The Amerinet Virtual Facility: early stage visuals

When Amerinet (a leading US healthcare solutions organization) wanted to develop a 3D virtual medical facility, they called in KZero.

We’ve been working with them for several months developing the Amerinet Virtual Facility (AVF). A full 3D virtual environment containing a wide range of healthcare and medical products/services. The AVF is a sales and marketing tool, allowing customers to view and interact with products, obtain contract details and request further information.

The AVF is being developed in Unity and once launched, will be accessible via browser, iOS devices and Android tablets.

Here our some early stage visuals (and here’s the Slideshare presentation) showing the initial design approach and product models. As we move towards full launch we’ll be publishing visuals and fly-throughs of the full facility.



Digital Kids Conference presentation

Here’s the presentation Nic delivered at the Digital Kids Conference in New York yesterday.


TV Advertising Ups the Stakes in the UK Virtual Worlds Sector

With above average ARPPUs and paying user conversion rates, the UK market has long been a high-value territory for virtual world companies targeting kids and tweens.

And, whilst the likes of Moshi Monsters, Stardoll and Club Penguin lead the way in terms of user penetration, a group of newer virtual worlds are activating UK TV advertising in order to grow their userbases and take a piece of the market.

At present, Minomonos, Space Heroes Universe, Fight My Monster, Herotopia and Bin Weevils are all buying UK air-time across the major kids channels. Here’s a selection of TV ads shown in the UK.

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Lessons in Launching Virtual Worlds. Mistake #3: We’re Going With a Monthly Subscription

This is number three in our series explaining common mistakes made by companies launching virtual worlds.

In the first post we discussed the need for market (or rather user acquisition) budget and the target market range was explored in the second post.

Now the focus switches towards the monetization strategy – the pricing method that users will be encouraged to use.

Most virtual worlds targeting the KT&T marketplace opt for a monthly subscription pricing method – charge users a fixed monthly fee and provide them with enhanced/premium features. These premium items take the form of access to special areas, bundles of virtual goods, additional features and the like.

Worryingly, the pricing decision for a lot of virtual worlds and MMOs in the sector isn’t a decision at all. Instead, worlds just opt for a monthly subscription based on the following thinking:

  • If it works for Club Penguin then it will work for us
  • It provides parents with peace of mind – no unexpected charges
  • Having a recurring monthly subscription is less hassle

You get the picture.

And in principle the arguments above are sound. And indeed, virtual worlds such as Moshi Monsters, Jumpstart, Club Penguin and Wizard 101 all have monthly subscriptions. But, these worlds have become ‘brands’ in the space helped a great deal by spending sizable amounts on user acquisition (see mistake number 1).

However, there’s a much bigger picture that many virtual worlds completely miss.

Firstly, switching costs.

What many virtual worlds do not realize is that users who are most likely to be monetized are already being monetized somewhere else, i.e. a competitor virtual world. In this instance, the new virtual world has to shift the user’s attention away from their existing world and move them to their world. It’s important to bear in mind that the propensity for KT&T to have monthly subscriptions in more than one world is virtually zero, due to the issue of switching costs and an unwillingness for parents to be paying for two at the same time.

Another issue is brand awareness and reputation.

When a new virtual world launches, brand awareness and more importantly brand reputation is zero. Nobody knows and nobody cares. Yet worlds think parents will willingly pull out their credit cards and commit to a monthly subscription. If only it was that easy.

A far better pricing strategy is using microtransactions (MTX) at lower price points than a typically monthly subscription (which, surprise surprise is usually $5.95). Allowing users to purchase a virtual currency (which can be used to buy all the elements that a typical monthly subscription offers in smaller chunks) makes the payment decision much easier for parents.

Not only is the paying amount lower (read: cheaper) but also less riskier than a monthly subscription. This neatly side-steps the concern parents have that their child will get bored playing in world X and move onto to another one (whilst still paying for the first).

Implementing lower -priced MTX has an additional benefit of widening the paying user catchment. In other words, for a lot of users, paying $6ish a month is simply not an option. Whereas paying as low as $1 for a ‘taste of the good life’ is much easier to swallow. You just have to look at the app market for evidence of this. By lowering the paying entry threshold you can go after those users that haven’t been monetized by other worlds.

The bottom line is that pushing users over the monetization line is about showing KT&T whats on the other side of the fence. If you have a great VW then users will want to stay as paying users – give them a really low hurdle to jump over, then focus on raising it once they’re over it.

As a closing PS, another point missed by many virtual worlds is that by having a monthly subscription – a take it or leave it fixed price for premium content, you’re actually setting the upper limit of what users can pay. This means that the really engaged paying power users that reside within KT&T worlds can’t get anymore out of their world over and above the monthly subscription level and benefits. This is a poor longer-term strategy.

PPS: KT&T virtual worlds and MMOs with virtual currency based MTX convert three times as many users as subscription-only worlds and have a monthly ARRPU on average 20% higher.

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How Minecraft Gave Virtual Worlds a Second Life

A blog post from New World Notes today announced that Minecraft is now the popular game on XBOX Live. And in fact it’s more popular than Call of Duty. That’s kinda cool.

Minecraft has been an incredible success in a very short period of time by offering users the ability to create. Millions of users (we’ll call them that for now) are spending long periods of time crafting (creating) digital objects. Why? Just because they can. It’s Lego 2.0 with added zest.

The secret sauce is the interaction with these objects, other users and the environment. New digital worlds are being created and entire ecosystems of interaction are taking place.

What has really assisted in the growth of Minecraft is the passionate audience of fans behind it. And, in particular the videos of user creations and activities inside the world. This ‘Machinima’ enjoys multi-million views in really short periods of time. In turn, virality grows off the back of widespread exploitation of social graphs.

It’s interesting to see the different ways that users play / engage with Minecraft. Some re-create real world places – these are known as mirror worlds. Others create race tracks, space stations and even environments from other games such as World of Warcraft. Pop culture is also prevalent. Combining this and the viral element, here’s a video on YouTube that was released four day ago. It’s just about to hit 5m views. Not bad.

Minecraft is enjoying explosive growth and 2012 has seen them move from circa 28m registered accounts right up to 45m. This is the largest proportional increase in the entire sector, including the kids, tween and teen markets. The Universe chart extract below shows the Q1 2012 position (we’ll be releasing Q3 numbers soon).


Minecraft has become a global brand in around two years and the great thing is that due to the nature of the platform (user generated content), the community is in total control of its destiny – where it goes from here.

But hang on a minute.

Haven’t we been here before with Second Life?

Millions of users. Media awareness. Content creation. Communities.

All of these elements were (and still are) in Second Life. This has been the case for many years. The funny thing is that Second Life is still a great business. It’s just that the media got bored and moved on. People think that Second Life has closed, just because no-one really writes about it anymore. But the community didn’t get that memo and still enjoy being inside Second Life.

But is was never cool in a way that could be interpreted by a wide age range. Who, in turn could tell their friends. Maybe the avatars looked too real, and at the same time too weird. Maybe it was the brands that swept in and mainly left a bad-taste in users mouths. We were fortunate to create one of the best performing campaigns in Second Life, with our L’Oreal Paris campaign. Or perhaps it was the age limit of having to be at least 17 to register for Second Life. Sure, these was a ‘Teen Grid’ for slightly younger users but that’s not cool. You always wanted to go to your older brothers party.

