New Opportunities for Marketing in a Digital World

The Digital Impact on Society and Media Marion Marxer
Opportunities for Marketing and Communiation Prof. Chris Buss

The Digital Impact
on Society and Media

6.7.2010 MBA Dual Degree – GSBA/SUNY 1/102


New Opportunities for Marketing &
Communication



Table of Content
1.Management Summary 6
2.Background – Changes in Technology, Changes in Society 12
3.Evolution of Digital Technology 12
4.Impact of Digital Technology on Media 14
5.Impact of Digital Technology on Society 16
5.1.1.Generation C 17
5.1.2.Life Caching 18
5.1.3.Online Oxygen 18
5.1.4.Masters of the Youniverse 20
5.1.5.Virtual Friendships 21
6.Evaluation of Digital Background 22
7.First Conclusion – Digital Background 24
8.Situation – New Playgrounds, New Toys 26
9.The New Playgrounds of the Digital Society 26
9.1.1.Exchange Platforms 26
9.1.2.Virtual Reality and Gaming Platforms 33
9.1.3.Mobile Connectedness (Entertainment and Information) 40
10.The New Toys of Digital Marketing and Communication 45
10.1.1.Online Marketing 46
10.1.2.Mobile Marketing 54
10.1.3.Home Entertainment 58
10.1.4.Digital On-the-Way 60
11.Evaluation of the Digital Situation 67
12.Second Conclusion – Digital Situation 70
13.Key Issues 71
14.First Issue: Become Part of the Virtual Youniverse 72
15.Second Issue: Invade Private Content Consumption 72
16.Third Issue: Entertain, Involve and Engage Consumers 73
17.Fourth Issue: Create cross-world and – media experiences 74
18.Third Conclusion – Digital Issues 74
19.Opportunities 76
20.Virtual Reality Enhancer 76
20.1.1. Brand and Product Placement in Virtual Realities 78
20.1.2. Brand and Product Integration in Virtual Realities 80
20.1.3. Content, Service and Area Sponsorship 82
20.1.4. Virtual Product or Sub Brand Launch 82
20.1.5. Virtual Brand Being Spaces and Branded Experiences 82
20.1.6. Proprietary Virtual Brand Realities 83
20.1.7. Proprietary Games (Advergames) 84
20.1.8. Social Networking Facilitation and Enhancement 85


20.1.9. Blogger Relationships Management 86
21.Experience Provider 86
21.1.1.Content Sponsorship (Online, Mobile, Digital TV) 86
21.1.2.Mobile Movies 87
21.1.3.Mobile Games 87
21.1.4. Digitally Enhanced Promotions 88
22.Engagement Trigger 90
22.1.1.Youniversal Communication (Reality, Virtuality, Mobility) 90
22.1.2. RFID-Promotions 91
22.1.3. Co-Creation: Consumer Created Advertising 92
23.Identification of Most Promising Digital Approaches 94
24.Fourth Conclusion – Digital Opportunities 95
25.Key Success Factors 96
26.Consumer Life Cycle 96
27.Marketing-Communication Architecture 97
28.Consumer Journey 99



Preface

The subject
How digital technology changes society and the media landscape, what new
opportunities arise and how to best capitalize on them for marketing and
communication.

The objective
• to address the impact of digital technology on society (consumer’ s mindset and
behavior) and media (new channels and tools)
• to explore new phenomena arising with the forming of a digital society
• to assess the consequences for marketing and communication by evaluating the
different marketing/communication approaches as well as new possibilities under
these new circumstances
• to develop theories for successful marketing and communication now and in the
future.

The scope
The scope of digital technology explored in this thesis is limited to the areas relevant for
marketing and communication. The impact on health (medical diagnosis/treatment),
logistics (operations management) and other areas greatly impacted by technological
development have not been taken into consideration.



1. Management Summary

Background
Digitalization spreads quickly and impacts our whole lifestyle. Digital technology and
media are already an indispensable part of our everyday life and will play an increasingly
important role in our private and professional life.

Society adapts very quickly to new technology and uses them to their favor. Consumers
of the digital age are on one hand self-confident, self-determining, self-focused, on the
other hand they love to share, exchange, play and build social networks. This might also
be the reason why everything stays noncommittal. Consumers are looking for
relationships that are not too close; they prefer to keep a little distance. And the media
landscape is transforming into a stock exchange. The logical conclusion is therefore to
see and treat consumers like business partners. They are on the same level. They
conclude deals that both sides take profit in while treating each other fairly.

Situation
New consumer playgrounds pop up on the Internet in the form of virtual realities and
exchange platforms for personal opinions, interests and memories. Real people’ s lives get
digitalized and shared though the Internet. People let others take part in their most
personal thoughts and experiences, and live parallel lives in virtual reality. They create
their own content and spaces to share with peers.

Virtual realities and digital contents are consumed more and more throughout the whole
day and on the go. With the private and individual consumption of digital contents in
the midst of other people in the street, in public transport as well as in front of the
computer at home or at work during the lunch break, people create their own “ private
world” .

Within the new playgrounds consumers can not only create their own world, but many
different worlds in which to live and navigate between. Even though these playgrounds
and worlds overlap through the convergence of technologies, media and content; each
one is expected to cover very specific aspects of their life.

Consumers know exactly what they want to get there, and when and how they want it:

In the virtual world, consumers aspire to explore their Youniverse and probe all facets of
it. In the virtual playgrounds, they want to interact, exchange, try out, discover and
experiment. It’ s all about the experience of their own personality (through different


identities), of relationships with others (through different stories and situations) and of
life as a whole (through different environments and set ups).

In the mobile world, consumers intend to connect with their peers as well as with
information, services and entertainment. Mobile playgrounds should enhance their time
while commuting that provide them with advantages and improve their quality of life in
general.

At home, deliberately disconnected from the outside, consumers aim at enjoyment, while
consuming selected entertainment and information. Even though, in these playgrounds,
they do not engage as in the previously mentioned, they are very demanding: they are
not satisfied with just any program, but only the one that fits their current interests and
momentary moods best.

The following graph visualizes the different consumer worlds and summarizes the just
mentioned expectations:

Virtual Mobile
experience service
exchange pastime
I explore I connect

Home
entertainment
consumption
I select

Graph 1: Consumers’ worlds

Marketers are limping behind: they have new toys, but don’ t know how to play with
them. Some playgrounds they are just discovering and do not know what toys to apply
or simply haven’ t developed them yet.

Most importantly, marketers haven’ t adjusted their game to the mindset of the new,
digitally empowered consumers:

• In the virtual world they focus on generating clicks, instead of engaging consumers
and enabling experiences.



• In the mobile world, they try to generate response rates instead of enabling
connections and delivering services.
• In the living rooms they strive for reaching the mass market instead of providing
selective entertainment and information.



Key Issues
The whole marketing and communication industry has to completely change the way of
thinking and acting, and new ways and forms of marketing and communication have to
be developed in order to cope with a much more complex, fragmented and individualized
environment.

Brands and marketers have to become more responsive to the individual consumer and
not to a target group as a whole. And, marketing and communication strategies have to
evolve with the digital lifestyle of the consumer. The key words are: Integration (virtual
and real), Engagement (brand and consumer), Experience (stationary and mobile).

The key issues:
1. Become part of the virtual Youniverse
2. Invade private content consumption
3. Entertain, involve and engage consumers
4. Create cross-world and – media experiences

Opportunities
The key issues derived from the analysis of the situation reveal what really matters and
what marketers should aim at in order to successfully work in the digital market.

The awareness of these key issues allows choosing the right strategic options and
approaching the new market from the right angle thus seizing the opportunities
concerning the role and position of brands vis-à-vis consumers in the digital market
place:

Key Issues Opportunities
Œ Become part of the virtual
youniverse Integration Œ Virtual reality enhancer
Invade private content consumption Engagement Experience provider
Experience
Ž Entertain, involve and engage consumers Ž Engagement trigger
Create cross-world andÐmedia experiences

Graph 2: Key Issues and Opportunities in the Digital Market

The following is an evaluation of the activities that could be taken to pursue one of the
three digital brand strategies with the highest success potential in the new market
environment.


