BusinessWeek’s Kenji Hall recently sought Reuben’s input on Joi Ito’s still-relatively-new role as head of Creative Commons. Reuben has known Joi personally and professionally for some time, and we’re especially happy to participate in conversations about online IP given the July launch of our IP-protected celebrity virtual goods business, Virtual Greats.
As reported by Virtual Worlds News in March, we’ve been working to create spaces for Playstation Home the last several months. Today, we got a little shot of excitement, as SCEA CEO Jack Tretton gave a sneak peak of HOME and our work. Nice job all. I think I heard applause at 1:57. . . . .
[Edit 7/16] Here’s a better copy of the video from gametrailers.com.
Today brings one of our biggest announcements yet - along with our valued clients at the National Geographic Channel, we’re very proud to say that we’re bringing that network’s new series “L.A. Hardhats” into the just-launched virtual world, Lively by Google. We’re thrilled to say that we’re a participant in the Preferred Developer Program for Lively by Google, and that the L.A. Hardhats room is the first branded space in Lively. Given Google’s unrivaled stature in more than one of the overlapping industries that we operate in, this is an incredible honor. We look forward to bringing you more news about respectfully and contextually integrating brands into the Lively community, which will no doubt thrive.
AdAge has our CEO Reuben’s latest blog post up and it has provoked a lively discussion. “Has the internet failed to create stories? I think it has (and often begin my presentations by throwing down this gauntlet). Let me explain….”
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In the past 2 years, virtual worlds have received a great deal of media coverage. The Gartner Group predicts that by 2011, 80% of internet users will participate in at least 1 virtual world. Globally, sales of items in virtual worlds account for $1.5 billion.
About a year ago, I became fascinated by the almost complete absence of copyrighted material in the virtual goods market. This was especially weird given that the audience was largely teenagers with a provable affinity for celebrities, heroes and copywritten material. What I discovered was that legally, “virtual merchandise” had never existed as a class of rights and therefore belonged to the owner of the core IP (in some cases a recording artist, in others, a studio). As we struggled to think how to use this insight to transform this market, we also noticed that from a distribution perspective, the market was extremely fragmented; globally there are 130 million users split between some 60 different worlds. The problem this presents IP owners is that they would need to seek out dozens of worlds in order to achieve scale.
Today, I am proud to announce the launch of a company built to address this market, bringing incremental revenue to IP owners and virtual world operators while allowing the audience to aspirationally connect with the stars they idolize. We’re upping the ante in virtual goods by introducing “virtual greats” – premium virtual goods.
To achieve this, we have entered into partnership with the world’s most iconic personalities and characters. Starting today, we will begin making announcements about our exclusive license and distribution partners. The story will break in Variety in Hollywood, with a press release and general coverage to follow.
The virtual merchandise we create and market in partnership with celebrities will fall into several categories:
Most importantly, I’d like to thank all the people who made this launch possible. First my wife and kids. Second, my partner Christian Lassonde and all our colleagues at Millions of Us. Then, our friends and allies at Omnicom – Jonathan Nelson and John Wren. Then Gary Stiffelman, Jamie Young and Alicia Sydney at Ziffren Brittenham. Also Craig Sherman and Joe Hyrkin at Gaia Interactive. And of course, Mitch Kanner.
Finally, and most importantly, our leader. This is a completely separate company from Millions of Us. We searched long and hard for a great CEO, capable of building a game-changing company and leading it to large scale. Dan Jansen is that person. Prior to joining us, Dan led the Media and Entertainment practice at the Boston Consulting Group. He is dynamic, expert and lots of fun to work with.
This is going to be a brilliant ride. Can’t wait.
Sometimes the most amazing things happen right under our noses and we miss them because we’re not in 4th Grade.
Take a stroll down the aisles at your local Target, Walmart, Walgreens or Rite-Aid and you’ll notice an interesting phenomenon — pre-paid gift cards for as many as 26 virtual worlds. Let me try to explain what this means (if you have a 4th Grader, feel free to skip the next few paragraphs).
There are roughly 100 million people in virtual worlds at the moment and the vast majority of them are kids and teens. These worlds, which in general are rather simple looking, allow kids to hangout together on the web. Jeff Yang of Redpoint ventures, a prominent investor in a variety of these worlds (he was also the sole Venture Capitalist behind Myspace) likes to call these worlds the “New Mall”. Collectively, the kids in this “mall” are spending over $1.5 Billion on avatars, clothing, pets and the like. That’s real money on virtual stuff.
Now here’s where the cards come in. While these kids have a seemingly endless appetite for virtual goods, they don’t have credit cards. Even if they did, the stuff they’re buying costs between 20 cents and $5 — creating a problem when the cost of clearing the transaction is greater than the value of the item. The cards solve this by allowing a parent to buy their child $10 or $25 worth of virtual currency. The card company takes a fee off the top, generally somewhere in the neighborhood of 20% (nice business model, huh?) and the rest goes to the kid to spend at the virtual mall.
Now I’m guessing a few of you are wondering why on earth anyone would spend real money on virtual stuff. Let me try to explain this in truly simple terms, because I think it’s a really fundamental concept, no different than what goes on when we buy stuff in the real world.
First of all (and this is beyond fascinating), teenagers view their avatars, or characters in virtual worlds, very differently than adults. While you or I might refer to the avatar as “my avatar”, a teenage just calls it “myself” or “me”. Perhaps an equivalent for us older folks is that we’d never ask someone if they received an email from our “email account”, we’d simply say “did you read what I wrote you?” So these teens see their avatars as themselves, which makes sense when you’re spending over an hour a day communicating through that character. And when that’s the case, how your avatar looks is critical to the way in which one’s social status is perceived. So virtual goods become the markers of social hierarchy — we are social creatures after all (even non-4th graders) and that stuff really matters.
If you’re still thinking “This is beyond bizarre”, let me leave you with a little thought experiment. How much does your average pair of jeans cost? The truth is that if you bought jeans based simply on utility (in other words, discounting social perception to zero), you would spend $10. This means that the difference between what you really spend on jeans and $10 is the value you place on what other people think. In my case, it’s embarrassingly high — over $100.
Guess those 4th graders spending $2 on virtual bling aren’t so crazy after all.
Eric Caoili over at Worlds in Motion was among those picking up today’s big MoU staffing announcement: adland veteran Brian Dunbar, most recently with Goodby, Silverstein in SF, joins us as EVP for Client Services. Read all about it here.
Given the ongoing conversations he has across the interactive advertising, social media, entertainment and virtual world spaces, Reuben is fast becoming an oft-cited authority at the messy intersection of these disciplines. MediaWeek’s Mike Shields today quoted Reuben weighing in on the implications of the recent reorg at Fox Interactive for advertisers pushing into social media. MySpace is obviously central to this discussion.
Be sure to check out Reuben’s first contribution to AdAge’s new DigitalNext blog, which AdAge describes as follows: “a collection of news and opinions on the emerging media and technology space and its opportunities and impact on marketers. The group’s esteemed (and opinionated) contributors run agencies, startups, and creative departments and hail from all sorts of disciplines, including design and user interface, social networking and community, mobile, gaming and virtual worlds.”
Already the recipient of an LACP Spotlight award, last fall’s WWE SummerSlam in Gaia campaign has been recognized as an Honoree by the International Academy of Digital Arts and Sciences, best known for putting on the Webby Awards, aka “The Oscars of the Internet.”
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