Minecraft has a user base that spans a wide age range. We estimate the average user age to be 14 but that hides a spread from eight right through to 98. Minecraft is UGC (user generated content) for the masses. So, the users are kids, tweens, teens and adults.  The power-house of user base growth has come from the teenage market, with YouTube boosting K-Factors and brand awareness and other community-led channels such as Facebook have made virtual worlds cool again. In fact, the Minecraft Facebook fan page has just reached 5m fans.

Shown below is a google trends chart comparing Second Life and Minecraft.

Minecraft is the red line and totally over-shadows Second Life in blue, which is remarkable because the media  interest in Second Life was intense in 2007 – 2008. It’s just that Minecraft has become more popular by an order of magnitudes.

The bottom line here is that fundemantally. giving the people the power to create whilst socializing is one of the most compelling features of virtual worlds. It may even be the most important aspect. Second Life provided one of the first platforms for people to do this. But the growth of Second Life was ultimately hampered by some brick walls. The younger audience has propelled usage of UGC and Minecraft and  and in many cases it serves as the ‘graduation destination’ for the millions of kids and tweens that migrate from the highly successful younger virtual worlds such as Moshi Monsters, Club Penguin, Stardoll and others.

This sector is in good hands and promises much. As consumers and businesses, we will continue to use virtual content creation and engage with virtual social networks. Drawing from a previous point and closing this article, the ability to create and share will be the driving force in the future of the sector and virtual worlds like Minecraft give us glimpse into where we are heading. Albeit currently in large pixel format……but that’s cool.

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Lessons in Launching Virtual Worlds. Mistake #2: We’re targeting kids aged six to 13

This is the second in a series of posts examining common mistakes made by companies launching virtual worlds for the KT&T market. The first post, ‘We don’t need a Marketing Budget’, is here.

We get a stack of business cases every month at KZero for new virtual worlds. Obviously a critical element of any plan is the target market, so here’s some actual extracts from a number of these business cases:

‘Targeting boys aged 5 to 12′

‘Targeting boys aged 6 to 15′

Targeting girls aged 5 to 11′

‘Targeting girls aged 7 to 16′

And my personal favourite ‘targeting girls and boys aged 3 – 14′

Here lies the problem, and the topic we almost always raise first with clients…..

The activities that five year old boys like to do online (and in virtual worlds) differs massively from those aged 8, let alone 12 year olds. They have different play patterns and interests. Now compare boys with girls. Again, even though for early ages there’s a little overlap, once you get to tween and early teen ages, again, user profiles and interests differ greatly.

The point here is that having a wide age range as the target market in a business case may give you a larger addressable market but really, can a virtual world concept proposition engage both ends of the scale? Short answer, no. Only the early movers into the space (the likes of Habbo, Stardoll and Club Penguin) have enjoyed this type of wide penetration and this is mainly due to the massive brand awareness pulling users in in the first instance. Continue reading “Lessons in Launching Virtual Worlds. Mistake #2: We’re targeting kids aged six to 13” »

Lessons in Launching Virtual Worlds. Mistake #1: We don’t need a Marketing Budget

This is the first in a series of posts highlighting some very common mistakes made by (primarily) start-up companies launching virtual worlds and MMOs for KT&T (kids, tweens and teens).

The insight we’re going to share in this series is gleaned from over five years of consulting for and working with a wide range of companies in the sector.

When we speak with Venture Capitalists and Financiers looking into the KT&T virtual worlds and MMO space a comment we hear a lot is that the space is crowded. Indeed, looking at the Universe and Radar charts, its clear there’s a lot of companies in the market – ‘Chasing the Penguin’ as we used to call it.

However, a large majority of these companies have failed to scale and grow their userbases to critical mass levels. We define these levels on a registered account basis as being 1m, 3m, 5m and 10m. We measure these critical mass levels alongside the K-Factor (viral sign-ups as a % of paid-for) and see measurable uplifts in the K-Factor at each level. For example, once a virtual world reaches 5m registered accounts it sh0uld be seeing a ’1 for 1′ K-Factor, meaning the world gets a viral sign-up for every paid-for sign-up.

Virtual worlds and MMOs with insufficient marketing budgets are floating around in the market and failing to ramp up. This isn’t because their worlds are boring or don’t have great games or quests – worlds are not built to be boring. It’s primarily because when initial funding was raised for the development of the world, insuffiicent funds were allocated to user acquisition. Why did this happen? Here are some reasons:


  • Arrogance. ‘Our virtual world will be so great that we won’t need to spend much of marketing and acquisition. Sign-ups will be viral’.


  • Ignorance. Marketing was an after-thought, only brought up and considered once the world was open beta. This mistake was typically caused when the management team was mainly technical as opposed to commercial.

And, on the topic of marketing and user acquisition, this doesn’t mean banging out a few press releases or having a stand at a conference. Do you see many kids walking around virtual world or gaming expos? No, we don’t either. User acquisition means using measurable and scaleable online channels such as gaming portals, paid-search and the like. There are many worlds using these channels to great effect.

From a CPA perspective (cost per acquisiiton) we deem worlds to be performing well on a paid-for acqusition basis if their CPA is in the $0.50 – $0.80 range. In terms of an overall starting aquistition budget, we always advise at least $750k. Then and importantly, profits from monetization need to go back into the acquisition budget (at least 50%).

And what happens when the companies don’t have a sufficient launch budget? Not much unfortunately. And then they have to go back to the market or existing investors for another funding round. This is a painful process.

In the next of this series exploring Lessons in Launching Virtual Worlds, we’ll be covering off geographical targeting and target market age ranges.

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Golden Triangle Slideshare presentation

Our latest report, The Golden Triangle is now available on Slideshare.

This report explains and positions the opportunities available to IP owners in the toys/games and tv/movie sectors with respect to virtual world integration. The full high-res report can be ordered here

The Golden Triangle

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A Slideshare presentation about Slideshare presentations

Sharing is something we like to do at KZero. And, over the years we’ve shared a great deal of research and insight about the virtual worlds sector.

In fact, we only have one report that we don’t provide for free – everything else is shared, made available on request and viewable on Slideshare. To date, KZero reports and presentations have amassed over 320,000 views on Slideshare, so we’ve done a little presentation showing some data about the reports.

The headlines:

  • Total views: 324,410
  • Email shares: 592
  • Tweets: 158
  • Favourites: 356

Our most popular report on Slideshare is the old Kids, Tweens and Teens report (the newer, better version of this report is our only premium report), with 192k views to date. Second place goes to our Virtual Worlds 2011 report, approaching 20k views. Here’s our Slideshare presentation about Slideshare presentations.



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New report, Virtual Worlds 2011+ now available

We’ve just made our latest report, Virtual Worlds 2011+ available. You can order it here.

This report identifies and explains the emerging trends in the virtual worlds sector and includes insight into:

  • Kids, Tweens and Teens
  • Platform convergence
  • Music
  • Gambling
  • Online dating
  • UGC
  • Socnet extension
  • Education
  • Virtual goods (consumer and B2B)
  • Mirror worlds
  • Mobile devices
  • Metabrands
  • Branded virtual worlds

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Dorothy of Oz branded social gaming suite launches on Facebook

Our suite of branded social games for the forthcoming Dorothy of Oz movie and virtual world has recently launched on Facebook.

