we see day in/day out in the real world. So again, while it’s a great thing that researchers are doing, studying virtual economies to gain insight into real world ones, choosing a platform that more closely resembles the real world would bring far better results and insight into human behaviors.

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KZero clocks 579m registered virtual world accounts

Thursday, July 23rd, 2009

Virtual Worlds consultants and analysts KZero recently pumped out two mid-summer virtual world statistics that should get you to sit up and pay attention. They’ve provided not only a breakdown of where people are headed, but what age groups are predominant in these virtual worlds.

kzero_full_circle

Admittedly, the first set up stats is slightly complex at first glance, but upon further inspection, these charts are nothing short of eye opening.

This chart visualizes ages breakdowns and the associated virtual worlds that these ages are taking part in, along with each individual world’s launch data and timeline.

If pretty circular chats with fancy blue and red dots don’t really do it for you, KZero has gone the extra mile and broken things down even more. According to their research, the Q2 2009 virtual worlds sector inhabitant count now stands at 579 million. This number represents a 38.6 percent increase over Q1, where inhabitant totals stood at 417 million.

q2-2009-reg-accs-chart5

Taking data-points of the average age of users within each world, and then allocating this data to all accounts, KZero affirms that predominant age in these worlds is 14. The majority of these VW inhabitants come from big players including Weeworld, Habbo, and Stardoll.

Having a different look at the same data, the graph below represents cumulative registered accounts by age.

q2-2009-reg-accs-chart3

There’s obviously a plethora of activity in the 5-14 age group, a moderate increase from 15-20, but after that, a relatively flat curve. For the purposes of this study, Second Life was excluded.

As KZero points out, the majority of activity, and associated monetization scramble, is happening in the 10-15 year old age group. Totaling 334 million registered accounts, over 57 percent of the entire segment, this age segment represents the largest potential for growth. Holding 19 percent of the entire segment is the 5-10 year old age group. Clearly, youth oriented virtual worlds such as CampFu are smack dab right in the middle of the majority of virtual worlds citizens’ radar.

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$237M + invested in virtual goods in 6 companies in Q2 2009

Friday, July 10th, 2009

Virtual Goods News has recently released new numbers on virtual goods investments for Q2 in 2009. While this study finds over $37 million being invested in 6 companies that either monetize in full or part through virtual goods sales, the numbers overall are markedly down.

Update: The folks over at the good ship Virtual Goods News have recently sent over an update.  Upping the total amount invested from $37 million to $237 million by way of the $200 million investment made by Russian firm Digital Sky in the Facebook social network that occurred on May 26.  Duly noted, Facebook does not primarily monetize via virtual goods, however their virtual gifts, and branded virtual gifts do pull down a significant revenue number, enough to make them a serious player in just about any virtual goods related market.  Obviously, this record breaking influx of cash seriously skews the numbers below.

virtualgoodsnewslogoQ1 2009 saw a total of $69.1 million invested, again, down from Q4 2008’s $100.7 million. Certainly one factor in this downward trend must be attributed to the global economic downturn. Looking at the overall venture capital investment landscape, this downturn may simply be a reflection of the general decline in vc cash. Technology related industries have seen a particular decline, and virtual goods investments certainly fall into this category. Virtual Goods News’ sister site, Virtual Worlds News is also reporting record lows in venture capital investments. Again, remain calm, and exit the building in an orderly fashion. Oh no, wait. That’s not right. This might not be the most favorable news to come out of the virtual items sales industry, when seen from 30,000 feet up, our swimmers seem right in line with everyone else in the pool. The real question here is – when we start seeing the return to ‘business as usual’, will virtual goods/worlds investments also see this return?

Perhaps most notable in the studies findings is the increase in investments in the mobile payments sector. The largest single investment in the study was won by Boku, receiving $13 million. Boku is a mobile payments start-up that purchased both Paymo and Mobilcash. Competitor OneTXT also scored a cool $2 million, thereby making the segment the clear winner in Q2, netting approximately 40% of all dough invested in the virtual items/goods space. As Virtual Goods News notes, this is particularly noteworthy, as there was no publically disclosed data regarding mobile payments in all of 2008 and Q1 2009.

Perhaps, and this is a big perhaps, the North American market has seen proof in the pudding with microtransactions via virtual goods sales, and is looking to replicate other areas of monetization already found in Europe and areas of Asia? Paying for items via mobile providers is nothing new here in Europe, but I can’t remember a single time/place I’ve been able to do something similar in the US. If this is in fact the case, we could be staging for a rapid change in the way virtual goods are charged, sold, and delivered in North America. The only issue that worries me about this is that Asia and Europe have seen a gradual rollout of these methods, while the US hasn’t. Change is good, but too much change too fast can often be met with backlash. That’s not to say the entire North American market will make a rapid shift back to subscription only options, and the party’s over, but how about we get one method down and understood before we start throwing even more (sometimes confusing to the novice) options at consumers.