Consumer
Positionings Opportunities Impact Uniqueness Sustaina-bility Risk Cost
Relevance
Virtual Reality Brand Being Places 4 6 6 5 2 1 24
Enhancer Access sponsorship 6 3 3 3 6 3 24
Virtual product launches 5 5 5 5 3 2 25
Virtual Service Launches 5 5 5 5 3 2 25
Brand Placement 3 4 3 3 5 3 21
Product Placement 5 5 4 3 5 3 25
In-Game Advertising 3 4 3 3 5 2 20
Advergaming 5 6 6 3 2 2 24
Blogger Relations 5 3 3 5 3 6 25
Social Networking Facil. 5 3 3 4 5 3 23
Experience Online Content Spons. 6 3 3 4 5 4 25
Provider Mobile Content Spons. 6 3 3 4 5 3 24

Mobile Brand Movies 4 4 4 3 2 2 19
Mobile Brand Games 5 5 5 3 2 2 22
Online Promotons 5 5 5 3 3 2 23
Digital TV Sponsors. 4 3 3 4 5 3 22
Video Ads (TV, M, I) 3 3 3 3 5 4 21

Engagement Youniversal Concept 5 5 6 5 2 1 24
Trigger RFID Promotions 4 4 5 3 3 2 21
Digital Promotions 4 4 4 3 4 3 22
Co-Creation 6 5 5 4 3 3 26

Table 1: Evaluation of Marketing and Communication Approaches

The ratings just give a general indication of the different directions. The variables
depend strongly on the idea, objective, concept and situation of the specific
marketing/communication approach and would need to be evaluated for each specific
case.

Key Success Factors
For any of the identified digital strategies to be effective and for each approach under
the strategies to be successful, cross-media integration is essential. Following are the key
success factors in this context:

• Definition of the role of the different media in the customer life cycle
• Design of a communication architecture that defines the linking of the
communication means
• Development of messages and hooks for each communication mean taking into
consideration the consumer journey


2. Background – Changes in Technology, Changes in
Society

3. Evolution of Digital Technology

One of the first contacts a large audience had with digital technology was probably the
digital watches from the 70’ s. This was the first “ digital trend” , but back then, we had a
completely different understanding of what “ digital” meant. “ Digital” stood for
technical, cold, quadratic. DOS computers underlined this view even though at that time
the mass audience didn’ t associate computers with the word “ digital” . Since then, a lot
has changed and now – only 30 years and many digital innovations later – we start to
understand what digital technology really means.

Window interfaces, digital music, CDs, mobile phones, emails, Internet, PDAs, digital
cameras, navigation systems, MP3 players and so on: One new application after the
other popped up and became – within no-time – part of our daily life. Now, we
communicate digitally, listen to digital music, watch digital TV, go to digital art
expositions and so on. Digital technology has become very emotional and embraces our
whole lifestyle.

Digital technology continues to evolve at a huge pace and new applications are almost
instantly adopted by society. Society itself has become a driver of the technology with
hundreds of thousands of “ engineers” that invent or enhance digital applications around
the globe. The last buzzwords in mass digital technology were bandwidth, mobility and
convergence. The next big things will be artificial intelligence and nano technology.

A look into the future of Tim Druckery, Leonardo Review: The not so subtle
inevitability of technology mediating virtually every facet of being has come to appear
normal. In the mad rush to induce smart everything, culture finds itself between
euphoria and exhaustion. One month's watershed technology is next month's techno-
azoic fossil. And while the debate widens about the extent of bandwidth, the potential of



compression, the speed of transfer, the so-called limitless access to data, the power of the
network, a pattern emerges. It is a pattern in which the future promises the fulfillment
of the incomplete present. Finding a perspective amid the debates about technologies
that will affect every, pardon the expression, fiber of life is no small task. Genetics,
neuro-technology, bio-computing, stand aside multimedia, the world wide web,
encryption, and wireless technologies as complex and often atomistic, nuisances.” 1

1
addendum.mit.edu/e-journals/Leonardo/reviews/pre2000/druckreybeing.html#top


4. Impact of Digital Technology on Media2

“ The era of mass media is giving way to one of personal and participatory media. That
will profoundly change both the media industry and society as a whole” , says Andreas
Kluth, technology correspondent of The Economist.3

This statement has profound implications for traditional business models in the media
industry, which are based on aggregating large passive audiences and holding them
captive during advertising interruptions. In the new-media era, audiences will
occasionally be large, but often small, and usually tiny. Instead of a few large capital-rich
media giants competing with one another for these audiences, it will be small firms and
individuals competing or, more often, collaborating. Some will make money from the
content they create; others will not and will not mind, because they have other motives.

With participatory media, the boundaries between audiences and creators become
blurred and often invisible. In the words of David Sifry, the founder of Technorati, a
search engine for blogs, one-to-many “ lectures” (i.e. from media companies to their
audiences) are transformed into “ conversations” among “ the people formerly known as
the “ audience” . This changes the tone of public discussions.

“ The mainstream media” , says David Weinberger, a blogger, author and fellow at
Harvard University’ s Berkman Centre, “ don’ t (yet) get how subversive it is to take
institutions and turn them into conversations” . That is because institutions are closed,
assume a hierarchy and have trouble admitting fallibility, he says, whereas conversations
are open-ended, assume equality and eagerly concede fallibility.4

2
The Economist, 22.04.06
3
4
cyber.law.harvard.edu, The Economist, 22.04.06


One could argue that participatory media will never substitute for mass media since self-
publishing by someone of average talent is not very interesting and not always correct. It
is true that not everything in the “ blogosphere” is poetry, not every audio podcast is a
symphony, not every video vlog would do well at Sundance, and not every entry on
Wikipedia, the free and collaborative online encyclopedia, is 100% correct. But exactly
the same could be said about newspapers, radio, television and the Encyclopeadia
Britannica.5

What is new is that young people today, and most people in the future, will be happy to
decide for themselves what is credible or worthwhile and what is not. They will have
plenty of help. Sometimes they will rely on human editors of their choosing; at other
times they will rely on collective intelligence in the form of new filtering and
collaboration technologies that are now being developed. “ The old media model was:
there is one source of truth.

The new media model is: there are multiple sources of truth, and we will sort it out” ,
says John Kraus, the founder of JotSpot, which makes the software for wikis.

The obvious benefit of this media revolution will be what Mr Saffo of the Institute for
the Future calls a “ Cambrian explosion” of creativity: a flowering of expressive diversity
on the scale of the eponymous proliferation of biological species 530m years ago. “ We are
entering an age of cultural richness and abundant choice that we’ ve never seen before in
history. Peer production is the most powerful industrial force of our time,” says Chris
Anderson, editor of Wired magazine and author of a forthcoming book called “ The Long
Tail” . At the same time, adds Mr Saffo, “ revolutions tend to suck for ordinary people.” 6

Indeed, many people in the traditional media are pessimistic about the rise of a
participatory culture, either because they believe it threatens the business model that
they have grown used to, or because they feel it threatens public discourse, civility and
even democracy.

th
The Internet “ is a much larger change than the coming of television” in the 20 century,
says Mr Semel, former chairman of Warner Brothers. In the past, “ someone decided that
the news goes on at a specific time for example. We all grew up when somebody else was
the programmer; now the user is the programmer. Furthermore, unlike in television “ you
don’ t need hits. Many small audiences are as good for advertisers as few large audiences,
and indeed may be better. This has huge implications for content, turning it into one
long continuum – from professional to amateur, from blockbuster to subculture niche.
Old media economies, which are biased towards hits at the “ head” of this distribution,
are being replaced by new media economics, which allows creation and consumption
along the entirety of a much longer professional and consumer-generated content tail.
5
6
saffo.com, 30.08.06


This leads to a media landscape that will look more and more like a stock exchange.

