Transcript Chapter #11.ppt

Chapter #11
Marketing Strategies for the New
Economy
Second Life
What is it?
•Three-dimensional virtual world
owned and run by it’s
“residents”
•Developed by Linden Lab
•110 employees
•Based out of San Francisco
•Opened to the public in 2003
•Currently has 4,031,269
members
•Stated as the "next phase of
the Internet's evolution"
•mixture of fantasy and reality
•Brand Marketing
•Concerts, Meetings, etc.
What is it?
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The World
– stores, beaches, golf courses,
bars, ski areas, high-rise office
buildings, fantastical anime cities,
medieval role-playing regions
– Meet people
– Own “land”
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The Creations
– Personal Avatars made by fellow
“residents”
– Can build literally anything
– Able to trade, buy, sell
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The Marketplace
– The Linden Dollar
 247.5 Linden Dollars per US
Dollar
– LindenX
Bad Beginnings
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Began June 2003
Started with nothing there, it was left to the users
to create (however only 1000 users returned every
month)
Linden Labs almost discontinued Second Life, but
the users that were on Secondlife were so creative
and passionate, Linden Labs Investors decided to
keep financing
In 2004 they re-launched Second Life, where users
could own their own content, which fostered
creativitiy and encouraged users to come back
Growth Graph
Growth since 2004
 Users who return regularly
= .3 million or about
300,000
 New Accounts as of
Jan 16= 2.6 million
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The Rise of Popularity
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Has become a phenomenon
Free for casual use
334,000 regular visitors
2.6 million have checked it out
In mid January the number of people “checking it
out” was increasing by 20,000 a day.
Growth due to online ownership and ability to buy
and sell goods and services online to other users.
In The Future…
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In two years experts expect Second Life to be
huge- probably as large as the entire gaming
community is today
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Check out the website: www.secondlife.com
Business Supporters
Venue for which thousands of
ancillary businesses can sprout
 Backers of Second Life
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– Mitch Kapor, Creator of Lotus 1-2-3
(spreadsheet)
– eBay founder Pierre Omidyar
– Amazon CEO: Jeff Bezos
– Microsoft chief technology architect: Ray Ozzie
Potential Business
Applications
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“We all use teleconferences…but in
Second Life we gather and mingle before
the meeting, and when it finishes, some
people stop and talk again. We start to
form social networks and the kinds of
bonds you make in real life." - Hughes
Examples
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Resident Anshe Chung
– Accumulated a real life net worth of more than $1 million
– She Employs 30 people in China who build things and otherwise
improve the land she buys and develops for resale
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Another developed Tringo (cross of tetris and
Bingo)- became so popular now is licensed for
Nintendo’s Game Boy advance
All innovations in Second Life by its users give the
users ALL intellectual Property rights of those
inovations
Current Business Use
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Daily spending (by users) is around $600,000 in Second Life, making
GDP about $220 million
Where does the Money go?
– Nike, Sony BMG, Toyota, Sun, Starwood and many other user created
and owned businesses in Second Life
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IBM has:
– built stores for Circuit City and Sears
– Allowing customers and Second Life users, for example, to design
kitchens with all Sears appliances
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Linden Lab counts 65 companies that have sprung up inside Second
Life serve real-world business customers.
CTO Cory Ondrejka says about 350 people work full-time for such
companies, and there are at least $10 million worth of such projects
underway (currently)
Future Growth
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Linden intends to make the Programming code available to all
users (HTML and HTTP)
“CEO Rosedale hopes that other companies' virtual worlds will
interoperate with Second Life”
Example quote:
– Say IBM uses our code to build its own intranet version that's
somewhat different from Second Life," he says. "A user may
say 'Wow, this virtual thing IBM has built is pretty cool. Now I
want to go to the mainland.' And we have another customer."
Long-term opportunities for Linden
– lucrative services necessary to keep all these linked virtual
worlds functioning smoothly
We can recreate Google's business in this environment
High Speed Internet
2006 40% of UK Households have
broad brand connection by 2010 70%
of US house holds
 Gain experience (5 years) spend less
time reading newspapers (24%) and
watching TV (23%)
 9% of UK retail spending on line. In US
1/3 shop on-line
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Top Online Retailers
1.
2.
3.
4.
5.
Amazon.com
Office Depot
Staples
Dell
HP Home/home
office
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Office max
Sears/Land’s
End/Kmart
CDW
Sony Style
Newegg.com
Threats or Opportunities
of the new economy
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Syndication of Information
– Originator, Syndicator, Distributor
– RSS
Increasing returns to scale of network
products
 Customization
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– Collaborative filtering
– Rules-based personalization
– Customization
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Disintermediation and Restructuring of
Distribution Channels
– www.SparkleCraft.com
– Blue Nile
– www.kayak.com
– www.ebag.com
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Global Reach
Radiohead
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Sustainable
advantage?
Privacy
Clickstreams
Versioning
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Time
Convenience
Comprehensiveness
Manipulation
Community
Support
Doing research on-line
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Shorter (less is more)
Open ended questions at the end
Do not ask questions of everyone that only
brand users can answer
Keep respondents engaged
Indicate progress is made i.e. 70% complete
Hershey moved product development
research on-line
Product Promotion &
Brand building
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Internet search
– Paid Inclusion v search engine optimization
E-mail Marketing
 Viral e-mail
 Blogs
 Promotional sites
 Banner Advertising
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– Click-stream
Conducting transaction
Delivering Digital products
Dynamic pricing
 Digital signatures
 Digital deliveries
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– Music, books, movies, education
Customer Service and
Support
Making transactions easier
 Retaining customers
 Co-production (not just self-help)
 Product Return and Disposal (Dell
secondary market)
 Web 2.0
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Dot.com
treatment
Jewelry
 Checks
 Telecom
 Hotels
 Real estate
brokerage
 Software (open
source)
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