Profit is the name of the game in a virtual world

Published on 1 July, 2007. By John Reynolds

Second Life’s GDP may reach €500m this year. Is this success all down to sex and shopping?

You may not know it yet, but there’s more than one Dublin. No, I don’t mean Dublin in California or Indiana in the US, but Dublin SL in the interactive virtual world, Second Life.

To enter Second Life, you sign up and register a name for your character or “avatar,” with your PC mouse you navigate a virtual world that looks and feels like a computer game. What traditional computer games lack is the interactivity here where you can chat and interact with other people, and where the most popular activities are sex – thanks to virtual prostitutes – and shopping with Linden dollars (L$) and €1 buys you L$360.

There are 4.8 million registered SL users, and with at least 250,000 regular users paying $9.99 (€7.50) a month to use it regularly, it’s not a bad little earner for owner and creator, US firm Linden Lab. Analysts Screen Digest say the value of the online gaming market has passed $1bn in the west alone, while online ad spend grew by 41 per cent in Britain last year. More was spent online there than on radio, outdoor posters or business magazines according to figures from the Internet Advertising Bureau (IAB).

Virtual shoppers can buy clothes or other accessories for their avatar. Domino’s Pizza delivers real pizzas to your door ordered through its Second Life outlet. Dell, IBM, Sony, Adidas, Toyota, Calvin Klein and Nike have all set up shops and Irish mobile phone network 3 launched a virtual music store there. Thinkhouse PR has a virtual office across the road from Irish bar, the Blarney Stone, where Dublin SL creator John Mahon started out.

Mahon, an airline operations director and managing director of PickSL, clearly thinks there’s money in virtual property and he could be right. Amsterdam SL recently sold on eBay for €37,000. “I created Dublin SL, in the firm belief that, ‘if you build it they will come.’ However, because there’s a growing demand from people who want to rent space and businesses and there’s only so much detail I could include, I’ve now had to build a new Dublin SL that’s four times bigger,” he says.

Property search website Funda has commissioned him to build a virtual shamrock-shaped island in Dublin Bay and he’s also consulting about building a Munich SL. “I’m also talking to the Irish Tourist Board and Diageo about Second Life’s potential,” Mahon adds. As many as 18,000 people visit Dublin SL every day, compared to perhaps 2,000 visiting Sony’s island, so it makes more sense for Bewleys to have a shop, or an advertiser to have a billboard on the virtual Grafton Street.

So aside from the sex and shopping, what else goes on? Second Lifers asked questions of CEOs and politicians at the World Economic Forum in Davos. A US university set up a politics class, organised a virtual UN and then held seminars and negotiations. Lovers of all things Italian will soon be able to visit Tuscany SL. Sweden has set up a virtual embassy and the American Red Cross set up a virtual refugee camp for Second Lifers to see and experience one of their projects in more detail. Duran Duran and comedian Jimmy Carr have performed in SL and Mahon is hoping that a band he’s promoting, Callaghan, will hit the big time having first built up an SL fan base.

Another SL fan is internet entrepreneur Samantha Kotey, who runs Virtual Worlds Network from Dublin’s Digital Hub. Along with her two design staff, she helped Thinkhouse PR set up their virtual office. “If businesses have a presence in SL, it’s more interactive than having a static website. Although there are other virtual worlds such as Playstation’s ‘Home’ and the game-focused World of Warcraft, this is more suited to business and we need to show them why they need to be in it” she says.

“You can make money in SL,” says Sabrina Dent, a part-time marketing manager who runs with a friend in her spare time, creating styles for SL avatars. “I earn €860 a month from virtual stores and advertising on our SL fashion blog. An SL business requires promotional and management skill to do it properly,” she says.

SL’s GDP is anticipated to reach €500m by the end of the year. It will also chip away at TV advertising revenues, according to Stuart O’Meara, Director of AFA O’Meara. “It’s going to hit ad spending with traditional media. Most people will use this in the evening, which is peak TV viewing time and they generally spend more than an hour doing so. If audiences fall by 10 per cent, then that’ll hit ad revenues which drop, so it’s going to be a growing problem for declining newspaper, TV and radio audiences,” he says.

SL and other online worlds are here to stay. AC Nielsen’s last global consumer confidence survey found that Europeans prefer to spend discretionary cash on entertainment rather than on clothes, holidays, home improvements or savings, so it looks like the trend will continue. This trend isn’t confined to under-35s: 58 per cent of women aged 35-55 are online regularly, so ad spend in traditional media is already being hit.

According to IAB figures: UK TV advertising revenues shrank 4.7 per cent last year, radio by 5.2pc and press classified by 7.8pc. Irish broadband penetration hasn’t yet peaked, so expect to see similar effects in the coming months and years.

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