An exchange, that is, for users who offer (create) and bid for (search, navigate, share,
enjoy) content. And a stock exchange for advertisers, who bid against one another to
have their sponsored links placed in front of these users. Exchange becomes necessary
because people need help navigating around this huge continuum of content. In the
present century, says Paul Saffo of the Institute for the Future, “ you get large by
allowing the many and small to gather on your lawn.” Successful media companies will,
according to PricewaterhouseCoopers, a consultancy firm, become “ marketplaces that let
consumers search, research, share and configure their media experiences.” To be good,
these exchanges need to combine “ a personalized media experience with a social context
for participation.” Instead of “ exclusive ownership of content or distribution assets” (the
stuff of the old media), the media marketplaces will compete in their “ knowledge of
consumer activity” , which they will use both to interact more intimately with consumers
and to match them better to advertising that is unobtrusive and helpful (itself a
novelty), and thus lucrative.7

One could argue that the above described is not the direct result of digital technology
evolution but an effect caused by changes in society (the development of digital society)
described in the next chapter induced by technology. Both are true. What remains is the
100 million dollar question: what was first? The chicken or the egg?

5. Impact of Digital Technology on Society

What follows is the description of five major consumer trends that are induced, driven
and accelerated by digital technology. They are just examples since the wider
implications for society will become visible gradually over a period of decades, as it was
the case with past innovations like the book press (the starting point of the mass media

7


era that achieved its zenith in 1958, more than 400 years after Gutenberg’ s invention in
1455).

5.1.1.Generation C

The Generation C phenomenon captures the avalanche of consumer-generated content
that is building on the web, adding tera-peta bytes of new text, images, audio and video.
Consumers around the world pro-actively post, stream if not lead parts of their lives
online.

There are three main drivers for this trend:
• (1) The creative urges each consumer undeniably possesses. We're all artists, but
until now we neither had the guts nor the means to go all out.
• (2) The manufacturers of content-creating tools, who relentlessly push us to unleash
that creativity, using -- of course -- their ever cheaper, ever more powerful gadgets
and gizmos.
• (3) The proliferation of 'personal showrooms' helping GENERATION C to instantly
display its creations to a global audience.

57% of American teenagers create content for the Internet – from text to pictures, music
and video. In this new-media culture, says Paul Saffo, a director at the Institute for the
Future in California, people no longer passively “ consume” media (and thus advertising,
its main revenue source) but actively participate in it, which usually means creating
content, in whatever form and on whatever scale. This does not have to mean that
“ people write their own newspaper” , says Jeremy Zawodny, a prominent blogger and
software engineer at Yahoo!, an Internet portal. “ It could be as simple as rating the
restaurants they went to or the movie they saw,” or as sophisticated as shooting a home
video.”

Many members of Generation C choose to open their own showrooms on a funky
platform like Cyworld. This South Korean phenomenon now provides more than 10
million South Korean citizens (25% of the population) with their own cyber-outlet,
where self-made poems, stories, songs, photos, and videos can be shown off to other Gen
C members and producers, agents, talent scouts and employers alike. Pleasant Cyworld
detail: when users liven up their space with funky digital decorations, or spice things up
with videos and music, (all purchased with acorns, Cyworld's currency) this brings in
about EUR 116,000 a day.8

This means that instead of asking consumers to watch, to listen, to play, to passively
consume, the race is on to get them to create, to produce, and to participate. “ People
8
trendwatching.com


creating stuff to build their own reputations are at one end of the spectrum and one-man
super brands such as Steven Spielberg at the other” , says Philip Evans at Boston
Consulting.9

Generation C is much more cynical, savvy and uninfluenced by traditional advertising.
They’ re content creators, not watchers, and they have a lot more control over the media
they consume. As a result, they have much higher expectations of brands and how they
communicate. Engaging and entertaining is everything. Mass broadcasting of generic
messages are nothing.

5.1.2.Life Caching

Today’ s consumers (fueled by a need for self-worth, validation, control, vanity, even
immortality) love to collect and store possessions, memories, and experiences, in order to
create personal histories, mementoes of their lives, or just to keep track for practical
reasons. The experience economy still gaining ground -- with consumers more often
favoring the intangible over the tangible -- collecting, storing and displaying experiences
is ready for its big moment.

Thanks to the onslaught of new technologies and tools, from blogging software to
memory sticks to high definition camera phones with lots of storage space and other 'life
capturing and storing devices', an almost biblical flood of 'personal content' is being
collected, waiting to be stored to allow for ongoing trips down memory lane.

This trend owes much to the bloggers: ever since writing and publishing one's diary has
become as easy as typing in www.blogger.com, millions of people have taken to digitally
indexing their thoughts, rants and God knows what else; all online, disclosing the virtual
caches of their daily lives, exciting or boring. Next came moblogging, connecting camera
phones to online diaries, allowing not only for more visuals to be added to blogs, but
also for real-time, on the go postings of experiences and events.

5.1.3.Online Oxygen

Consumers don't just want online access anywhere/anytime, they absolutely crave it!
From airports to living rooms to roof gardens to classrooms to city parks, people go to
great lengths to get a dose of online oxygen. Seven years after the first web sites started
popping up, and email made its way from science labs to office desks and living rooms,
600 million consumers worldwide are beginning to see online access as an absolute
9


necessity, and there are no signs that the pace of integrating online access into daily life
is slowing down. And we haven’ t even touched upon the looming explosion of WIFI
enabled PDAs and phones. “ Traditional” cell/mobile phones connecting to the Internet
at high speed are a common sight already.10

Cellular carriers have started providing high-speed Internet access over many of the
most populated and heavily traveled regions worldwide. These services are made possible
by new networks that carriers refer to as 3G, for “ third generation” . The services deliver
download speeds of about 400 to 700 kilobits a second, which is roughly 10 times as fast
as dial-up and the wireless services that have been offered for years; the upload speeds
are less, though, in the range of 50 to 80 kilobits a second. These new services are based
on technology called HSDPA (high-speed download link packet access). All you need to
use the service is an available PC-card slot or an already built-in wireless modem.11

Following are some numbers that back up this trend:
• Internet has overtaken television as the most heavily used medium among teenage
boys in Hong Kong, according to new research from NFO WorldGroup (2005).
• AOL has found that the Internet is now the primary communication tool for US
teenagers. Among 12 to 34-year-olds, 46 percent voted the Internet as the "most
essential" medium to their lives (TV 29%).
• And it's not just teens and families: almost 20 percent of European seniors now have
Internet access, according to a new study conducted in 2005 by Forrester Research,
the number of consumers older than 55 that are online has increased by 50 percent in
2.5 years, up from almost 10 million in 2000 to more than 15 million at the end of
2002.
• US teenagers now spend 16.5 hours a week on surfing the Internet, chatting and
writing e-mail (boys spend 16 hours, girls spend 17 hours in total).12
• Internet has become the most indispensable medium amongst the US population (see
graph below).

10
trendwatching.com
11
International Herald Tribune, 18.05.06
12
BuzzBack Market Research 2005


152
160
140
120 100
100
80
60 46
40 23
20 10 9

0
Internet TV Radio Movies at Newspaper Movies at
home theaters

Graph 3: Amount in USD you would have to pay to an American to abandon the Internet for 14
days13

What Mr Semel, former chairman of Warner Brothers says about his daughters is
exemplary: The 24 year old does a lot on the Internet, the 19 year old does everything
on the Internet, and the 13 year old “ lives online.”

5.1.4.Masters of the Youniverse

Human beings want to be in charge of their own destiny. Or at least have the illusion of
being in charge. And just because they can now get this control in entirely new ways,
aided by an online, low cost, creativity-hugging revolution that's still in its infancy,
young and old (particularly the young) consumers now weave webs of unrivaled
connectivity and dig instant knowledge gratification. They exercise total control over
creative collections, including their own creative assets, assume different identities in
cyberspace, wallow in customization, personalization, co-creation to make companies
deliver whatever and whenever on their own terms and so on.

