Business in Virtual Worlds, Events, Virtual World Platforms

Insights from Engage Expo: Virtual World Goods, Kids, and Monetizing Mom

The “Conference Previously Known as Prince”, er, previously known as the Virtual World Conference, but now known as Engage! Expo, just wrapped up, and the following report was sent back to give a sense of what’s going on. Thanks to Craig for summing things up:

The Engage Expo wrapped up, and in dire economic times it was scaled back in size from last year: less attendees (many business travel budgets have been cut: haven’t these people heard of Second Life? LOL), fewer talks, and less exhibitors. Part of this may be attributed to the fact that the 3D Training, Learning and Collaboration event is happening in DC in April, so some folks may have opted for one conference rather than both. But there were also rumblings that the venture capitalists are being more cautious with their money – kind of obvious, in an economic crunch. As Joey Seiler, editor of Virtual Worlds News, the trade publication of the virtual world industry and an arm of Show Initiative, the conference organizer, said, “they are cutting harder deals, and looking for quicker results.”

To that end, ‘results’ was the running theme behind much of the content at this year’s conference. There were talks on (hold your breath, now): optimizing revenue streams; the ‘emerging world of virtualized transactions;’ improved user interaction with virtual goods; music as a conduit for selling virtual merch; monetization and marketing; virtual good-selling; teen spending; iPhone gifts; merging online and offline products; and this one: ‘Payment Systems That Power Social Monetization.’ On this last note, there were also two monetization providers – PlaySpan and Super Rewards – that enabled publishers to seamlessly integrate payment options for consumers into their platforms.

I think you get the drift here. The earning of money through virtual worlds seemed to be at the forefront of people’s minds. Mind you, this conference was focused almost exclusively on virtual worlds directed at teens and tweens, but still, the content focus was narrower than a previous one we attended.

For example: at the 3D music seminar, Sibley Verbeck of Electric Sheep envisioned a day when bands gave away their music in virtual spaces in order to sell virtual merch, and he was hot on the idea of microtransactions as a way to get 3D music spaces moving. Joe Hyrkin, of Gaia Online, discussing platforms that would attract marketing and brand directors, noted that any site with over five million users was “meaningful.” And during the seminar on monetizing kids’ worlds, it was noted (without irony, I should add) that kids aged 10-11 in the US do not have cell phones, but that European kids of the same age do. The point of this unremarkable research? The US kids cannot make an online purchase without a cell phone. And the end of this buying circle is, of course, the mom, a group which Maria Bailey, a specialist in marketing only to mothers at BSM Media, said had to be “reeled in.” (Or maybe she didn’t quite say “reeled in.” But it certainly felt that way.)

Ben Duranske was on hand with law firm Pillsbury Law, that has dedicated an arm of its practice to law in virtual worlds, dealing with patents, copyrights, open sourcing, agreements, privacy and data protection, property rights, and virtual taxation issues. Proof that, if anything, virtual worlds are gaining even more traction as a legitimate, large-scale business enterprise.

So, you see where this is headed. As VCs back down on virtual worlds (although SuperSecret, a VW startup based in San Fransisco, scored $10 mil start-up cash at the conference), Seiler noted that the lower figures for VW capitilization were on pace with other sectors of the economy.

Seiler sees a trend towards more boy-centric worlds emerging. He cited Ridemakers, Webisaurus, Action All-Stars, Topps (with its pretty amazing augmented reality addition to its baseball cards, which turn them into three-dimensional, pitching and hitting collectors items!) and Upper Deck as some companies leading this trend. But he also saw something else.

“Content is going to take the foreground to technology,” he said. We’ve seen how the wow! factor of a new commercial virtual world is slowly dissipatating as the business development side of things take stronger root in the industry. Which does not undermine at all what the coders and programmers are up to: in fact, quite the opposite. The need for compelling visuals and new technologies is as strong as ever. But Seiler felt that the business developers were ramping up their efforts.

Is this simply a case of profitability being on the top of everyone’s minds? It does beg the question, will innovation in the commercial world of VW development become watered down? Hard to say.

“The lasting appeal of a virtual world in a kid’s space,” said Seiler, “is that moms seek to buy items with ‘value.’” This is why Club Penguin has been so successful. “To not just be junk food, but wholesome. Penguin has always had this approach, by giving money to non-profits and so forth.”

There was nary a mention of educational components in VWs (at least that we caught). Which is kind of surprising, seeing as how most of these worlds are aimed at kids. But when kids step away from school, do they want more lessons? Hardly. Unfortunately, we had to miss the panel featuring *gasp* ACTUAL KIDS. Now there’s a radical idea for a talk!

P.S. Last year we snarkily noted that Sony Home wasn’t attending. Well, this year, it did. So sue us.


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