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2 Nov

October KZero news round-up

Brands in virtual worlds. A definitive list (virtually)

Updated Universe chart for Q3 2009

VW registered accounts increase by 92m to 671m in Q3 2009

New KZero report: Virtual Worlds 2010+

Habbo and Stardoll show largest growth in Q3 2009

Talking with RezEd about education in virtual worlds

Updated Radar charts for Q3 2009


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2 Nov

KZero twitter stream now active

You can now get the latest KZero news, market research and industry insight @KZeroWorldswide

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28 Oct

New KZero report: Virtual Worlds 2010+

We’ve been rubbing our crystal balls again, thinking about the growth areas for the virtual worlds sector. And, we’re delighted to say our findings are now contained within the latest KZero report – Virtual Worlds 2010+.

The report can be requested here and is ideal for companies considering entrance into the virtual worlds market as well as Investors seeking insight into the key growth areas and emerging business models. An overview presentation is here.

The report covers the following areas:

Continue reading →

11 Aug

Second Life versus Vastpark: Guest Post

This is a guest post by KZero Advisor Serge Soudoplatoff.

I had recently a very interesting conversation with Greg More, from the Spatial Information Architecture Lab at RMIT. Greg is a really innovative person, sees the potential for virtual worlds, and does a lot of interesting projects around spatial data visualisation. Greg and his students have worked with different virtual world platforms.

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Greg @ RMIT

In the middle of the lunch, as I asked him about Vastpark which he uses a lot, he suddenly said Second Life is like coding in html, Vastpark is like coding in php.

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Looking back to look forward: 20 trends defining virtual worlds in 2007

Just over a year ago Techdigest did a great job of live-blogging the Virtual Worlds Forum event in London. They also came up with a list of 20 trends defining virtual worlds in 2007. Now then, a year is a long long time in the virtual worlds space so let’s go back and look at these predictions and see what’s happened a year later.


1. Shedloads of virtual worlds will be launched in 2008. KZ: Spot on. See them here. And expect even more in 2009.


2. Teen-focused virtual worlds are huge. Well, some of the largest VW’s at present cater to the teen marketplaces like Stardoll, Habbo, IMVU and Gaia, although it’s the tween worlds which show the highest growth signs at the moment.


3. Brands still get it wrong. They did for sure in 2007. In 2008 we’re seeing better approaches, mainly because brands are starting to realise the range of different worlds available. Agencies are still a little slow getting to grips with virtual worlds though.


4. There’s a problem with communication. Yes, the industry is still a little insular and the media tends to flirt positively and negatively with virtual worlds. This issue is easing though, mainly through increased penetration of KT&T worlds.


5. There will be big growth in corporate use of virtual worlds. KZ: The first prediction that has yet to be realised.


6. Virtual items will be a big moneyspinner. KZ: Definitely, and will I think become the dominant factor for most virtual worlds. Here’s some stats to support this.?


7. Mobile is a bit of a wildcard. KZ: Not yet. They’re still the red herring.

Continue reading →

10 Nov

Appearing on Metanomics (Unpredictable Spaces) today

I’ll be appearing on my second Metanomics show today (12pm PST/SLT, 8pm GMT). The show is featuring Jon Himoff from Rezzable Productions. We used the Greenies Kitchen as part of the L’Oreal campaign and I’ll be on the show to offer my thoughts on brand placement in Second Life. More information here.

Post-event: Here’s some snaps from the show…


15 Sep

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 →

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 →

The Virtual Worlds Innovation Awards

Virtual Worlds Management are launching a new awards programme at the LA show. These awards are to recognise companies and initiatives pushing the boundaries of the sector in new and exciting ways.

The winners will be announced at 5pm PST on Wed Sep 3. I’m one of the judges for these awards, joined byChristian Renaud (CEO, Technology Intelligence Group), Erica Driver (Co-Founder and Principal, ThinkBalm), Steve Prentice (VP and Fellow, Gartner), and Robert Bloomfield (Founder and Host, Metanomics; Professor and Director of Graduate Studies, Director of the Business Simulation Laboratory, Cornell’s Johnson School, pause for breath).

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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 →

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