Masters of the Youniverse seek for freedom, mobility and independence. In a not-too
distant past, the automobile was the ultimate symbol of freedom: a way out from all
constraints. No longer: for hundreds of millions of consumers worldwide, 'The Cell Phone
is the New Car' (as the Economist cleverly stated earlier this year). But, not only mobile
phones gratify this generation with a go-anywhere, get-everything, go-anytime mentality.
They love to create their own (virtual) Youniverse and to live multiple identities in
cyberspace. Millions of them now 'live' in online communities, play multiplayer games,
and chat with anyone and everyone.

What is this all about? It is about escaping to an alternate reality:
13
yahoo.com, OMD 2004


• Gaming's great benefit for gamers is escapism. within an alternate reality. Within
this alternate reality, fundamental human desires are satisfied— the drive to explore,
with the promise of reward."14
• For gamers, the thrill of the game is the virtual experience, the chance to escape
reality and, to a degree, control their destiny. Gaming, whether online, mobile or
console-based, lets players be a part of the storyline and live in an alternate reality.
This allows the player an experience that generates real emotions. In a video game,
you decide where you are going... You can't do that with a TV show."15
• Minutes after registration, you can shed, or if you wish, simulate your real life (RL)
identity by personalizing an avatar, custom-designing your own hang-out, haven or
"crib," or importing your buddy list and IMing new pals. For many visitors, these
worlds fulfill the yearning for a much-needed outlet beyond home, work and school—
not unlike what Starbucks’ founder Howard Schultz touts as the coveted third space
in RL."16
• In online games, it is possible for every person to have at least a few moments of
feeling truly accomplished, befriended and loved."17

How are these virtual worlds/games impacting daily life?
• In games, the individual is always the star. Which then translates to gamers
expecting to be a star in the real world, in daily life, in the workforce, wanting to
lead and to stand out.
• In games, there's always a solution, gamers just have to find it. Pounding on a
problem until it gets solved may then translate into more persistence and optimism
when not behind the console as well.
• In games, failure is part of success. Anyone who tries a new game fails multiple times
before getting it right, so the Gamer Generation is more willing to take risks.18
• And, with the change of expectations of this generation, the nature of consumerism
and relationships with brands and companies are bound to change as well. 19

5.1.5.Virtual Friendships

As people spend more time on the virtual world of the Internet, they will have less time
to establish friendship in the real world. However, the Internet is a great place to
14
Mediaedge:cia
15
Promo Magazine
16
iMediaConnection
17
Edward Castronova
18
USA Today and “ Got Game” , by John Beck and Mitchell Wade
19
trendwatching.com


cultivate and cement existing friendships in the real world. With e-mail, Instant
Message, Skype, and blog, people can keep in touch with their friends so easily. They
don’ t have to go out for a lunch or coffee to chat or discuss important matters. Through
e-mail, people can talk privately; through IM or Skype, they can talk in groups; through
blog, they can express their feelings, opinions in public and have a chance to make new
friends.

For people who need someone to consult with, the Internet could even be a better
consultant than their close friends. It is easier to find answers for professional questions
from the World Wide Web than from you close friends— unless you friends happen to be
experts of various walks of life. For emotional support, the consolations from people who
have the same problem or experience with you always work better, and one can easily
find this kind of person through the Internet. Sometimes, talking to a stranger is more
relaxed than talking to someone who knows you very well. Nevertheless: “ New
technology links people over greater distances, but cuts into face-to-face meeting time.” 20

Or as chichu from “ A Nontechie’ s Exploration of the Digital World exemplarily states:
“ One and half years ago, I burst into tears while leaving my country to go to
Washington DC. For quite a long time, my only friend here was my husband. But I
didn’ t feel lonely at all, because, thanks for the Internet, I could talk to my families and
friends in Taiwan whenever I wanted, which also slowed down my pace to build up new
friendship around my new orbit.”

Social behavior changes with every new communication technology. Mobile phones have
already changed the way we plan and behave in social contacts. Everything has become
more noncommittal: we fix a date, but “ we call before to see if it’ s still ok and at what
time” ; we don’ t know yet if we’ ll come, but we’ ll write you an SMS later” . We don’ t
want to settle things; we rather leave it open and decide last minute amongst the
options. This new trend goes in the same direction: we’ d rather stay in contact with
people we met on vacation over the Internet than meet the friends that are around the
corner. This does not have to do anything with the profoundness of the relationships,
but we build in a noncommittal factor through the interface that is in-between.

6. Evaluation of Digital Background

The Digital Revolution
Society is in the midst of a dramatic change process that transforms “ analog” consumers
into “ digitally embraced” consumers with new mindsets, expectations, needs, living

20
Study of the University of Arizona and Duke University, 2006


environments, reference groups and therefore new ways of living and behavior. This
change is massive enough to be called a revolution: “ The Digital Revolution” .

The “ Digital Revolution” is not a final status quo or a changeover that you’ re done with
once it is completed. It is rather a change process that was induced more than 20 years
ago and accelerated in the last five years. Even though it is now turning at high speed, it
has not yet reached its maximum acceleration level. The pace of innovation will speed
up even more in the next few years, bringing up lots of new stuff that impacts and
fundamentally changes our lifestyle, society and business.

“ There will be more innovations in the next 10 years than in the last 5’ 000.” Predicted
Dr. James Canton, futurist, social scientist and author, at the Pioneer’ s event of GDI –
the most recognized Think Tank in Switzerland – in May 2006.

The visualization of the digital transformation process shows the interdependence and
interaction of digital technology, digital media and digital society.

Each of the three main participatory elements in the digital market acts as a turbo in
the digitalization process by speeding up the development through feeding the loop with
self-induced novelties as well as by adopting and further developing changes brought
about by the other elements.

Digital Technology Evolution Innovation

Behavior

Digital Society Development Enhancement Digital Media Formation

Graph 4: Digital Transformation Proccess

Will that revolution be for the better or for the worse?
We learned have from history that revolutions gradual enough to be associated with a
name (Renaissance, Reformation, Industrial Revolution, Digitalization?) often have
enduring effects. The big thinkers about today’ s digital revolution tend to veer towards
extremes of optimism or pessimism. Paul Saffo, a futurologist and one of the world’ s
most enthusiastic technophiles, also looks at the downsides. “ Each of us can create our
own personal-media walled garden that surrounds us with comforting, confirming



information and utterly shuts out anything that conflicts with our world view,” he says.
“ This is social dynamite” and could lead to “ the erosion of the intellectual commons
holding society together… We risk huddling into tribes defined by shared prejudices.”
This contrasts with the view of Lee Rainie, the director of the Pew Internet & American
Life project, a research foundation. He believes that “ people will become not less but
more aware of differing arguments as they become heavier Internet users,” because
contradictory views are just a hyperlink away.

Some people worry about what the new digital age will do not only to democracy but
also to brains, thoughts, grammar and attention spans. These concerns usually arise out
of encounters with teenagers in their native habitat – i.e., in front of screens with several
simultaneous instant messaging “ threads” (“ cu2nite bfz4evr” – “ see you tonight and best
friends forever” ). They will be playing iTunes with a video game running in the
background, blogs in the foreground, and homework in the small window to the bottom
right.

Other people are not worried at all, Steven Johnson, the author of “ Everything Bad is
Good for You” , argues that the very things about new-media culture that scare older
generations actually make younger generations smarter, because digital media train kids
from an early age to shift through and discard clutter, thus “ enhancing our cognitive
abilities, not dumping them down.”

The honest conclusion, of course, is that nobody knows whether the digital era, on
balance, be good or bad. And as Joseph de Maistre, a conservative who lived through
the French Revolution, famously said, “ every country has the government it deserves.”
In the coming era, more than ever before, every society will get the media it deserves.21

7. First Conclusion – Digital Background

Digitalization impacts our whole lifestyle. Digital technology and media are already an
indispensable part of our everyday life and will play an increasingly important role in
our private and professional life.

Society adapts very quickly to the new technologies and uses them to their favor.
Consumers of the digital age are, one one hand, self-confident, self-determining, self-
focused, on the other hand, they love to share, exchange, and play and build social
networks. This might also be the reason why everything stays somehow noncommittal,
always with a little distance built in.

