Virtual Worlds, Real Money: The Power of Second Life

1. Virtual Worlds + Virtual Lives = Real Money Presented By: Lindsey Bonner Daniel Kaser Travis Carlston

2. Top 3 Virtual Worlds • Second Life • Internet-based virtual world launched in 2003 • World of Warcraft • Multiplayer online role playing game • Sims • Strategic life-simulation computer game

3. Second Life • Launched in 2003 by Linden Lab • Became mainstream in the late 2006, early 2007 • Second Life Viewer enables “Residents” • Residents create a motional Avatar (character) to explore, meet other residents, socialize, participate in individual and group activities, create and trade items and services from one another • Virtual currency = Linden Dollar • More than 9.8 million active accounts

4. Forming a Virtual Economy • Residents can design and make clothing and build other virtual objects • Products and services are bought and traded using Linden Dollars • Linden Dollars can be traded for US Dollars on the Lindex • Exchange rate of US$1 = L$270 • Difference between Second Life and other virtual worlds – SL promotes and allows retention of full intellectual property rights to what residents build

5. Deeper Look at Virtual Businesses • Currently housing 45,000 PROFITABLE business owners (positive monthly Linden flow) • Over 150 profitable businesses make >$5,000 per month • Virtual casinos were recently removed as business from SecondLife – What’s illegal in the RW is illegal in SL • Accounted for 10-15% of the Linden economy • One Resident created a Game that avatars can pay to play • Resulted in a licensing deal with a video company and cell phone game manufacturer

6. SecondLife Enhances Real World Businesses • Wal-Mart Stores, American Express, Intel and more than 200 other companies use Second Life • Helps foster more collaborative learning methods • Trying to get an edge on the virtual world’s new work force • Real world fashion firms design and test new clothing • Designs can be seen in 3D by their colleagues and customers • Real world advertisers are also embracing the space to promote and market their products

7. The Emotional Side • Virtual worlds can have an emotional impact on the users. • They often get attached to virtual land, virtual property/belongings and virtual ocean views • Their virtual office becomes a ‘real’ place to them...a place where they earn a living • They spend hours on end in a virtual world, often forgetting or not taking advantage of the real world • Residents create alter egos to escape or enhance their real world

8. The Technology Side • SecondLife’s technology let’s residents create clothes or storefronts from scratch • Anything from a notary service storefront to candles that actually burn down into pools of wax • Uses and relies on open standard and open source implementation • Source code is available to everyone • Strategic Direction: Recently launched an Architecture Working Group • Enable 3rd parties to run servers to connect to the SL platform • Scale the SL Grid to support 60 million regions , 2 billion users, and in-world currency of 50-100 million residents • User System Requirements – Cable or DSL; Microsoft 2000, XP or Vista OS; Pentium III or Athlon or better; 512 MB or more memory; video/graphics card GeForce 4 MX or better , 945 chipset, or ATI graphics card • Also runs on MAC and Linux • Not compatible with dial-up or satellite internet, and some wireless internet services

9. Second Life Testimonials Nickname: Khannea Suntzu Review: SL saved me, period. I can burn here, brighter and a lot more often. SL make me smile, I can be creative, I meet people, I pay my bills with what I make in SL. I never invested a penny in it, in RW money and it gave me LOTS. Money is even fun in here (look me up, i'll show ya!) Try it. Nickname: Xelton Tzedek Review: 2 of 2 Now, I'm not saying the distance doesn't have its drawbacks, but think of the opportunities! This "game" can become just one more step to a more advanced civilization. Think of the possibilties of interviewing multiple people at once, and choosing which person seems suited for the job! One more thing as well. Any new world introduced to society will flourish in its own version of corruption and crime, unless restrictions were set to where freedom was non-existant. The fun of Secondlife is that said freedom to build, create, have fun, and rise to the top!

10. Fees and Memberships • First basic account is FREE • Each additional basic account has a one-time fee of $9.95 • Premium Second Life Account • $9.95/month – allows you to buy land, build, display, entertain, and live • Other fees: • Land Use Fee $9.95/month in addition to sq meter fee from $5 - $195 US • Island Use Fee - $295

11. And God said: “Let their be Sims Online”

12. The Sims Online • TSO is a massively-multiplayer online life simulation game and is part of the world famous Sims franchise. • It is designed to give you maximum character playability in a fictional world. • Thirteen (13) different cities are home to thousands of online users who cyber-interact with one-another. • The game is based on a point system of skills that can be increased with a little effort. • Some of these include: mechanical, cooking, charisma, body, creativity, and logic tests • To increase your Mechanical & cooking skills, you must read virtual books on the subjects. • To increase Charisma the character practices talking in front of a mirror • To increase Body you can cyber-dance or you can get cyber-exercise. • To increase Creativity you must do artistic things like painting and playing the piano or guitar. • To increase Logic skills you can do research on your virtual computer, play chess, or look into space with a virtual telescope.