If you’re feeling creative then the China Princess Dress Designer is for you. Social game wise, you can let off some steam with the Marshall Mallow Gumball Cannon or pit your wits against the Bricks of Oz. Enjoy!

You can learn about the overall online strategy for the movie here.

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Virtual worlds successfully using Facebook to grow user bases

You might be interested to learn that virtual world IMVU has almost 1.4m fans of their Facebook fan page.

Why do they use Facebook? Lot’s of reasons…

  • It’s a marcomms channel: IMVU communicates the latest news, competitions and user updates
  • Their users also use Facebook: So it makes sense to go where their users are when they’re not in IMVU
  • Rewards: IMVU offers ‘secret sales’ to their followers on Facebook
  • It boosts viral activity: Push notifications from users extend the viral reach

The second point above is the no-brainer of course. But, you might be even more interested to learn that virtual worlds with users below the minimum age requirement (13) for Facebook for similar purposes (and more, explained later). Let’s not kid ourselves – Facebook is chocka-block with under age users. And it’s also full of users at the higher age range end of these kids/tween worlds.

As shown in the chart below (worlds ranked by average user age), whilst these KT&T worlds are not quite at IMVU levels in terms of followers, they’re not doing badly.

Some of these worlds integrate elements of their virtual world experience into Facebook, therefore broadening their reach. Others (most actually) use it is a marcomms channel to speak to their users and the parents of these users (Jumpstart is a great example of this). Others use the Facebook Connect feature to automate the registration process – a great idea.

Continue reading “Virtual worlds successfully using Facebook to grow user bases” »

Animal Jam continues the trend in Branded Virtual Worlds

Demonstrating the continuing trend for existing brands to create their own virtual worlds (Branded Virtual World), this week we’ve seen the launch of Animal Jam.

This property, from National Geographic also highlights another key trend in the sector, channel convergence.

NatGeo worked with Smart Bomb Interactive on development and Jadi Communications for the marketing strategy and execution.

We were tasked by Jadi to review the marketing strategy/messaging and provide a competitive analysis of the landscape in order to ensure correct positioning.

This is a kids and tween play with the benefit of rich NatGeo content.

With the launch of National Geographic Animal Jam, National Geographic for the first time is offering content from its extensive multimedia resources as an integrated component of a virtual world for young adventurers and their families. Players can access video features, photos and facts about animals, plants and insects in a game world that encourages them to move from the virtual to the natural world by exploring nature right in their own neighborhood or backyard. Continue reading “Animal Jam continues the trend in Branded Virtual Worlds” »

Q2 Radar: Brands and Learning dominate new entrants into virtual worlds sector

We’ve updated our Radar Charts for Q2 2010. These charts show both existing virtual worlds and platforms in development (closed beta). This time we’ve included MMOs into the Radar charts and we’ll be building out this list over time.

As a whole, the virtual worlds and MMO marketplace is changing quite dramatically. Whereas 12 months ago a concept we called ‘Chasing the Penguin’ was the main thrust of activity. This related to completely new companies setting up shop funded on the basis and excitement caused by the Disney acquisition of Club Penguin. This led to a massive influx (60+ new worlds) entering the marketplace going after the lucrative kids and tween sectors.

Of course, there’s only so much time kids have available and only so many times these kids can convince their parents to part with their hard-earned cash – we’re seeing casualties now.

As our last post explained, the virtual world and MMO marketplace is now shifting to being brand dominated as companies with existing customers, channels and operations see the value in sliding the brands and offerings into immersive environments.

The uplift in new platforms being developed as a result of these brands can be seen in the Radar segment shown below.

The other key segment seeing increased activity from new entrants is Education and Learning with a wide range of companies across many different educational areas developing their offerings. Continue reading “Q2 Radar: Brands and Learning dominate new entrants into virtual worlds sector” »

(In and) Out of their World – How Brands are Moving Across Platforms

We’ve highlighted many times the opportunities presented to brands within the virtual world and MMO category, primarily from engagement and monetisation perspectives. Linked to this is another trend we identified of leveraging different platforms to synergise brands. This is a post about how these trends are rapidly transforming and driving the sector.

Real world brands having virtual worlds is not a new concept. Barbie Girls and Webkinz were early pioneers of this strategy, amassing multi-million user bases in short periods – and importantly, in most cases much faster than ‘pureplay’ virtual worlds which at present make up the bulk of the sector.

We’ve just updated our Radar charts showing existing and new worlds and MMOs by genre. Related to this, we thought you’d be interested in seeing how brands are moving across different platforms. This is shown in the diagram below (which we’ll be updating on an ongoing basis).

We’ve placed five different channels (TV, Movies, Toys/Games, Consoles and Books) around the virtual world platform. From here we’ve shown how a brand has moved from one of these channels into virtual worlds. For example, BuildaBear started life as a toy retail operation and then augmented their virtual world proposition, BuildaBearVille. Kung Fu Panda similarly created a MMO off the back of the movie – so on and so forth. Continue reading “(In and) Out of their World – How Brands are Moving Across Platforms” »

Building the (virtual) Yellow Brick Road

KZero client Summertime Entertainment is enjoying our full range of services in support of their upcoming animated movie Dorothy of Oz. We were appointed earlier this year to provide strategic services relating to the development of the virtual world, virtual goods and social gaming elements.

With the movie coming out early 2012, our focus has been on developing the virtual platforms to build pre-launch awareness of the movie as well as provide online destinations for fans (and monetisation of course). All online efforts are designed to bridge the Wonderful Wizard of Oz franchise to a new generation.

We’ve created the end-to-end business plan and model for the virtual world, leveraging both the Dorothy brand and the movie. This effort includes the in-world feature sets and user journey as well as game/questing mechanics, socialisation mechanics and the supporting virtual goods strategies. Now we’re working alongside Dubit to build-out the world and bring it to market Q1 of next year.

Here’s some concept artwork for the movie. Continue reading “Building the (virtual) Yellow Brick Road” »

Virtual World Accounts Q2 2009: 15 to 25

Not such a busy sector currently but watch this one for major growth in 2010.

See all the age ranges and virtual worlds here.

A record month for KZero

April is shaping up to be a record sales month for us, already beating our previous best months for new client wins (and we’re not even half way through the month yet) We don’t just produce pretty-looking graphs you know….

Our published client list only tells half the KZero story to date as we can’t list out the majority of the projects we work on. Why? Because a major revenue and client stream for us is providing business planning and strategic services to companies in stealth mode developing virtual worlds and goods propositions.

Here’s an overview of our new clients in April (so far):

Continue reading “A record month for KZero” »

Market sizing and addressable markets (Europe)

I’ll be writing a post later this week about the importance of target market analysis and criteria for companies developing new virtual worlds. This post (and two subsequent ones) will serve as data-points and reference.

As the number of virtual worlds increases and new worlds are launched outside of North American (particularly from Europe and Asia), it becomes increasingly important to understand not just the overall market size but also the addressable market. In other words, identifying and measuring the population of a country and those households with internet access.

So, this post is simply a set of graphs breaking out KT&T segments by age, country and market size. First up, children between the ages of five and nine across Europe. The first graph, show left contains the overall country populations, split by gender.