21


Consumers are looking for relationships that are not too close. They prefer to keep a
little distance. And the media landscape is transforming into a stock exchange. The
logical conclusion therefore, is to see and treat consumers like business partners. They
are on the same level. They conclude deals that both sides take their profit in and they
treat each other fairly.

The new playgrounds of our new business partners is the next logical discussion.



8. Situation – New Playgrounds, New Toys

9. The New Playgrounds of the Digital Society

It is evident that with these big changes in society behavior of consumers changes as
well. Consumers are looking for and creating new playgrounds that express the mood
and lifestyle of the rapidly developing and growing digital society:

9.1.1.Exchange Platforms

9.1.1.1. Blogs

28m blogs were in the worldwide web in June 200622 and a new blog is created every
second of every day, according the Technorati, a search engine for blogs, and the
blogosphere is doubling in size every five months. But, the attention blogging gets and
the role it plays in society still is varying from one country to the other. In 2005, for
instance, only 1% of all blogs were in German, compared with 41% in Japanese, 28% in
English and 14% in Chinese.23

Graph 5: Number of tracked blogs on the Internet24

A “ personal online journal” is the definition that most newspapers offer when they need
to be brief. That analogy is not wrong, but nor is it entirely right (conventional journals

22
lefigaro.fr, 14.06.06
23
technorati.com, 22.04.06
24
technorati.com, 22.04.06


usually come in chronological order, whereas blogs are displayed in reverse chronological
order, with the most recent entry on top). More importantly, this definition misses the
main point about blogs. Traditionally, journals were private or even secret affairs, and
were never linked to other journals. Peeking into the diary of one’ s big sister typically
led to a skirmish. Blogs, by contrast, are social by nature, whether they are open to the
public as a whole or only to a small select group.

Technically, a blog is part of a web page to which its owner regularly adds new entries,
or “ posts” , which tend to be (but need not be) short, and often contain hyperlinks to
other blogs or websites. Besides text and hypertext, posts can also contain pictures
(“ photoblogs” ), videos (“ vlogs” ) or contents captured with mobile phones (“ moblogs” ).
Each post is stored on its own distinct archive page, the so-called “ permalink” , where it
can always be found. On average, Technorati tracks some of 50’ 000 new posts an hour.

A blog is “ the inedited voice of a single person” , preferably an amateur, says Dave
Winer, a software engineer who pioneered several blogging technologies, and who keeps
what by his own estimate is the longest-running blog of all (dating back to 1997).
Blogs, in other words, usually have a raw, unpolished authenticity and individuality.
This definition would exclude quite a few of the blogs that firms, public-relations people
or newspapers set up nowadays. Strictly speaking, these are no longer blogs, they only
use their popular form. This explains the initial appeal of blogging as an outlet for pure
self-expression. As Glenn Reynolds of Instapudit, a well- known blog on American
politics, said when asked why he blogs: “ It beats yelling at the television.” But venting
an opinion is usually only the start. “ At first, I saw it as being about publishing, now I
see it more as a revolutionary way to communicate,” says Mena Trott, who runs a
company, Six Apart, that illustrates this with its three main products. Blogs powered by
its products TypePad and Movable Type have an average of 600 readers, although a few
are read by more people than some newspapers are.

9.1.1.2. Life Journals

But, there is another kind of blogging: the so called life journals. Their users are under
21 and female. Many of the posts are about who snogged whom last night and what
happened next, why I am sad, how adults don’ t get it, and so forth. Other posts ask
things like, “ Anybody want to catch King Kong at 8 pm?” and have the replies in the
comment pane below within minutes. That is because many adolescents consider e-mail
passé, and instead are using either instant messaging (IM) or blogging for their
communications. E-mail was supposed to be “ asynchronous” , as meaning that the people
taking part do not have to be online simultaneously. But today’ s adolescents have never
known e-mail without spam and see no point in long trails of “ reply” and “ cc” messages
pilling up in their in-boxes. As for synchronous communication, why adults would send



e-mails back and forth instead of “ IM-ing” is beyond them. For these kind of life journal
blogs, the average number of readers is seven, according to Six Apart. Such small
audiences are common in participatory media. Indeed, they may conform to the
biological norm, whereas mass-media audiences may have been an aberration. Robin
Dunbar, an anthropologist at the University of Liverpool, studies primates and
discovered a surprisingly stable ratio between relative size of the neocortex and the size
of groups formed by particular species. For humans, the upper limit is about 150. Many
clans, fan clubs and other groupings remain well below this limit, as do most blog
networks.

Life journal groups of readers are typical of the new-media era in another way. Bloggers
(i.e., creators) are one another’ s audience, so that distinctions between the two
disappear. Creators and audiences congregate ad hoc in meandering conversations, a
common space of shared imagination and interests. MySpace.com, a social networking
and blogging service, reflects this quality even in its name.

Conversations have a life of their own. They tend to move in unexpected directions and
fluctuate unpredictably in volume. It is these unplanned conversational surges that tend
to bring the blogosphere to the attention of the older and wider (non-blogging) public
and the mainstream media.

9.1.1.3. Citizen Journalism

But, there is a very fine line between blogging and online (mass) media. There is Ohmy
Media, the world’ s most successful example to date of “ citizen journalism” in action.
Ohmy News is a sort of online newspaper in South Korea that gets an average of 700’ 000
visitors and 2 million page views a day, which puts it in the same league as large
newspapers. But Ohmy has no reporters on its staff at all. Instead, it relies on amateurs
to contribute the articles, which are then edited by Mr Oh, a former magazine journalist,
and a few colleagues. Mr Oh calls Ohmy a “ playground” for South Korean hobbyists,
where “ adults” set certain rules and thus give the site credibility. Ohmy also has built-in
feedback and rating systems so that the best articles rise to the top. One of Ohmy’ s
biggest innovations is economic in nature. The site has a “ tip-jar” system that invites
readers to reward good work with small donations. All they have to do is click a little
tip-jar button to have their mobile phone or credit-card account debited. One
particularly good article produced the equivalent of $30’ 000 in just five days.

9.1.1.4. Vlogs



Another example of a successful citizen journalism platform (actually a mixture between
citizen journalism and vlog) is Current TV. In 2005, Al Gore, a former American vice-
president, set up this cable-television channel that encourages its viewers to contribute
their own video stories. And they do. “ Viewer-created content” – or “ VC2” , as Current
TV calls it – now accounts for 30% of the channel’ s airtime, and rising (forecast is 50%).
To help people get started, Current TV has extensive online tutorials on storytelling
techniques, camera equipment and so forth. And to organize the content that comes in,
its website allows users to vote on the quality of each video clip. It is, in many ways,
pure meritocracy.25

Picture 1: Home video example on youtube.com26

The most successful vlog is youtube.com, a vlog platform with the slogan “ broadcast
yourself” that allows users to view and share videos. Millions of home videos uploaded
by consumers around the globe are waiting to be discovered by the Internet community.
60’ 000 new pods (consumer generated piece of video) get uploaded every day and the
best ones (top five) are watched by an average of 150’ 000 viewers within their first day
of “ shelf life” . The total number of video downloads adds up to 40 million a day with
people having the possibility to rate, comment and send them via email.

YouTube was launched in May 2006 and has gone from 0 to 20 million (unique) visitors
in less than one year. This means an impressive growth rate of 200% per month leading
to the doubling of the audience every second month.

25
The Economist, 22.04.06.
26
youtube.com, July 2006


Graph 6: YouTube User Development in the US August 2005 to May 200627

Not only are there a huge number of consumers visiting the online video gallery, these
consumers are also showing interest and contributing a lot of time to the Generation C-
platform: Each visitor views an average of 43 pages and spends a total of 36 minutes on
average on the site.

Besides quantity of YouTube users, the profile of them is surprising as well. Mature
people with high income make up the biggest part of the YouTube -community. Almost
60% are older than 35 (comfort seeker)! Only 20% are children and teens under 25 years
old (identity builder) and another 20% are young adults between 25 and 35 years old
(positioning designer). Almost two thirds of them earn more than USD 60’ 000 per year.28

9.1.1.5. Social Networking Platforms

On social networking or online community websites people create their own private
community. They are searching for acquaintances matching their profile and
expectations in order to share photos, journals, and experiences and also to further
develop their social network.

