Big companies are piling into virtual reality with their own, branded
online worlds that could be as much enterprise tool as marketing ploy
No, virtual worlds aren't exactly video games. But they appeal to the very same gaming demographic. And, for that reason, media companies—like Warner Bros. and Disney—are enthusiastically creating these explorable online lands faster than you can say "Christopher Columbus."
Which is why, this past week, high-profile TV producer Anthony Zuiker—creator of the "CSI: Crime Scene Investigation" trio—presented a keynote at the Virtual Worlds Conference & Expo in San Jose, Calif., a gathering for media folks who have just recently woken up to the potential of virtual worlds and what they have to offer.
For instance, last month, Warner Bros. Entertainment announced it would launch T-Works in the second quarter of 2008, a virtual destination that would bring together all the key characters from its core animated brands, including Looney Tunes, Hanna-Barbera and DC Comics. It's been in development for over a year.
As in most virtual worlds, visitors to T-Works will choose an avatar—in this case, a Warner Bros. character such as a personalized version of Tweety Bird—which they can then use to participate in various activities and to communicate with other visitors' avatars.
"T-Works—which really doesn't stand for anything other than bringing to mind the word 'tunes,' as in 'Looney Tunes'—will be a single place online where we can promote and create interest in all of our animated properties and new ventures," says Lisa Judson, president of Warner Bros. Animation. Historically, she says, the company's characters have been segmented, but T-Works "is an opportunity for them to all live together, ScoobyDoo with Batman, George Jetson with Fred Flintstone."
Plans are for T-Works to house screenable classic animations as well as original content, 120-plus online video games, plus a "grab and go" area where visitors can pull their favorite characters, personalize them, and then remove them and post them on other social networking Web sites such as MySpace or Facebook.
"This is a cross-divisional project that is a huge priority for Warner Bros.," notes Judson. "There have been outside vendors helping us, but the planning and development is all being done internally." She wouldn't discuss what the project is costing other than to say that it is a "significant investment but well worth it because T-Works will be a great marketing platform for all the company's businesses."
T-Works will be entirely ad-supported by "a small number of strategic partners," according to Judson, who notes that there will be no cost to consumers to participate. On the contrary, visitors will receive virtual rewards for all their actions on the site for which they can, say, personalize their avatar, swap for game power-ups, or bring them to retail in the form of coupons generated by advertisers. There will be no e-commerce on the site.
"We believe that virtual worlds and online social networking have become mainstream behaviors," she notes. "And if that's where consumers are going to be, we certainly want to be there too. Warner Bros. is a company that creates great content and we're excited to put that content wherever consumers are going to want it."
That growing excitement about virtual worlds led Chris Sherman—founder of the Austin Game Conference in 2003—to launch the first Virtual Worlds Conference in New York this past March.
"It was difficult not to recognize all the attention that [virtual world] Second Life was receiving," recalls Sherman. "As we dug deeper, we realized that Second Life was just the tip of the iceberg, that there were all sorts of other virtual worlds out there. So we created the show, attracted 600 registrants when we had only expected 400 or so, and now we're doing the second show, a five-track event with about 20,000 square feet of exhibits. Clearly there's a lot of interest in the virtual world space."
While Sherman says that swelling consumer interest parallels the growth in their access to broadband services, he insists that virtual worlds are nothing new—that while some of the applications are leading-edge, the technology has been around for some time.
"It's just an extension of what's been going on in the video games industry for many years now," he says. "I mean, Ultima Online came out 10 years ago, and that was a virtual world, wasn't it?"
But today's virtual worlds have evolved past gaming; they are now being used for activities as simple as social networking or as complex as employee collaboration.
"For instance," he says, "Ultima Online was totally scripted. But Second Life caused such a stir because there was no script or path or narrative; it was a blank slate, a tool that enabled people to come in and be creative, to do whatever they wanted to do. It wasn't about gameplay but about communication."
Over 100 speakers spoke about these new applications for virtual worlds at Sherman's conference this past week—and few were from game companies. Most came from blue chips as large and well-known as IBM, Sun Microsystems, Cisco, and Intel that are experimenting and becoming familiar with the virtual environments.
"Companies are waking up to the fact that, in the not-too-distant future, consumers will be spending more time inside virtual non-gaming worlds than they are playing games today," predicts Sherman. "That's because there are more diverse things to do. Besides playing games, you can socialize, you can build your business network, you can learn any number of different applications. Gaming will be just one of many activities."
Sherman compares virtual worlds to the Internet in the '90s when corporations began to understand the possibilities the new technology could mean for their businesses.