Turkey leads the way here with 3.6m boys and 3.4m girls, followed by Russia with 3.4m and 3.2m respectively.

Continue reading “Market sizing and addressable markets (Europe)” »

DM News covers L’Oreal Paris campaign

It’s been over for a few months now but interest in the campaign we created for L’Oreal Paris in Second Life continues. DM News is running a feature on the approach we took. Full article here.

The importance of branding in a recession (for KT&T VW’s)

How is the global recession going to impact virtual worlds in the kids, tween and teen virtual world sectors? A question in the minds of dozens of management teams of these worlds.


One early and obvious casualty from these economic times is a reduction in marketing budgets from advertisers. Marketers are being forced to re-examine their proposed expenditure and cut-back in areas typically classified as non-traditional or without demonstrable returns. Not good news for virtual worlds with business models relying on advertising and marketing from third-parties.


This issue is unfortunately further compounded because these marketers are probably also fearing for their jobs at the same time and more likely to ‘keep their heads down‘ rather than ‘stick their necks out‘ and propose virtual world campaigns.


On this basis, revenues from users (via premium subscriptions and micro-transactions) becomes paramount to the short and medium term success of these VW’s – and even more so due to the fact that this sector is already highly competitive and leaning towards over-supply. VW’s need to create strategies which improve on the conversion rates between active and paying users. The good news here is that small improvements on this conversion rate can lead to major revenue upsides.


So really, the key here is to focus on the buying process psychology related to ‘upgrading’ member accounts. And it’s the parents/guardians of members who are the target here as these are the people with the power, or more accurately, the credit card.


What’s needed here is the re-assurance from the VW’s directly to the parents that rewarding their children with premium services is a good thing – value for money essentially.


I’ve spoken several times about the challenges facing what I call ‘Pure-Plays’ – virtual worlds created solely for online purposes without a real-world awareness or presence. These companies have several challenges – grow their user bases, grow their user bases and compete against well-known brands with their own worlds and the positioning/establishment of their own brands. It’s this third point which is sometimes overlooked.


Of course, as the slide shown left identifies, there are several factors presented threats and issues for virtual worlds but in a recession I strongly believe the role of brand is the key to unlocking the value in active user bases.


The brand needs to get into the real world in order to build awareness and to a high degree credibility with the parents. They’re not going to dish out their valuable disposable income without being convinced of the value and most importantly, trusting the company.


What does getting into the real world actually mean?

. Continue reading “The importance of branding in a recession (for KT&T VW’s)” »

Metanomics show video

Here’s the link to the Metanomics show (Unpredictable Spaces) from earlier this week.


Revolution Magazine features K Zero

The November edition of Revolution Magazine carries a three page article this month on marketing in virtual worlds. Part of the Masterclass series, I’m one of the panel along with Ian Hughes (IBM / Eightbar) and Alistair Williams (Habbo UK).

Hughes: “I began with a private island in April 2006 and would invite IBM clients and partners to visit. That has led to a 12-island complex, including a healthcare island where we demonstrate products and host events, a code island where we stage lectures on software engineering, and a science island that contains a giant 50ft high -resolution molecule model“.

Williams: “It launched in the UK during 2000 with just a one-page ad in a teen magazine, and doubled in size virally over four years. In 2005 we introduced celebrity visits and by the end of 2007 had reached a million unique UK users“.

Our campaign for L’Oreal takes centre stage in the article and I’ve also thrown out some words of wisdom, extracted from the 7 Point Plan for Marketing in Virtual Worlds – the first ever marketing framework in the sector.

Continue reading “Revolution Magazine features K Zero” »

Evolving Business Models in MMOs

An extract from a post published on Free to Play – related to MMOs but nevertheless relevant to virtual worlds and this post about Premium Subscriptions.


* Jesse Mulligan, moderator

* Robert Ferrari, Turbine

* Hilmar Veigar Petursson, CCP (Eve Online)

* Nicolay Nickelsen, Funcom

* Min Kim, Nexon

Is it possible to have one business model for a game for both sides of the Pacific?
* Min: Its possible, but you need to tailor it for each market. You can do microtransactions in each market. But Korea has a PC cafe market which generates a lot of revenue and we dont have that in the West, so thats one big difference.
* Hilmar: Eve Online is centrally hosted, so our busines model needs to be adaptable within the same server. We need to build a vast array of options within game so people can choose what they are comfortable with.

Lowering the Premium Subscription barrier

The majority of virtual worlds in the KT&T space rely on the premium subscription model. A straightforward enough concept – offer a basic experience of the platform for free and then incentivise members to ‘pay for more’. The operators generate their revenues from this transaction and obviously it’s a numbers game – push as many people through the doors as possible, knowing that a % will take the premium route.

The problem is, only a very small % actually take this route. Or rather, (for the younger aged worlds) only a very small % of the parents of the members take this route. This means it becomes even more of a numbers game, requiring in most cases hundreds of thousands of registered members to go through the upgrade gate and become premium subs.

Some simple numbers, assuming a 3% conversion rate of registered members becoming premium members (3% is generous by the way).

200,000 (registered) x 3% (conversion rate) = 6,000 premium subs.

6,000 premium subs x $5 (monthly price) = $30,000.

And don’t forget the $30,000 isn’t all margin as we need to take out processing/transaction costs for this. And, before we even get to staff costs and other opex we need to account for server and bandwidth costs.

So, taking the gloss off the exciting virtual worlds sector, there’s a hard reality out there – the premium subscription route is a difficult one. And it’s made even more difficult by the intensity of competition growing by the day as new worlds launch. So many choices for KT&T’s and it’s not even always a case of ‘where shall i spend my money’ – clearly in most cases money just doesn’t come into it as so many members never even consider upgrading to premium subscriptions.

Clearly this is a growing issue for virtual world operators.

So what can be done to lower the PremiumSubscriptionbarrier?

Continue reading “Lowering the Premium Subscription barrier” »

The Relevance of Relevance. Winners and losers in the kids VW space

As the dust settles on the LA expo, I’m thinking back to many of the discussions I had about the kids and tween virtual worlds space. The crux of these discussions, as they usually tend to, boiled down to:

a. How big is the space?

b. How big is it going to get?

c. Where are the growth areas?


a. How big is the space?

It’s certainly not small at present. Take the top five worlds in the KT space on a registered account basis and you arrive at a figure close to 200m.

Filter out from this duplicate accounts (a single person with multiple accounts in the same world), aged accounts (people no longer logging in) and cross-world accounts (people with accounts in more than one world) and you probably get a unique user base of 35m kids aged seven to twelve. This is equivalent to the entire population of California or for us Europeans, the whole of Poland.


b. How big is it going to get?

If the current size on a unique basis is in the region of 35m kids, I’d see it doubling to 70m by the end of 2009 and comfortably growing to 150m by 2010. (Insert simple and pretty graph here >>>>).


These are quick and dirty estimates. The need for greater transparency on unique accounts and standardisation on industry metrics is for another discussion.

c. Where are the growth areas?

This is the area I want to roll up the sleeves on.

Let’s start with companies leveraging real world IP and brand power into the virtual space. Companies like Barbie Girls, Disney, LEGO and numerous TV-based properties are going to do VERY well. Why? Because they already have millions of potential ‘virtual world residents’ – kids who have grown up in a real world wrapped by these brands – they understand them and most importantly they know them. In fact, more than likely they see them every day as toys on their shelves or programmes on their TV.