The concept of social networking is a powerful thing and the underlying concept will
influence the way advertising is done in all media, not just online.

People use social network sites to form connections with other people and bridge their
online life with their offline life. Companies whose business is built on creating buzz need
to tap into those connections in order to effectively market to tastemakers. Social
networking, by bringing together friends and strangers alike, enables instant
27
emarketer.com, July 2006
28
ComScore Media Matrix, June 2006


communication and provides an easy way to share content (whether self-created or from
another source) and offers a single source for viral marketing and word of mouth.

One of the biggest social networking platforms is myspace.com. Last month, MySpace
(slogan: a place for friends) racked up visits from 51.4 million unique visitors in the US,
according to comScore Media Metrix. That represents 30% of the entire US Internet
population and doesn't include traffic from international markets, where MySpace is
making an ever-bigger push. MySpace was the seventh most visited site on the Internet
last month, and is adding members at a rate of more than six million a month and has
more than tripled its number of monthly visitors in the past year.

The following numbers on members of the most popular social networking platforms
underline the importance of this rapidly arising and growing consumer playground:
• MySpace: 68 million members
• MSN Spaces: 30+ million members
• MSN Messenger: 100+ million users
• Yahoo! Messenger: 63+ million users
• QQ Messenger: 150+ million users in China
• AOL Messenger: 43 million users in the USA
• Cyworld: 17 million members in Korea (= 33% of population). In China, Cyworld
acquired 1.3 million subscribers in only eight months.

Instant communication and sharing seem to be the big thing in the internet: Three out
of the four top ranked activities of internet heavy users are related to social, experience
or knowledge exchange: More than two thirds of the 16 to 49 year olds use instant
messaging, almost one third social networking and two out of ten peer-to-peer platforms.
Not surprisingly are the usage rates among young adults even higher, figuring between
one third and two thirds.



Table 1: Online offers used by internet heavy users in the US29

Unusual is also the level of loyalty that users feel toward social networking platforms.
According to Nielsen/NetRatings, MySpace has a user retention rate as high as 67%,
meaning that two thirds of the visitors in April 2006 had been at the site the previous
year.

Table 2: Retention rate of US social networking sites30

"The popularity of social networking is not expected to wane in the near future," said
Peter Daboll, president and CEO of comScore Media Metrix. "This is a phenomenon
we're seeing not only in the US, but also around the world."31 The advertising volume on
myspace.com amounts to USD 800m. Globally, social networking will be an estimated
$350 million business in 2006, rising to $2.5 billion in 2010.

29
Universal McCann, emerketer.com, 30.08.06
30
emarketer.com, 07.07.06
31
emarketer.com, 07.07.06


"Regardless of the social networking venue to use, gaining an understanding of how
messages are spread virally and involving customers (and potential customers) in the
marketing process are two things that will surely pay off in the future," says Ms.
Williamson.

9.1.2.Virtual Reality and Gaming Platforms

Virtual reality (VR) is a technology, which allows a user to interact with a computer-
simulated environment. Most virtual reality environments are primarily visual
experiences, displayed on a computer screen.

9.1.2.1. Massively Multiplayer Online Games (MMOG)

A Massively Multiplayer Online Game (MMOG or MMO) is a computer game that is
capable of supporting hundreds or thousands of players simultaneously, and is played on
the Internet. Typically, this type of game is played in a giant persistent world.

MMOs enable players to compete with and against each other on a grand scale, and
sometimes to interact meaningfully with people around the world. The friendships made
on MMOs are sometimes as real as those in the real world, and generate a large amount
of online 'social capital'. However, most MMOs require players to invest large amounts
of their time into the game (drawing one away from the real world), and are more
suitable for the serious gamer. Still, almost anyone who enjoys games or human
interaction can enjoy an MMOG.

9.1.2.2. Massively Multiplayer Online Role-Playing Games (MMORPG)

The most popular sub-genre that did much to pioneer the category is massively
multiplayer online role-playing game (MMORPG), an online computer role-playing game
(RPG) in which a large number of players interact with one another in a virtual world.
As in all RPGs, players assume the role of a fictional character (traditionally in a fantasy
setting, other settings are related to sports or fighting) and take control over most of
that character's actions. MMORPGs are distinguished from single-player or small multi-
player RPGs by the game's persistent world, usually hosted by the game's publisher,
which continues to exist and evolve while the player is away from the game.

Though MMORPGs have evolved considerably, many of them share various
characteristics:


• Traditional Dungeons & Dragons style game plays, including quests, monsters, and
loot.
• A system for character development, usually involving levels and experience points.
• An economy, based on trading of items (such as weapons and armor) and a regular
currency.
• Guilds or clans, which are organizations of players, whether or not the game actively
supports them.
• Game Moderators (or Game Masters, frequently abbreviated to GM), sometimes paid
individuals in charge of supervising the world.

As most MMORPGs are commercial, like EverQuest and World of Warcraft, players
must either purchase the client software for a one-time fee or pay a monthly subscription
fee to play. Most major MMORPGs require players to do both these things. By nature,
"massively multiplayer" games are online, and require monthly subscriptions due to the
needs of the design and development process. With this in mind, the alternate term
MMGS, standing for Massively Multiplayer Gaming Service, is also appropriate for
describing MMOGs in general and MMORPGs in particular.

MMORPGs are immensely popular, with several commercial games reporting millions of
subscribers. South Korea boasts the highest subscription numbers, with millions of users
registered with the more popular games.32 And numbers in Europe and North America
are rising as well.

World of Warcraft (WoW), for example, has 6m subscribed online gamers worldwide
with 50 – 70’ 000 people being online simultaneously around the clock. WoW is a fantasy
game that is not only about fighting. The aim of the game is – as for the majority of
games – to earn credits in order to further develop one’ s character.

Players create characters, which serve as their avatars in the online world of Azeroth.
When creating a character in WoW, the player can choose from eight different races and
nine different character classes. The races are split into two diametrically opposed
factions, the Alliance (the good ones) and the Horde (the bad ones). Each race and
character class comes with a different set of attributes such as agility, strength, intellect
and so on. In addition, one can choose professions (primary and secondary) that
determine one’ s skills.

In order further develop the character – as in real life – one has to learn, to practice and
to earn money (through fighting or selling goods created). Or as Michael Böhni, CEO of
shift-think, PHD in AI, member of the management team of the Digital Culture
Association and online gamer since the age of 9 puts it: “ You have to use your creativity
and come up with ideas to advance in the game.”

32
wickipedia.com, 20.06.06


9.1.2.3. Metaverse – the real virtual parallel world

Second Life represents an early view of the ultimate in creative youniversal branding
thought: users creating truly an alternate world.

They truly live a second life with an alter ego in a metaverse, a parallel world only
existing on the Internet.

The special thing about SL is that the majority of the content is residential-created. SL
gives it users tools to add to and edit its world and participate in its economy. This
means that the entire virtual world is built and managed by the 240’ 000 residents.

But this is not the only difference. While not technically a MMORPG, SL allows anyone
to create virtually any kind of game within the virtual world himself. While most other
MMORPGs are goal-oriented (conquer this castle, beat this villain), SL knows no
mission. Another difference is that most MMORPGs play in fantasy worlds while SL
mimics real life. Also, normal MMORPGs are closed systems while SL is an open one.

The website mmogchart.com analyzes many role-playing games. The statistical data
suggests that it’ s the open and aimless system that makes people stay loyal longer than
in other MMORPGs. In traditional games a lot of players take a leave after having
achieved their goal since there is no challenge anymore.

SL incites creativity. Every resident perambulates the virtual world with an avatar, a
character that represents the gamer in the virtual world and can be customized in a
variety of ways. The result can either be faithful to the original humanoid avatar, or can
result in a completely non-humanoid representation of the character. The residents can
also get a 3D-grogram for the creation of virtual goods of any kind. With this
construction tool the residents create everything from trousers to cars. Without the
creativity of the residents the game would not work.