14. Background of TSO • Will Wright is the originator of the SIMS games. • It is said that Will Wrights home burned down in the great Oakland Firestorm of 1991, and he was forced to move his family away • Somehow, this lead him to the idea of a game simulating the every day events of life and it was only a few years before the game would hit shelves and become the biggest selling franchise in history. • SimCity was created by William Wright in the early 1990’s. • SimCity puts the player in charge of a city. There is a mayor, multiple townspeople and plenty of jobs so your job is to maintain security and prosperity in your town. • After SimCity came a multitude of “The SIMS” games throughout the 1990’s. • The SIMS went a different route than SimCity. This game was all about life and personal prosperity. Instead of just increasing the towns skills, you had your own character that you could design. • Then TSO came along. • In theory, this was the perfect combination of technology and the internet in order to create a virtual world where people would spend real money on inanimate goods, but the game has thus far failed to live up to its potential or its counterparts World of Warcraft and Second Life.

15. A$ far a$ money i$ concerned • It is free for the first month of play and $9.99 per month after that. • Compared to Second Life and World of Warcraft, real money sales for virtual goods are low in TSO, so there is not much activity…YET. • These low merchant sales have been the cause of a virtual economic slump in the game. This hasn’t necessarily stopped people from playing, just from spending all their hard earned cash on in-game items. • But videogame giant Electronic Arts will undoubtedly break the silence with an upgrade, or possibly even a new Sims game. • With proper marketing and promotion, this would allow the virtual world of TSO to take off like its competition has.

16. Continued…. • If it proved popular, it would burn holes in the hiked up suspenders of those playing the game, which could start an economic upturn and a chain reaction of virtual sales like real estate or property. • There is a very good chance TSO could come up quickly and become a leader in the world of MMO life simulation. • The Sims franchise has a lot of clout from being the highest selling game franchise in history • EA is an absolutely massive company with more than enough money to market their product. • In other words, The Sims Online is one to keep your eye on.

17. Just like the other two games World of Warcraft or WoW for short is a MMORPG (Massively Multiplayer Online Role Playing Game) • Created by Blizzard Entertainment • Warcraft Franchise had its debut in 1994 with Warcraft: Orcs & Humans. • World of Warcraft is the Fourth installment of the game.

18. Game Demographics • The game currently hosts 9.3 million subscribers and the number continues to grow year to year • Average age of a player is 28.3 years. • Male to Female ratio for those playing is 84% male to 16% female but in-game character male to female distribution is 65% male to 35% female and of those female characters 55% of them are played by males. • Average game play per week is 22.7 hours • Geographically North America has 2 million players, Europe has 1.5 million and China has 3.5 million.

19. There is Money to be made… • Blizzard Entertainment charges $20 for the game and 30 days of online play • After the trial game play the players can purchase anywhere from 30 days to 6 months using a credit card or prepaid game card • Marketing has picked up over the past couple years due to so many people playing and Blizzard Entertainment has made note of that putting new ad-campaigns in place and teaming up with companies such as Toyota.

22. Currency • The primary currency used in the game is gold. The exchange rate on the currency is about 1000 pieces of gold to about $100 U.S. dollars. • There are online stores such as MyMMOShop, H4Gamers, Virtual GA and Vc MMO who specialize in selling the gold and other services such as purchasing accounts • Personal accounts depending on your status in the game sell upwards of $6000 U.S. • There are even items such as Swords that can cost upwards of $800 U.S.

23. Gold Farming and the Trade Channel • Gold farming is a way of obtaining gold in the game which then can be sold or traded. • The Trade channel is where people meet in the game and trade goods which may or may not involve real world currency. • Gold Farms are created by users and are even seen as a type of employment • Some countries have even started to question whether they should tax the virtual economies because of the real money they bring in. Thus leaving many of these groups to function underground.

24. In Conclusion • World of Warcraft with its prospective 9.3 million players and Second Life with 9.8 would rank as this worlds 88th and 87th most populous nations edging out Sweden, Austria, Switzerland, Hong Kong, Ireland, and New Zealand • Estimates of the virtual economy and the money it generates are between $200 million and $1 billion a year • With so many people ditching the real world for the virtual world it provides entrepreneurs the chance to flex their muscle and make some money