Virtual Goods News full list of the 6 companies that received venture capital investments in Q2 2009 can be found here.

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eRepublik lands a cool $2.8 million for new type of Virtual World

Thursday, June 18th, 2009

In a further show of support for blossoming virtual worlds, Madrid, Spain based eRepublik has recently announced that they’ve secured €2 million (approx. $2.8 million) in Series A funding from AGF Private Equity.  Coining a new term, and dubbing themselves a MOSS (massive online social strategy game), eRepublik had previously secured just over $1 million from the VC firm as well as multiple angel investors.  This new injection brings the total up to $3.8 million.  Not bad for a small company for only about a year and a half and staffs just 30 employees.

erepubliklogoThe MOSS is a browser based virtual world that closely mimics today’s real world.  Additionally, this virtual world contains no A.I., and relies solely on the participation of players (called appropriately, citizens).  Somewhat like, but also different from Second Life, eRepublik allows citizens to participate in politics, the economy, set up businesses (currently at 17,502), interact socially with other citizens, and just to spice things up a bit: engage in wars with other countries (citizens live in eUSA, or eCanada, for example).

Live for only 576 days, eRepublik reports that the MOSS has over 350,000 citizen accounts, with 120,000 of them regularly logging in and participating in the active community.  Taking a look at the traffic numbers, eRepublik is reporting that they’ve received over 3.7 million visits in the month of May alone, generating 95 million page views.  Citizens have arrived from over 200 countries worldwide, and spent over 55 million minutes within the world.

eRepublik’s co-founder and CEO Alexis Bonte says that this new injection of fresh funds will be put towards fleshing out the existing world, as he says the current eRepublik is only 25% of what’s planned.  They’ll also continue to expand eRepublik’s language offerings, as they just released a Spanish speaking version earlier this month, and move ahead with launching a host of new games.

eRepublik is free to play, and monetizes via sales of their in-game currency, eRepublik Gold.  While no mentions were made about expanding out virtual goods offerings, something tells me that a bit of the $2.8 m has already been earmarked to ramp things up in the in-game store.

Hear what eRepublik is all about directly from Alexis Bonte in his TechCrunch pitch from last summer.

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Citi sees $1 billion in IGA by 2014, and PricewaterhouseCoopers puts global market at $73.5 billion by 2013

Wednesday, June 17th, 2009

Maybe it’s a sheer coincidence, but combining the recent NPD numbers regarding consumer electronics consumption habits, and the extremely positive outlook on virtual worlds recently published by Strategy Analytics things are already looking good.  Well hold onto your hats, as both Citi and PricewaterhouseCoopers published even more news to get pretty jazzed about.

Citi

moneyAccording to a recent Gamasutra piece, a research note by Citi indicates that the In Game Advertising market could reach the $1 billion mark by 2014.  Citi sees the most online advertising growth coming out of the gaming sector, which currently stands at around $600 million.  An impressive number for sure, however, it accounts for only roughly one-third of the total online advertising spend, $20 billion.

According to analysts, today’s average gamer is 35 years old, with 40 percent of “total gamers” being female.  Obviously, this is a highly attractive audience to advertisers.  Citi says that in game advertisements “have higher engagement and slightly higher [cost per thousand users, representing value] than traditional banner ads.”

And this advertising isn’t simply limited to a Doritos banner on the side of an in game truck.  Citi says that this advertising is also tying into the separate trend of microtransactions, as real world brands are setting up shop in virtual worlds.  Looking at high profile, tangible examples, Citi points to both Apple and Tencent’s investments into microtransactions, and gives a thumbs up to the segment, calling it a potential “multi-billion dollar opportunity.”

PricewaterhouseCoopers

Recently releasing their Global Entertainment & Media Outlook 2009-2013 report, financial firm PricewaterhouseCoopers is calling the US and Canadian game industry revenues for 2009 at or around the $17.2 billion mark.  In this report, the “Game Industry” is defined as console, handheld, PC, and mobile game software sales, subscription fees, and in-game advertising (no microtransactions???).

PWC predicts that these game industry revenue streams will collectively post average annual growth rates of 5.8 percent through 2013, at which point we’re looking at an estimated $21.6 billion.  Looking outside North American waters, PricewaterhouseCoopers expects to see a global compound annual growth rate of 7.4 percent, pushing total numbers to a massive $73.5 billion in 2013.

Included in the report, and cited as a driving force behind these numbers is their prediction of the release of the next-gen console, first appearing in 2012.  PWC predicts that Nintendo will arrive on the scene first, particularly due to the Wii’s inability to output HD graphics.

Echoing Citi’s statements about IGA, the firm notes that this is a particularly strong segment of the market.  PWC places today’s in-game advertising spend at $886 million (could we agree on $743 million?), but sees at 13 percent annual growth rate over the next five years, placing the spend at $1.3 billion in 2013 (again, maybe we can settle on $1.15 billion?).

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