The REAL value proposition of virtual worlds

This morning I read yet another pundit’s informed view that virtual worlds are ‘just another marketing platform.’  I don’t know how people get to be a ‘pundit’, but they don’t seem to need any real knowledge, or they wouldn’t say such uninformed things.
 
Given what we know about virtual worlds – not just OpenSim, not just Second Life(TM), nor any of the others – it should be obvious by now to anyone using them for any length of time that the user base, the consumers, just isn’t there in any real, meainginful metric.  You have hardcore gamers, you have nongamer early adopters, but what you don’t have is what makes the grist for the marketing wheel:  namely, the mass market consumer.   
 
Given that I spent the last several years successfully designing product for the mass market, I am rather more intimately acquainted with that marketplace than the pundits who want businesses to roll their brand campaigns into virtual worlds.  When I designed a product style, I put anywhere from 300,000 to 1,000,000 units into production for the North American marketplace alone, and I could safely expect to sell 18-20 such product styles.  Given the statistics out there, I think anyone can see that real mass market numbers just don’t equate with the consumer actually being in any one given virtual world at any given time, to receive a marketing message to ‘buy my stuff’.  The mass consumer just isn’t there yet.  She will not be there until enterprise steps up and figures out how to use virtual worlds specifically to enable themselves to do business more efficiently and effectively, and then pays to harden the virtual world in a way that makes them ready for business, which will have the collateral effect of making the user experience consistently easy.  Then and only then will we see mass market adoption of virtual worlds.
 
Until then, enterprise enablement is the real value proposition for virtual worlds.  Virtual worlds enabling enterprise to conduct business more efficiently.  It’s not brand extension, social networking (consumers, remember?)  or even collaboration.  Sure, all of these are important trends, but they are trends that are time units away from seeing their full florescence.
 
RL businesses entering virtual worlds to use as another marketing channel need to understand that their consumer base probably isn’t there yet, so these businesses need to use caution about rolling out branding campaigns.  Think about what sort of ROI they really expect, and get real about returns.  Tie any virtual world marketing into a longer term, full marketing campagin with the full bricks and mortar backing and you’ll get buzz.  But I would be seriously surprised if any enterprise is getting anything more out of a VW than a good, targeted direct mail campaign would give them. 
 
Likewise, the case studies for using virtual worlds for collaboration are fairly well known by now, including some of the pitfalls businesses may experience in bringing their workers into a virtual world, and what sort of accelerants and benefits they can hope to achieve.  It’s harder to put metrics to achievement with regards to virtual collaboration, though, especially metrics that the executive staff is going to get excited about.  Savings improve margin, so talking about travel costs and travel time saved is great, but savings don’t actually increase the company’s top line.  
As an executive, I am always looking at both the bottom and the topline of my company.  A solution that enables me to address both of these concerns is something I’ll look at closely.
 
We’re more forward about our use of virtual worlds, because I do see the very real value of using virtual worlds to enable business.  That’s where I see the real money is – and anyone looking at my product development numbers realizes pretty quickly that I’m all about making my numbers.  We’re specifically interested in using virtual worlds to enable product design and development both synchronously and asynchronously.  This is where businesses will see huge gains in productivity, in savings, in waste reduction, and in business intelligence and management metrics.  The Fashion Research Institute currently has a research agreement with IBM, to investigate how to best use virtual worlds in this way.  We are specifically addressing the apparel industry, which is an old and traditional industry that has never been computerized in any meaningful way. 
 
Our initial results have shown that the entire process of design work can be expedited using virtual worlds, substantially reducing development time.  Substantial waste can be cut from the process with concurrent time and cost savings. Executives have data transparency and management metrics for an area that has been traditionally resilient to any attempts at time management. 
 
The ease of collaboration helps with the product development process, but the true value proposition for us lies in the inherent nature of virtual worlds like Second LifeTM: 3-D modeling capabilities, real-time design capability, persistence of the work space, and above all, the data transparency to all stakeholders in the design and development process. 
 
We’re using OpenSim as our virtual world of choice for our enterprise solution.  OpenSim is open source, and it’s still being developed.  It has some advantages, in that it uses the standard Second LifeTM client to connect to an OpenSim backend.  New users can be trained to use virtual worlds using Second LifeTM, which has deep user-generated content and a rich, immersive experience which is critical to user acceptance.  When the user is trained to use virtual worlds, they can be easily brought into an OpenSim backed environment with no loss of accuity to the user.  The user ‘sees’ the same user interface and does not have to learn a whole new set of commands. 
 
Virtual worlds used to help business do business is where enterprises will see real value for their investment. Ultimately businesses that do not make the digital leap will simply not be able to compete against businesses who have cut their costs and have better business intelligence data gathered from their virtual world installations.
 

 

 

 

 

 

 

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4 thoughts on “The REAL value proposition of virtual worlds

  1. Pingback: A brief survey of emerging uses for OpenSim « justincc’s opensim blog

  2. Pingback: fresh (1er mai 2008) | extralab | early adapters

  3. Pingback: Where is the Value for Businesses in the Virtual World? « The Tech Development Team at FIT

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