"Everyone is going to look at virtual world platforms and ask, 'How can I adapt this to my own business?' " he says. "For instance, Allstate is an insurance company, but it came to the show because it is looking at adopting virtual worlds for its entire employee base as a way of facilitating employee communication. And that's tens of thousands of employees. Allstate may wind up using it for training purposes, for virtual meetings, for sharing data, for improving collaboration, whatever."
According to Sherman, CSI creator and co-producer Anthony Zuiker is, too, weighing the possibilities.
"He has a $2-billion brand among the three CSI TV shows and he sees virtual worlds as a way to extend that brand and create a cross-platform opportunity," says Sherman. "I can't be more specific because Zuiker is being cryptic about how he intends to proceed."
But Paul Yanover, executive VP and managing director of Disney Online, is extremely candid about his company's intentions.
"We view virtual worlds as being very meaningful entertainment experiences for the public and we see them as absolute and clear opportunities for Disney," he says. "And so we are definitely looking at building new businesses in that space."
Most recently, in August, Disney paid $350 million to purchase Club Penguin, a virtual world created and run by New Horizon Interactive in British Columbia. It was an unusual move for Disney which is known for doing most of its development in-house.
"It was hard to resist," admits Yanover. "We saw fantastic people there doing fantastic work, and they had created a really successful and artfully done connection with a lot of kids which is, of course, an audience segment that's very meaningful to us. We looked at our strategy—which is to build out a portfolio of worlds—and decided that there really was no need for us to build everything ourselves, especially if the already-existing world has as much momentum as Club Penguin does."
Indeed, when Disney acquired the site, it had built up a paid subscription base of 700,000 with 12 million free and paid visitors showing up regularly, according to Disney.
The media giant may have been one of the first to enter the universe of virtual worlds, especially those targeted to kids and their families, having launched Disney's Toontown Online as far back as the summer of 2003.
"At that time, the power of personal computers had grown dramatically, the price point had dropped, and we here at Disney had some pretty amazing people on staff who had done a lot of development work with virtual reality at our theme parks," recalls Yanover. "We had this crazy idea that we could build another virtual world—not out of brick and mortar as we had done in Anaheim and in Orlando—but online."
The experience was such a positive one, says Yanover, that Disney went full-speed-ahead on other online virtual worlds, including Virtual Magic Kingdom two years ago; Disney Fairies, which has had 3 million visitors since it opened this past January; and Pirates of the Caribbean Online, which is expected to launch next month.
"Some people might say that Pirates is more an MMOG [massive multiplayer online game] than a virtual world, but I maintain that the lines are blurring," explains Yanover. "In Pirates you create a pirate avatar and then live in the world that we introduced in the Pirates of the Caribbean films. You have thousands of people with you online, you have your own pirate ship, and you can assemble a crew of other people to sail around and adventure with you. You have relationships, you gain experience points and skills, and I say those attributes are very similar to what exist in Club Penguin."
The business models differ from one Disney online world to the next. For instance, Pirates will be free to play but a subscription fee will be required "in order to enjoy the entire experience," according to Yanover. He is looking at various business models for future worlds.
"So far, our sites are not ad-supported," he says, "but I wouldn't rule out anything. A lot of it depends on the expectations of the consumer. Because we have all been watching ad-supported TV for many decades, ad support is well within people's expectations."
While media giants are experimenting with what sort of virtual worlds will most please their customers, a cottage industry is growing to simplify the creation of 3-D online worlds.
For example, it was once necessary to cobble together virtual worlds using a slew of third-party technologies, but no longer. Cary, N.C.-based Icarus Studios, whose executives were at the Virtual Worlds Conference, is selling a suite of tools designed to make virtual world creation virtually a snap.
"It is now possible for companies—from game and virtual world development studios to global media brands—to create quality virtual worlds extremely quickly and at a significantly lower cost," says Icarus CEO Jim Hettinger.
Icarus is a technology partner of IBM which expects virtual worlds will have the same impact in the next five to 10 years as the Internet browser had a decade ago.
"We believe," says IBM segment executive Jacques Pavlenyi, "that the ability to connect real-world and virtual-world experiences—and to leverage the strengths of each to reduce complexity and increase productivity—will be a key role that virtual worlds will play."
But Chris Sherman doesn't believe it will be another five years before virtual worlds have a major impact and he strongly suggests that businesses, especially media companies, not let themselves be left behind.
"I think that holding back and not doing anything would be problematic," he says. "Getting out there now and understanding the technology and user behavior within virtual worlds is critical. We're going to see a lot of announcements in the next 12 months from major media companies—like Turner, for instance—who will be creating specialized virtual worlds. There will be a lot of different models; there's a lot to think about.
"But if you stand still and ignore it all," he says, "if you don't build up the knowledge base you'll need for when it comes time to actually implement your strategies, you risk being left behind completely."