There is also a strong economic factor in SL. You can sell your goods and buy objects
from others with “ Linden Dollars,” a virtual currency that has a fixed exchange rate to
the US Dollar. Virtual goods worth USD 230’ 000 are traded every day in SL. Each



virtual product belongs to the inventor. It is he who owns the copyrights and not the
operators of SL. You can therefore sell a product created in the virtual world in the real
world as well. The Australian Nathan Keir for instance invented the game “ Tringo” in
SL. After a while he made thousands of dollars by selling virtual copies of the game to
other residents of SL. Now he sold the license for Tringo in real world and the game can
also be bought for Nintendo’ s Gameboy.

The possibilities in SL are almost unlimited: A Californian politician transferred his
campaign into the virtual world. A cancer organization organized charity walks for its
real life organization in the virtual world. A red light district is building up and some are
already earning good money with it.

SL is also composed of rich, diverse, user-driven subcultures and countercultures. The
activities of these groups are usually centered on particular interests. Creating groups
can give people a common ground for discussion and provide an easy way to break the
ice. Some groups remain websites to bridge the gap between real-life (RL) and Second
Life interests. Besides groups, subcultures found in SL revolve around events. These
include many activities related to arts/culture, charity/support groups, commerce,
discussion, education, games/contests, nightlife/entertainment, sports etc. In SL one
finds for example casinos, theaters, shopping malls, space stations, movie theaters, etc.

Second Life brings to reality what the science fiction author Neal Stephenson 1992
described in his book, “ Metaverse” . The Metaverse was a parallel world that only existed
on the Internet and whose avatars interacted virtually with each other. What happens in
the virtual world impacts real world and vice versa. Second Life inventor Philipp
Rodedal is completely conscious of that. He means: “ we don’ t’ create a game, we create a
new land. It’ s a little bit like in the movie “ The Matrix” .

The latest developments of metaverse platforms:

• New metaverse platforms like Active Worlds, Open Croquet Project and Multiverse,
are all aiming to help independent game developers create high-quality Massively
Multiplayer Online Games (MMOGs) and non-game virtual worlds for less money
and in less time than ever before.

• Spore will be a more mythical take on the metaverse. Currently being developed by
Will Wright, the creator of SimCity and The Sims, Spore will allow participants to
bring to life their own civilizations, starting from a single cell organism, and
eventually dominating the universe with highly intelligent species. The launch is
foreseen for early 2007. But in virtual worlds like this, you have to be prepared to
have your brand morph and evolve in unexpected ways.



9.1.2.4. Rules and Mechanics in Virtual Realities

General rules and mechanics of life in the virtual realities are very similar to the ones in
real life – physically, legally and socially as discussed in the context of Second Life:

• From a physical point of view for example, materials react the same way as in real
nature. One can swim in water; one can stick something into wood, but not into
metal; glass breaks, it takes time to travel around etc. Day and nighttime
correspond, meaning that when the sun goes down in real word, it also goes down in
the virtual world. And, events of the real world such as Christmas or Valentines Day
take place in the virtual reality as well. Very sophisticated virtual worlds like the one
of Oblivion (an offline-game) are not even constructed anymore, but grown according
to the rules of nature with artificial intelligence (AI). Most of the games nowadays
include some sort of AI, which makes the experience more real and less predictable,
which means closer to the real world.

• From a “ legal” point of view, meaning that one is teleported to some sort of prison
for a time, the punishment depends on the gravity of the violation. In Second Life for
example, the prison is represented through a cornfield where one only finds a slow
tractor and a black and white television with only one channel for entertainment.33
Or, one gets excluded from the game, which actually means the death penalty, and is
also seen and feared as such by the player community since they worked hard and
invested a huge amount of time and often money to build up their existence in the
virtual world. More about possible real life legal consequences of virtual game
activity later in this chapter.

• From a social point of view, meaning that there are people that stick to the rules and
ones that don’ t, there are people that represent the good or the bad or something in
between. In WoW, for example, you can choose to be a character and live in the
world of the good or in the world of the bad. What is different is that you can have
multiple characters, entirely good ones and entirely bad ones for example. More to
the social behavior in virtual realities in the next paragraph.

9.1.2.5. Social Behavior in Virtual Realities

MMORPs are very interesting from a social point of view:

• First, people play a role different from the one they play in real life. Different is that
they can choose who they want to be, how they look and what attributes and skills

33
secretlair.com/index.php?/clickableculture/enty/hidden_virtual_world_prision, 02.06.06


they have. This means that they can slip into the skin of a new person and
experience the reaction of others and interaction with their environment through the
eyes of their second personality. MMORPs are even used for therapy for physically
disabled people in order to build up their self-esteem since in the virtual world
nobody sees their disability and they can live “ a normal life” through their avatar. In
Second Life there is even a “ Virtual Hallucinations building” where people can
experience how it feels to be schizophrenic.34 People identify with their second
personality so much that they even create videos – spending hours to develop stories,
direct the filming together with others in the virtual world, cutting and composing
them – with their character and put them online on warcraftmovies.com for others to
watch.

• Second, one meets an avatar with a certain appearance and standing in the virtual
reality and takes him/her for what she/he represents in the real world, not knowing
who really sits behind the computer, and if that person has similar or completely
different attributes and skills.

• Third, the behavior in some virtual worlds, like WoW is very social. It happens
regularly that one gets a present from somebody passing by for no obvious reason
except for the generally social code of conduct in this world. People are also very
open and get into contact with each other when they are interested in someone that
passes by. In other virtual worlds, like Second Life, the behavior is rather aggressive
and ego-centered. Could be that in fantasy worlds people are more relaxed since they
play for fun. In more economically focused worlds a lot of people invest money and
hope to get rich. Therefore they play harder and are more focused on their own
benefit. The good thing is, on the Internet, you can choose the world with the social
code of conduct that suits you most. In real life you can’ t; the real world is not split
into “ good” and “ bad” areas; it’ s all mixed up.

9.1.2.6. Convergence of virtual reality and real life

Virtual life does become very real sometimes since it has become a lucrative industry of
its own that grows at a fast pace. Some examples:
• Second Life is one of the only online games where you can legally buy things like
land with real money. The current exchange rate (May 2006) is one dollar for 309
Linden (the virtual currency of Second Life). The economy of SL generates an
average of USD 500’ 000 in economic activity each week.35

34
Second Life.blogs.com/nwn/2004/09/in_the_minds_ey.html, 02.06.06
35
wickipedia.com, 20.06.06


• The American Marc Bragg is accused of having cheated in an online auction in order
to buy land under market value. He was not only excluded from the online game, but
was cited before a real court that will handle the virtual matter in real life.36
• Estimated industry turnover in 2006: EUR 1 billion
• A Player on SL has built a disco that he sold to another one for EUR 100’ 000. The
disco owner refinances himself through the entry of the virtual people in his virtual
club
• A Japanese woman is the big fish in the immobility market on SL: she buys the land,
builds fancy houses with nice gardens and resells the land with the house
• A German business man has hired five employees in China that spend the whole day
gaming on different platforms and he then sells the gained trophies on eBay

9.1.2.7. Interesting and large enough target group

Online gamers are no longer a small segment of youngsters and nerds as the following
numbers demonstrate:
• Even though the biggest peak is in the segment of 10 to 15 year olds, the mass of the
gamers is between 20 and 45 years old (half men, half women!).37 Game pages have a
reach of 77m people, which represents 50% of the Internet community. 20% of the
online gamers have an annual salary of more than $75’ 000, which makes them an
interesting advertising target group. Regarding media consumption games come third
in Germany.
• More than 100 million people log on every month to play interactive computer
games.38
• In the USA, over 70 percent of males in the 18 to 34 demographic play video games,
according to NPD Group. Young men play 12.5 hours of video games a week, while
they watch television 9.8 hours, and three-quarters of households with a male
member age 8 through 34 own a video game system, according to Nielsen
Entertainment.39
• An average European gamer will play for 10.9 hours a week, 87% have played in the
last week, and 72% play at least three times a week. To put this into perspective:
gaming is, for gamers, the third-most-popular use of media entertainment in the last
week, after watching TV (96%) and listening to music (94%).40
• 60% of trendsetters and 33% of mainstream 14-34 yo have a social networking page.41