And that’s fine. In fact, that’s good, good for the industry. We’re not in charge of this industry, the kids are. These are the individuals who’ll be driving the virtual worlds industry into the middle of the 21st century.


But let’s switch over to the kids and tween virtual worlds being created without a real-world brand to lean on. There’s going to be winners and losers in this space and I think the fundamental factor that will influence their success (or failure) will be Relevance.


By this I mean relevance to real world play andpast-timeactivities that kids aged seven to 13 (for example) engage with. And play is the key word here. Kids like to play, we all like the play. And from an early age we learn what and how we like to play. On a basic level it’s a girls vs boys thing but over and above that, play then becomes a resonating activity that drives how we develop as individuals – we figure out what we like and don’t like to spend our precious spare time doing.

. Continue reading “The Relevance of Relevance. Winners and losers in the kids VW space” »

Marketing strategies in virtual worlds: The 7 Points

Back in 2006 K Zero released the first ever strategic framework for companies wishing to deploy marketing into virtual worlds – The 7 Point Plan.

Today, the updated 7 Point Plan for Marketing in Virtual Worlds is released, incorporating the freshest strategic recommendations for marketers wishing to move into the metaverse space in 2008/9. This report is free and available on request here.

The 15 page report contains the following sections:

What is a virtual world?

Why are virtual worlds growing?

Who is a typical resident?

The media landscape

Point 1: This is marketing, so have a plan

Point 2: Design is an output, not an input

Point 3. Integrate

Point4. Giving is better than receiving

Point5. Keep the seats warm

Point6. Stoke the fire

Point7. Promote and cross-promote

Included in the report are examples of marketing campaigns in Second Life, vSide, Stardoll, vMTV and many other virtual worlds. Brands and companies in the report include DKNY, Sephora, Warner Bros, L’Oreal Paris, Pepsi and many others.

Continue reading “Marketing strategies in virtual worlds: The 7 Points” »

Updated: Competitive rivalry in virtual worlds. Part 2/5 – The power of suppliers

What role do suppliers of virtual world services play in terms of influencing the level of competition in the metaverse sector? Using the Porter’s Five Forces strategic framework, it is possible to identify the supplier-related factors and then suggest appropriate methods for virtual world operators to manage their power and influence.

Firstly, who are the suppliers to virtual worlds and what do they supply? This is obviously by no means an exhaustive list.

  • Graphic artists/designers
  • General programmers/developers
  • User experience specialists
  • Community managers
  • Marketing agencies
  • ISP’s
  • Server companies
  • E-commerce/payment gateways/billing
  • Metaverse strategists

On an overall basis, supplier power is high if there’s a limited number of vendors and virtual world operators are highly reliant on their services. These are the elements influencing the bargaining power of suppliers… Continue reading “Updated: Competitive rivalry in virtual worlds. Part 2/5 – The power of suppliers” »

Viral marketing and customer acqusition strategies

This is a post about customer acquisition strategies for KT&T (kids, tween and teen) virtual worlds.

How do newly launched virtual worlds attract sign-ups (users, members, residents, customers, etc etc) during open beta and early launch stage? Or to be more precise, what are the marketing strategies developed for these worlds?

As someone with agency and client-side experience in marketing and advertising, this is a topic close to my heart and also a topic paramount to the success of virtual worlds.

The vast majority of virtual worlds seem to be relying on viral activity as the primary (or in some cases only) method of attracting new sign-ups and for some worlds this is a one way street to failure,particularlyfor worlds classified as pure-play – developed and created specifically for the virtual space with no real world brand awareness or presence.

It’s a flawed strategy because:

  • They have no real-world customers to leverage into their world
  • Their brand means nothing – it has no value or equity

So, for pure-plays the road to acquisition starts at zero (or maybe K Zero ;)) and it’s a long road to walk with competitors around every corner. Yet they still base the crux of their marketing strategy on viral. This problem becomes increasingly compounded with a lack ofdifferentiationbetween offerings. Worlds in the KT&T space are casual gaming or socialing plays, or a mixture of both and there’s little to tell them apart, except that they probably start with the letter Z, Y or X.

So unless these pure-play worlds can either create a new compelling sub-category or create atrulyunique proposition, they’re going to find it extremely hard to acquire new customers using viral alone – they need to develop a marketing strategy. After all, taking a step back from this a little, should the latest form of social engagement and online immersion be left to using the worlds oldest form of marketing for it’s success? I think not.

Virtual worlds based on real world brands have a much easier path. They have existing customers, measurable levels of brand awareness and importantly, established communication channels to exploit with their new messages. And, let’s not forget they already have teams of marketers who understand these three elements because that’s their job, day in day out.

Pure-plays have a much harder challenge to acquire new sign-ups but this doesn’t mean it’s impossible.

What is means is that sooner or later (sooner if they want to succeed and later if they want to just become noise) these pure-play virtual worlds need to ‘take it to the streets’ and start advertising their platforms. This also means they need to build higher marketing costs into their business plans (and funding plans if they’re in dev mode).

What methods of advertising or promotion are currently being used by worlds that don’t just rely on viral marketing?

Most virtual worlds appoint PR agencies. Seems like a pretty good idea – create a comms plan, build a candidate list and get the messages out. This is a good strategy for worlds that allow brands into their worlds as part of the audience will be marketers with budgets. But it confuses me slightly when virtual worlds less reliant on third-party marketing dollars rely heavily on PR agencies. Do kids read press releases, newspapers, websites or blogs? Does PR effort influence KT&T’s into joining new virtual worlds? Not really.

Virtual worlds presence at conferences is also common. Again, this makes sense if the worlds in question are looking to attract brands in – as long as these brands are present. But this doesn’t work when the primary revenue driver for these worlds is from resident income (via premium subs, virtual goods etc). The kids don’t go to conferences. This might sound obvious but you’d be surprised how many of these worlds allocate marketing budget to stands/sponsorships at expos.

So what about TV, radio and print channels?

Continue reading “Viral marketing and customer acqusition strategies” »

Evaluating virtual world business models. Part One

In terms of growth, the virtual worlds sector is exploding with dozens of new worlds across many different fields appearing on a regular basis.


With this growth comes new types of business models, some tested, some untested. Some rely on ‘traditional’ web-based revenue streams whilst others are experimenting with brand new sources of income.


What exactly what are the options for companies developing virtual worlds and associated business models?


Premium subscription


Probably the most popular business model at present and used by worlds such as Club Penguin and Second Life (for land purchase). Many KT&T worlds in development are relying on this business model of offering a basic service to all members and an enhanced version via premium upgrade. Some worlds also complement premium subs with a micro-transactional element.




  1. An understood pricing model for consumers and operators
  2. Provides higher than average (per transaction) revenue for the operator
  3. Can create recurring revenues if contractually structured
  4. Gives the consumer (the user) instant access to ‘upgrade’ areas or features
  5. Can be beneficial for real-world brands with high brand equity




  1. Can create a barrier to entry from a free to premium conversion perspective
  2. Potentially(strategically)exposes world owner to free to play competitors relying on other business models
  3. Requires investment in brand building and/or relies on a ‘big’ idea, not a me-too




These are virtual worlds offering a completely free service such as Dizzywood (for now).




