Virtual Worlds Competition Results in Consumer Segment Expansion

Open platforms, more flexible graphics, cheaper storage, faster connections, more 'socially educated' consumers, and more international audiences are enabling a next-generation virtual landscape. Rather than proving that virtual reality is technically possible, these new competitiors to the space are expanding virtual worlds into a traditional consumer technology segmentation. This sampling of virtual businesses showcased at Under the Radar provides an illustration:

1. The mass-market brand. Kaneva bills its virtual reality as '3D for the masses,' and is combining a social network with entertainment and casual gaming. In its first three months of public beta (launched in April 2007), the company attracted 350,000 registered members. By targeting 18-34 year olds from the mass market rather than early adopters, Kaneva sees itself competing with traditional entertainment such as TV and movies. Revenue comes from (a) sale of virtual items, (b) sponsors integrating their products and brands into virtual stores, and (c) games. The most telling evidence that the company is reaching the mass market? Target will start selling Kaneva game cards at retail this fall.

2. The portable widget. Meez leverages a core concept, portable identity, and enables users to build avatars that can be exported and used in non-Meez environments. This bridge between 2D Flash and 3D clients works cross-platform and supports key 3D features like item attachment poinrs, texturing particle effects, and multiple camera angles. Since the browser 3D can be exported into 2D, users are able to keep the same avatar across all virtual worlds, rather than setting up a new one each time. While the service appeals to a strong female demographic, the company is maintaining a user base that is 65% female/35% male (interest has proven to be more sustainable with sexual tension), mostly US, and an average age of 18. In its first year, the company has amassed 2 million registered users and is enjoying a fat swing on the hockey stick, adding 425,ooo new users/month currently.

Like most in the space, Meez plans to monetize the service through brand advertising, virtual item sales, gaming, and mobile fees. Given its young shopper demographic, the company's ads earn 4X the CPM of social media sites, and fashion sites such as Glam.com are selling Meez media.

3. The content network. Multiverse has developed an open platform for virtual world development, which it hopes will become the new medium for MMOG entertainment and virtual simulation. The network is distributed, and the company distributes the SDK but does not provide hosting. The open standards platform is designed to facilitate a network of virtual worlds, and this group of ex-Netscapers envisions that their 'worlds browser' will become the first descendant of the web browser. This has huge ramifications - on today's web, sites have the flexibility of being developed standalone, with application or data integration, or networked. Games and virtual worlds don't do that today - but if they did, there would be much less friction in the system for both users and developers. Unlike most, Multiverse has an ad-free business model: it's free to use their technology up front, but once you start charging others to use what you've built, you owe the company a percentage.

4. The corporate theme park. Doppelganger works with entertainment companies to create immersive entertainment experiences for fans. (Tyra Banks, Maroon 5, and DJ AM are all examples of properties in Doppelganger.)  If Second Life is an aggregation of individual experiences upon a shared platform, then Doppelganger could be considered a community of indviduals personalizing a shared experience. The company's business model is based upon its virtual economy, leveraging both the existing brands being promoted inside the environment and the homegrown brands. Translation: The income stream is 2/3 interactive ad revenue, and 1/3 virtual goods revenue.

This market expansion brings up some long-term questions: Will virtual worlds technology (note that this may be a distinct concept from virtual reality) become the successor to Web technology? If virtuality does become prevalent, how will our current Web interaction layers, workflow systems, and basic human behaviors be influenced, or superseded, in 5, 10, 20 years by these visual and spatial systems?

Comments

[Reveling John]

I thought I would append to this conversation this little tid-bit about Multiverse: http://findarticles.com/p/articles/mi_m4PRN/is_2008_April_3/ai_n25123989

They have added a 2d/3d interoperability to their platform. Apparently one user can use their 3d, client-side browser to view a virtual space, while a different user can see the same virtual space through the window of a web-embedded, 2d flash browser. And they really are viewing the same world because the two users can interact with each other, neither user having any idea what means the other is using to interface with the virtual space. Pretty cool : )

[Steve K.]

With the lion’s share of Internet growth emerging from Asian locations, it seems that the VR applications should be tailored to the market trends in those regions. While we have the liquid income in the U.S., Asian users, by far, have the numbers. The income model around providing services to Asia will be more of an incremental model based on the sheer number of potential users.

With that said, South Korea broke all software sales records with World of Warcraft, with massively multiplayer online gaming becoming the national pastime. WoW has become a worldwide phenomenon, followed by many attempts by gaming companies to ride the wave and take pieces of Blizzard’s market share.

MMOG is the fertile ground for innovative 3D games, storefronts, and social networks. Second Life has taken the lead in the 3D Social Networking VR arena, but many feel that is loosing steam. IMHO, 3D VR and the Internet are lacking input and creative energy right now. Certainly, there are unrealized treasures and untapped innovation in the area of 3D MMOG environments and deeply immersive experiences. While the market may be large in the U.S.—it will be dwarfed by that of Asia and they LOVE the MMOG!

[Manny Otiko]

Fascinating blog about virtual reality and how companies are turning to virtual reality programs like Second Life to market their products.

This Southern California company has developed software which allows people to turn pictures into avatars that can be used in virtual reality.

EON Reality Introduces EON Human
Breakthrough 3D technology teleports people from photographs to virtual reality

INTEL DEVELOPER FORUM, Beijing, April 18, 2007 – EON Reality Inc., the world’s leading interactive 3D software provider, today announced at the Intel Developer Forum its new EON Human technology that enables anyone to teleport real images of people into virtual reality. EON Human automatically generates 3D Face & Body online from a single picture. The technology allows people to preserve themselves for eternity in 3D on the Web.

[Christine: full press release redacted here, but can be referenced in full at http://www.eonreality.com]