36
20 Minuten, 23.05.06
37
Nielsen Interactive Entertainment, 2005
38
NYT, December 2005
39
MediaLife, January 2006
40
Mediaedge:cia, December 2005
41
TrendCentral, May 2006


• Synthetic worlds are popular: currently, these new worlds have around 10 to 20
million inhabitants and the total number of players is expected to reach 40 million
by 2020.42
• And, some more big numbers of popular virtual reality platforms: Habbo Hotel: 50
million members, Neopets: 70 million+ virtual pet owners, Coke Studios: 8+ million
registered users, Virtual Magic Kingdom: 1+ million registered users, Goonzu:
(Korea): 3 million members, Guild Wars: 2 million members, Project Entropia:
400,000 members, Ragnarok Online: 17 million members, Second Life: 290,000
members, World of Warcraft: 5.5 million members

And, a study of Electronic Arts (May 2006) reveals that gaming makes people happy.
The study concludes that people that regularly play online games go in for sports more
often than non-gamers and spend more time with their friends. This rebuts the picture
of the lonely and lazy online gamer.

9.1.3.Mobile Connectedness (Entertainment and Information)

Mobile phones have long become more than just telephones; they are people’ s personal
connection to the world. They have become steady companion, lifestyle tool and pastime
while on the road. And the significance of mobile devices will continue to gain
importance with the following developments.

9.1.3.1. Mobile Broadband Access

In some areas it is already reality and in others it will be in the very near future: high
speed access to the Internet via mobile phone, as already described earlier in the context
of the consumer trend, “ online oxygen” . HSDPA (high speed downlink packet access) for
example, which was introduced to the Swiss market in May 2006, allows down- and
uploading of data five times as fast as the current technology UMTS. It will soon be
possible to download entire short movies, interactive multimedia games (multiplayer
online games) and audiovisual news services. Mobile communication hereby becomes
more emotional and experience oriented.

This will have a huge impact on the quality and penetration of mobile applications
particularly multimedia applications like mobile games, mobile TV, mobile content and
mobile services, which are described in the following chapters.

Latest studies show that already 50% of the 17 to 29 year olds have a mobile phone
capable of handling multimedia applications. Those who have a multimedia mobile

42
Swansey University


phone know how to use it and half of them access Internet applications at least once a
month.43

The mobile industry predicts that mobile will one day go alongside with TV, cinema,
radio, press, online and outdoor in brands media schedule, but they also add that “ it is
still in its early days.44

9.1.3.2. Mobile Games

Mobile Games are already highly penetrated. In Germany, 85% of all age groups have
already played a mobile game and one third does it on a regular basis. Every third
person has already downloaded a game on his mobile phone. Consumers are also
interested in free advergames and 20% have already downloaded one. But, it’ s more a
men’ s thing. They represent around 70% of the mobile gamers. Surprisingly it’ s not the
youngsters segment that is the most engaged in mobile games, but young adults between
20 and 39 years old.

Mobile Games are emerging as serious contenders to traditional game applications in the
market place, with many predicting that their revenues will mount a serious challenge to
console, PC, Mac, handheld and online gaming in the near future. Current estimates of
the size of the global mobile games market in 2005 range from $3.5b to $5b, with
revenues exceeding $20b considered a real possibility by some of the more bullish
forecasters within a matter of five years. The installed base for mobile handsets currently
runs to an estimated 1.7 billion (1,700 million), with some forecasters predicting an
increase to more than 2.7 billion by 2010.45

Admittedly, only an estimated 900 million mobiles currently have WAP/GPRS (2.5G) /
3G capabilities, making the download of games from the web a possibility. However,
with replacement cycles for mobile handsets continuing to shorten (15-18 months on
average), the accelerating uptake of 3G and heavily subsidized upgrades by mobile
network providers, it will not be long before the majority of handsets will have wide
ranging mobile games capabilities.

43
ifmm.net, Minick Credentials, May 2006
44
Brand Republic, Digital Bulletin, 12.05.06
45
Brand Republic, Digital Bulletin, 12.05.06


1400 1232
1200 1064
1000 885

800 711
527
600
400
200
0
2005 2006 2007 2008 2009

Graph 7: Forecast of mobile game sales volume in Europe in Mio. Euros (Jupiter Research)46

Because of the earlier described increase of data transfer speed and the popularity of the
still rather simple mobile gaming applications, the successful model of multiplayer
gaming platforms is about to be translated into the mobile world analogue the example
of World of Warcraft.

Mobile network providers, mobile phone producers and game development companies are
currently developing such business models. « The market for mobile multiplayer games
is not yet developed. But we see a big growth potential here », says Heidi Anders,
responsible for new business segments at Siemens.47

But stand alone mobile game applications, aren’ t the only mobile devices being
developed. The link of traditional gaming platforms to mobile devices is also being
developed. Microsoft, for example, introduces « Live Anywhere » in May 2006. Live
Anywhere is a communication platform that links the Xbox (Microsoft’ s game console)
to PCs and mobile devices. Gamers can use their digital identity- the « gamer tag » on
their console, PC and mobile phone in order to play, communicate and use gaming
functions through the Xbox-Live-interface from the device of their choice whenever they
please.48

9.1.3.3. Mobile Content and Services

Mobile information and entertainment consumption is another mobile application with
huge development and success potential. Mobile content usage is not yet a mass market
phenomena, but it’ s already a nice segment: 60% have accessed mobile content within
the last three months and 10% do it on a monthly basis. And the number is growing: In

46
Financial Times Germany, 26.04.06
47
Financial Times Germany, 26.04.06
48
e3expo.com, 10.05.06


Switzerland 88% of the population has a mobile phone, and over 85% have pre-installed
mobile Internet access. 500’ 000 customers buy mobile content, 200’ 000 of them on a
monthly basis and 250’ 000 participate in mobile promotions every month.49

People are most interested in content and services centering around music, photos and
video clips as research, conducted in the UK revealed. Respondents showed increased
interest in content applications such as music (34%), movies (22%) and photos (52%).
The research found that 18-34s are most interested in content services: 67% are
interested in sharing pictures with family and friends, 58% in downloading songs, 53% in
video calling, and 39% in watching movie trailers or sporting highlight video clips.50

Popular as well are social networking applications. In April 2006 10,6% of the
respondents had used such a service within the last month. 13 to 17 year old boys have
the highest affinity to the socializing offers.51

LimeLife has revealed the findings of research examining the mobile motivations, usage
patterns and content interests of women. LimeLife predicts that the number of women
aged 15-45 who download mobile content will grow to 20 million by 2007.
• The mobile phone initially serves as a "private line" for girls 16-17 then evolves to an
"always with me connected buddy" during college years, gradually becoming more
functional and ultimately beginning to serve as a "command central" for working
moms and women pursuing careers.
• Games are second only to ring tones for desired mobile downloads among women.
• 67% of those surveyed showed strong interest in wallpapers made from "Photos I
Take." Further, the use of ring tones as "caller ID" identifiers is also representative of
the importance of customization and personalization in mobile content for younger
women. 69% of women surveyed, aged 18-22, have already downloaded one or more
ring tones.

As experience quality and emotional sensation of mobile multimedia services improve
and their application areas expand, mobile service usage will continue to grow and
consumer behavior will develop towards multimedia consumption of information and
entertainment.

9.1.3.4. Mobile TV

Mobile TV, video or movie is one adaption form of content to mobile devices. The highly
emotional audio-visual expression of the format has a high entertainment and fun factor

49
ifmm.ch, Minick Credentials, May 2006
50
Enpocket Mobile Media Monitor UK
51
International stucy of M:Metrics

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