  1. Lowest barrier to entry
  2. Universal access and engagement
  3. Unique differentiator




  1. Ultimately requires supplementary revenues such as banner ads
  2. Expensive to maintain
  3. Requirescomparativelyhigher numbers of users to become attractive to investment

Continue reading “Evaluating virtual world business models. Part One” »

LEGO uses UGC for new Universe logo

LEGOuniverse isscheduledfor release sometime late 2009 but planning for the upcoming MMOG (Lego’s positioning, rather than a virtual world) appears well thought-out and geared well towards raising awareness.

The supporting website has been in place for a while now, quietly gathering interest in the beta via the newsletter. Now LEGO has unveiled the new logo for Universe, created by the design team but during the development process LEGO reached out to LEGO fans asking for their own creations (read more about LEGO UGC here). Here’s some user submissions.

Having a history in brand development, this is particularly interesting to me and also demonstrates a structured andcommittedway of launching a virtual world leveraging heavily real world brand values. Here’s the new LEGOuniverse logo.

LEGO and the LEGO logo are trademarks of the LEGO Group. No trademark infringement intended.

K Zero services

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For virtual world owners

For investors and VC’s

Beg, Borrow or Steal? What can brands do in virtual worlds?

To the casual observer, during 2007, there was only one option for brands wanting to move into virtual worlds – Second Life. It still amazes me today how many totally unsuitable companies (based on product/service offering and target markets) actually set-up there.

To the more informed individual however, of course there’s other options for marketers – there’s a lot of different worlds out there….and even more to follow. And encouragingly several brands have virtual footprints in these spaces.

What I’m getting at here is the evolving environment and therefore decisions open to brands when developing a strategy for virtual world marketing (and let’s just hope they do actually have a strategy). Maybe one way to look at the strategic options is using the Beg, Borrow or Steal analogy.


Second Life is a generalist virtual world, catering to everyone and no-one. It allows endless capabilities for creativity or alternatively just an interestingly chaotic mash-up. But for brands, generalist worlds such as SL can be harsh places to do ‘stuff’. You just need to take a look at the traffic levels for many of the global brand venues (even right after the fanfare launches) to realise how little impact they actually had in-world. Not too many people cared.

However, the majority of SL marketing campaigns that actually did have an effect in-world were the ones that actively went looking for residents. They didn’t sit back in the comfort of their branded island and wait for the floodgates to open (if only). Instead a more direct approach meant the brands came down from their real-world pedestals and got their hands dirty with the locals.

The communication approach that this instance is one of kindly asking for the attention of residents and appreciating/realising that the main reason for these residents to be in-world is definitely not to look at real world brands.

Does this approach world for all brands? Definitely not. But for some, especially in the clothing, fashion, appearance and accessory categories, there’s real demand for real-world brands.


Some companies, mainly American, have taken a different approach for the virtual antics and instead have taken their brands into more controlled environments – they’ve borrowed the land and the attention of the members for tactically short bursts of activity.

Is Borrowing good? For some brands for sure. The degree of brand control in this type of environment is much higher than in a generalist world, basically because the virtual world owner is getting paid by the brand to create and manage the marketing effort and typically these worlds don’t allow too much UGC in-world.

Example of these types of platforms…..vSide, Stardoll, There, Kaneva, Whyville and a few more.

Typical user profiles for the users in these worlds……teens and young adults.

Are there downsides to Borrowing?

One issue is the constraints of the virtual world where the campaign takes place. Different worlds have different design values, styles, functionality and cultures. And, although the target market of the world may be a great fit for the brand, limitations on what’s actually possible (mainly technical reasons) may dillute the overall concept. All the more reason for virtual world operators relying on brand marketing revenue streams to pay closer attention to the real-world activities and drivers of their potential clients.

A lower amount of marketing data available is another potential downside for brands considering Borrowing. Different worlds have different levels of user and interaction data available pre, during and post campaign. Perhaps another area for virtual world operators to focus on.


The most recent development in the virtual worlds space from a brand perspective is the concept of these companies creating their own worlds. Doing this means they’re stealing attention (in the form of registered accounts and time) away from other virtual worlds.

Of the three options outlined in this post, stealing is the most expensive and time-consuming option. In fact, a real-world brand creating their own virtual world has to take a dedicated business-unit approach to the operation due to the sheer volume and wide array of elements required to launch a world.

But does this investment pay-off? We have early examples of successful brand-worlds, such as Barbie Girls and vMTV to look at. More interestingly though here is the high number of worlds in development from brands. Many companies are brave enough to put their money where their mouths are and go for it. Why? Because the benefits in theory are clear…

Total brand control in a world built specifically for that brand can only be a good thing. ‘Owning’ the member is another good reason as is the opportunity to create dedicated virtual revenue streams from activities in-world.

Understanding the wants and needs from the target market in a virtual space is the key for success with this option.

Are there any other options?

Oh yes. There’s some really unique new business models coming downstream built in some cases specifically for virtual world brand marketing. Some relate to virtual goods and services, some to cross-world experiences and even some taking a more augmented reality approach. So, great news for brands – they have a choice. What does this mean for the various types of virtual world operators and propositions? It means competition. And we all know who benefits from competition.

K Zero services

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For virtual world owners

For investors and VC’s

Agencies need to get ‘Tech Cred’

Adweek is carrying a story from the 4A’s Digital Conference. Mark Kvamme from Sequoia Capital comments on how he views the convergence of advertising and technology in the context of agencies.

“You have to have world-class creative but you have to have world-class tech folks who can translate that into conversations,” said Kvamme, currently a venture capitalist at Sequoia Capital, one of Silicon Valley’s leading VC firms.
Google, which Sequoia backed, found that its market share would change based on whether its search results came back a tenth of a second faster, proving that technology is far more than just an add-on as media becomes increasingly digital, Kvamme said. Continue reading “Agencies need to get ‘Tech Cred’” »

NY Times talks about virtual world brand placement

Entering virtual worlds for real-life pitches is the story headline over on the NY Times today. The article delves into the deals made by McDonalds, H&M and Ikea to place virtual brands into the Sims. Some extracts from the story:

Electronic Arts, the worlds largest video game company, said it made the deal with Ikea, the Swedish furniture manufacturer, in response to requests in online players forums for more modern, realistic furniture.

Michael Goodman, an analyst at the Yankee Group, said that last year, marketers spent about $180 million on in-game advertising, including sponsorships like Ikeas deal. He has predicted that spending would rise to $332 million this year, but said he was considering lowering that forecast slightly, as growth seems to be slower than expected.

Full article here.

K Zero services

For brands

For virtual world owners

For investors and VC’s

Brands and Worlds. Who’s the Daddy?


Do real world brands need virtual worlds? Or do worlds need brands?


The vast majority of press releases and media attention given to virtual worlds relates to real world brands going in-world. For example….



