Anyone with teenagers has likely come across an example of what video game fans call MMORPGs -- massively multiplayer on-line role-playing games -- such as World of Warcraft and Everquest. Riding around on giant lizards and casting magic spells may seem a bit juvenile, but these games are big business, since about 10 million people pay to play them regularly.
For the most part, the "real" business world hasn't made much of an impact inside these games, apart from the occasional gamer who makes a living by selling virtual weapons. But a new crop of virtual worlds is beginning to change all that -- and that presents an opportunity for smart companies.
Games such as Second Life, There and Project Entropia don't involve quite as much fantasy role-playing (although you are still likely to come across characters that look like giant robots or furry animals). For the most part, these virtual worlds function much like the real world, with an economy, a currency and so on. And business is starting to become a real part of the picture.
Firms are showing an interest in worlds such as Second Life because they see them as a marketing tool to reach younger users. Wells Fargo set up a pilot project last fall in Second Life called Stagecoach Island, in which players could win virtual money by answering a survey about financial matters, and then use that currency to play various games or activities on the island.
Second Life has about 200,000 users, and in January more than $5-million (U.S.) in real dollars was spent on virtual world transactions -- a figure that is estimated to be growing at 15 per cent every month. Money used in the game (known as Linden dollars, after game creator Linden Labs) can be converted into real world money at a fluctuating exchange rate. Project Entropia recently announced that game players would be able to take money out of their virtual bank accounts using real world ATMs.
In one of the latest attempts to blend the real world and the virtual, the American Apparel clothing chain opened a store in Second Life and is selling T-shirts and other clothes for virtual characters (known as avatars). The chain has said it is looking at allowing avatars to buy shirts in the game and then pick them up in the real world -- or vice versa. This month, any player who buys an item at the chain's virtual store gets a discount on that item at a real store.
In the June issue of Harvard Business Review, senior editor Paul Hemp wrote about the idea of promoting real world products inside virtual worlds such as Second Life. Avatars, he said, represent "a huge population of 'shadow' customers who can be analyzed, segmented, and targeted." At the very least, he argued, they "offer a window into people's hidden preferences and a means for achieving sustained consumer engagement with a brand."
When marketing on-line, "you want sustained engagement with the brand," DaimlerChrysler interactive marketing manager Bonita Stewart told the HBR. "Avatars create an opportunity for just this type of engagement."
Already in Second Life, players can buy Coke at machines or drink Corona beer at a virtual bar; during a recent virtual U2 concert, avatars could buy Evian water, and stores sell iPods that are loaded with music that plays over your computer speakers when your avatar puts on the headphones. None of these firms has an explicit relationship with Second Life, but if they are smart they will soon develop one.
In The Sims Online -- the on-line version of a popular computer game about a virtual world -- McDonald's has run a virtual fast food outlet, and Intel has put its logo on computers in avatars' homes. In another virtual world called There, Levi Strauss promoted jeans by offering them for sale to avatars, and Nike has done the same with shoes. Coca-Cola also runs its own separate world called Coke Studios, where avatars can remix music and drink virtual Coke; the company says it has eight million users.
An on-line shopping venture called Stylehive has a virtual store in Second Life that has recreations of various products, which when clicked on take a browser to an on-line catalogue so the player can complete the sale. And on-line retailing giant Amazon.com is looking at ways of blending its Web operation with Second Life, according to a senior Amazon executive who spoke at a recent conference (Amazon founder Jeff Bezos owns a stake in Linden Labs).
The virtual economy is booming. The bottom line is that virtual worlds could soon be generating real income for companies that are willing to look past the giant robots and furry animals.
Mathew Ingram writes analysis and commentary for globeandmail.com
