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12 Nov

Metanomics show video

Strategic Marketing

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


9 Nov

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 →

17 Sep

Evolving Business Models in MMOs

Strategic Marketing

An extract from a post published on – 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.
Continue reading →
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 →

10 Sep

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 →

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 →

28 Jul

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

Strategic Marketing

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 →

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 →

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 →

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.

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