April 3, 2008:¬†Paramount Digital Entertainment Extends VooZoo into MTV Networks’ vMTV and Makena’s Virtual Worlds

March 20, 2008: CosmoGIRL! Celebrates a Totally Virtual Prom


Jan 25, 2008: Screen Actors Guild Awards Pre-Show Event Live Inside Kanevas 3D Virtual World


April 9, 2008: Degrassi Gang gets vSideLaunch


April 7, 2008: Natasha Bedingfield ?¢‚ǨÀúUnpluggs into Habbo

Gaia Online

May 2, 2008: Gaia Teams with Project Runways Christian Siriano for Virtual Prom


And this is not limited to worlds in existence – platforms in development are also pulling in brands prior to launch….


Football Superstars

April 25: Puma and Reebok sign-up for Football Superstars


Dec 6, 2007: Vidal Sassoon and HairPiHi

Nov 20, 2007: Intel says Hi to HipiHi. HiPiHi says In to Intel


So clearly, there’s a relationship between brands and worlds and virtual world owners want to publicise these engagements. But where does the balance of power actually lie?


Let’s start with the brands and the current de facto location for brands in virtual worlds – Second Life. During 2007 over 150 brands took the plunge into SL, as shown in the table on the right.


So why did all these companies go in? Well, firstly because SL was a brand new and exciting channel to place their brands into. Full of early adopters and new opportunities, brands (mainly from the US) wanted to be the first in, so first mover advantage and positioning were reasons given for entrance.


The PR generated from SL activity was also a reason. Whilst this isn’t a worthy strategic basis to go in-world, nevertheless, many companies saw it as a media opportunity. Unfortunately for some of these brands the press release wasn’t enough to generate interest in their efforts. Continue reading “Brands and Worlds. Who’s the Daddy?” »

Ten ways to market to Teens online

Anastasia Goodstein on behalf of the School Library Journal (and author of Totally Wired: What Teens and Tweens Are Really Doing Online) has written an interesting piece on some of the lessons she’s learned from studying young peoples’ online habits.

Many parallels can be drawn to how virtual world operators (the companies running the platforms) and brands can best position themselves into this segment.

She breaks out the following:

1. Teens are multitaskers: According to a 2005 study by the Kaiser Family Foundation (see Generation M), students between the ages of eight and 18 spend more than 25 percent of their media time multitasking.

2. Teens prefer byte-sized entertainment: With so much multitasking going on, its best to keep your message short if you really want to nab teens attention……when it comes to electronic content, brief is best.

3. Teens expect content on demand: Gen Yers are used to getting what they want, precisely when they want it?¢‚Ǩ‚Äùdelivered, of course, on their favorite devices, including iPods, iPhones, and game consoles, like Playstation 3.

4. Teens want to participate: Kids want to have a say?¢‚Ǩ‚Äùand even some ownership?¢‚Ǩ‚Äùin the products and content they use. And the more opportunities they have to personalize these things, the more engaged theyll be.

5. Enlist teens to manage your social media: By recruiting a teen or two to assist you, youre validating their technological expertise and social networking skills.

Continue reading “Ten ways to market to Teens online” »

The Five Rules of Virtual Brand Management

Along with the Seven Point Plan for Marketing in Virtual Worlds (more here), KZero also has a dedicated strategic framework for brand management in virtual worlds.

As the number of virtual worlds allowing content creation increases, this concept becomes more and more important for real world brand owners. The full case study can be ordered here and shown below is an overview presentation.

Taking brands into virtual worlds. vBusiness Expo presentation

Shown below is the K Zero presentation delivered on day one of the vBusiness Expo. ‘Taking brands into virtual worlds’ uses the Seven Point Plan as a strategic framework to outline the marketing steps required by brands and companies considering metaverse activity. This case study can be ordered here.

December marketing news

Competitive rivalry in virtual worlds. Part 3/5 – Threat of new entrants: How easy is it for new virtual worlds to launch into the metaverse sector and which factors do existing worlds have to consider in order to protect their business?

Gaia brings in Sony and Warner Bros: In February 2007, US company Movietickets opened a virtual movie theatre in Second Life. In late 2006, Fox Atomic opened their virtual studio in Second Life. The objectives of these projects? – to attempt to create virtual communities of people interested in film.

What marketers learned in 2007, No 1. If you build it, they might not come. As we approach the end of 2007, over 200 brands are now present in virtual worlds. Of these worlds, Second Life has had the lions share of attention with over 174 companies deploying initiatives inside it.

What marketers learned in 2007, No 3. Collaboration is good, but whats in it for me? Together with words like ?¢‚ǨÀúengagement and ?¢‚ǨÀúimmersive, ?¢‚ǨÀúcollaboration has been used a lot in 2007 when referring to real world brands and companies strategies in virtual worlds. But what does this actually mean?

Latest player and environment imagery from Football Superstars. Heres some of the latest player and environment imagery from Football Superstars.

What marketers learned in 2007, No 4. There are ?¢‚ǨÀúother worlds What do you mean? Theres other virtual worlds aside from Second Life? Crikeys. Although Second Life virtually became the poster child for virtual worlds in 2007, the more savvy marketers realised they had other options. Thats not to say Second Life isnt worthy of marketing attention – it is, primarily due to the high numbers of early adopters residing in it. Continue reading “December marketing news” »

Metabrand advertising. Is that metatising?


Part of the LOr?ɬ©al Paris campaign.

What marketers learned in 2007, No 5. The media loves Second Life. The media hates Second Life

They’re a funny lot the media. And in 2007, it’s been a see-saw of differing views and opinions about Second Life.


It wasn’t until brands started to enter Second Life in reasonable numbers (early 2007) that the media took notice. And at first, as this was completely new to most media outlets, the stories were pretty positive.

One such story was carried by Business Week in May. ‘My Virtual Life. A journey into a place in cyberspace where thousands of people have imaginary lives. Some even make a good living. Big advertisers are taking notice’ was the headline. And from here, many other media titles jumped on board (a trend we saw later in the year).

The tide turned as we moved into August and September with the media then deciding it was time to stand out from the crowd and go negative. Wired Magazine was one of the first to adopt the new positioning with ‘How Madison Avenue Is Wasting Millions on a Deserted Second Life’. And from here of course, the rest of the media followed the story.

It’s was interesting at this point to realise just how many stories are recycled around the internet by websites and blogs. The Madison Avenue story generates 845 EXACT matches when you Google the headline. News travels. And it appears that bad news travels faster than good news as the My Virtual Life story only produces 126 exact matches.

The LA Times (referenced on Techcrunch) also carried a much copied article which came under criticism for it’s inaccuracy.

So why did this happen in 2007?

Firstly, Second Life became very hot early in the year. So media titles needed to keep up with the trends and push out the news flow.

Secondly, the media needs differentiation sometimes – a new slant on an existing topic. Hence the turnaround.

Thirdly, and probably most accurate in terms of explaining the media attention and virtual worlds is the Gartner Hype Curve.


Continue reading “What marketers learned in 2007, No 5. The media loves Second Life. The media hates Second Life” »

What marketers learned in 2007, No 4. There are ‘other’ worlds

What do you mean? There’s other virtual worlds aside from Second Life? Crikeys.

Although Second Life virtually became the poster child for virtual worlds in 2007, the more savvy marketers realised they had other options. That’s not to say Second Life isn’t worthy of marketing attention – it is, primarily due to the high numbers of early adopters residing in it.

However, just as marketers have multiple options for other media platforms such as TV, print, press….well, just about every other platform, the same can be said for virtual worlds. You have to choose the world that’s most appropriate for you brand.


This decision at present is primarily based on target market age ranges. Continue reading “What marketers learned in 2007, No 4. There are ‘other’ worlds” »

What marketers learned in 2007, No 3. Collaboration is good, but what’s in it for me?

Together with words like ‘engagement’ and ‘immersive’, ‘collaboration’ has been used a lot in 2007 when referring to real world brands and companies’ strategies in virtual worlds.

But what does this actually mean?

Collaboration, in the virtual sense for brands means wanting to create a conversation (another phrase used a lot) with residents and work together to a common goal.


Why do brands want to collaborate?

Because it’s become very clear during 2007 that residents in virtual worlds are smart. They know a cheap marketing trick when they see one. So, brands want collaboration as a way of recognising the incumbant IP and intelligence present in the metaverse space. It’s also an indirect way of giving residents the impression that real world brands are humble. Continue reading “What marketers learned in 2007, No 3. Collaboration is good, but what’s in it for me?” »

What marketers learned in 2007, No 2. It takes more than a press release

Stop press.

Company A has become the first company in the B sector to enter Second Life.

We heard this a lot in 2007. Here’s a few of these headlines:

This is a global precedent for the first Belgian bank to become active in this virtual world.

….becomes the First Pure-play PLM Company to Establish Presence in Mainstream Online Virtual World

….the first country to establish diplomatic representation in the virtual reality world of Second Life

…..becomes First Indian Company to announce Virtual Presence

….the first Fortune 500 company to do an exclusive press conference within Second Life

…..the first company to be launched in Second Life

OK. You get it.

amazed.jpgBeing the first Transylvanian manufacturer of air guitars to enter Second Life does not constitute a communications strategy aimed to encourage people to visit an island. Continue reading “What marketers learned in 2007, No 2. It takes more than a press release” »

What marketers learned in 2007, No 1. If you build it, they might not come

As we approach the end of 2007, over 200 brands are now present in virtual worlds. Of these worlds, Second Life has had the lions share of attention with over 174 companies deploying initiatives inside it.

And we’ve seen all kinds of activities take place. From giant computers and car vending machines, through to TV shows, competitions and concerts. But what have marketers realised in 2007? This series of posts looks at the lessons learned (in some instances the hard way) by real world marketers exploring virtual worlds.

If you build it, they might not come

There’s been an awful lot of media attention surrounding the lack of visitors to ‘corporate’ venues in Second Life. Whilst some of this media coverage has been inaccurate, it is fair to say that real world brand venues in SL attract a lot less traffic than metabrand locations. It’s also fair to say that for some of the more poorly conceived marketing campaigns in SL, there ain’t nothing going on but the rent (to Linden Lab).


Continue reading “What marketers learned in 2007, No 1. If you build it, they might not come” »

Competitive rivalry in virtual worlds. Part 3/5 – Threat of new entrants

How easy is it for new virtual worlds to launch into the metaverse sector and which factors do existing worlds have to consider in order to protect their business?

This is the third in a series of posts examining the competitiveness of the virtual worlds sector. Part one discussed the influence of buyers and part two covered the power of suppliers.

Of course, when discussing the threat of new entrants, what we’re talking about primarily are the barriers to entry in place for them. Here are the variables affecting the threat of new entrants and the strategies available to existing metaverse platforms.

Access to inputs

The access to inputs relates to the availability of component supplies required to create virtual worlds. These fall into three main categories:

  • Programmers
  • Hardware
  • Strategic experts

In effect, these are human and non-human inputs.

For virtual worlds being developed or organisations considering the creation of a metaverse, they need programmers in a variety of roles. And, bearing in mind the virtual worlds sector is relatively new, the supply of these programmers is limited.

So, how do existing worlds lower the threat of new entrants? They inclusively contract the programmers in order to lower market supply even further and make it difficult for new worlds to recruit. The same applies for strategic consultants – there’s only so many of these to go around – a good time if you’re considered an expert.

Government policies

How do government policies influence the virtual world category? Continue reading “Competitive rivalry in virtual worlds. Part 3/5 – Threat of new entrants” »

World of Warcraft ups the anti with TV push

In a recent post about virtual world advertising, the use of PPC advertising by There and Kaneva was highlighted.

Also in this post was the explanation that pretty soon we would be seeing more mainstream media channels such as TV, print and radio being used to promote virtual worlds. Well, World of Warcraft has upped the anti with their latest advertising push with a campaign titled ‘What’s your game?’.

Here’s the first TV spot featuring none other than William Shatner.

And here’s the second one with Mr T. Continue reading “World of Warcraft ups the anti with TV push” »

Competitive rivalry in virtual worlds. Part 2/5 – The power of suppliers

What role do suppliers of virtual world services play in terms of influencing the level of competition in the metaverse sector? Using the Porter’s Five Forces strategic framework, it is possible to identify the supplier-related factors and then suggest appropriate methods for virtual world operators to manage their power and influence.

Firstly, who are the suppliers to virtual worlds and what do they supply? This is by no means an exhaustive list.

  • Graphic artists/designers
  • General programmers/developers
  • User experience specialists
  • Community managers
  • Marketing agencies
  • Server companies
  • E-commerce/payment gateways/billing
  • Metaverse strategists

On an overall basis, supplier power is high is there’s a limited number of vendors and virtual world operators are highly reliant on their services. These are the elements influencing the bargaining power of suppliers… Continue reading “Competitive rivalry in virtual worlds. Part 2/5 – The power of suppliers” »

Advertising and the positioning strategies of virtual worlds

As more and more companies enter the metaverse space, naturally competition will grow between these worlds. And, the fight for new residents will be fought heavily on the advertising battleground.

Advertising is something virtual worlds have not really done a lot of to date. Word of mouth and early adopter channels (blogs, new sites, tech-based magazines) have been the primary channels for creating interest.

These avenues only go so far in terms of penetrating early majority (the road to mass adoption) consumer types. This means that virtual worlds will need to use other forms of advertising in order to grow their populations – and we’re starting to see signs of this.

The channel being used first is PPC advertising but I wonder how long it will be before a virtual world uses more mainstream options such as TV, radio or print.Three months ago, a Google search for virtual worlds resulting in only two sponsored adword links for platforms – There and Kaneva.

Here’s the picture today.


Kaneva and There are still represented and joined by with Habbo, IMVU and a few others. Competition is increasing. It’s also interesting to see Google (in number one ppc spot) promoting Google Earth. Continue reading “Advertising and the positioning strategies of virtual worlds” »

October marketing news

Too Fast, Too Curious. Cars in Second Life part 1. Automobile marketers love Second Life. All those ripe early adopters, 3D models and test-drives. And savvy marketers are building communities as well.

HUDS up, its a Belgian Bank. Following on from companies like BNP Paribas, Europ Assistance and Wirecard, the latest entrant is Belgian Bank Keytrade.

Collaborative Credit Agricole. Banking group Credit Agricole joins BNP Paribas as French financial services representatives in Second Life.

Advertising a virtual expo, advertising a real world expo. Advertising expo organisation Advertising Week is using Second Life to augment their 2007 conference.

Dont step in the meadow muffins. The benefits of virtual world activity for food and drink companies are not obvious. After all, avatars do need need to eat or drink. Continue reading “October marketing news” »