Kooky Wednesday Fun: Duh Naaaa!

It’s a gorgeous day outside.  Have you checked out wis.dm yet?  That’s great for randomness & time wasting.  I’ve been exploring it for like a week… week and a half now.

This has been the week of reform for my social network profiles… I’ve gone through oldies, newbies, greenies, and blue-ies.  I forgot how very, very many communities I belong too.  Frightening really.

Yikes: Sony, wrong numbers, and TMI for a 12 year old

A 12-year-old boy in Washington State got stuck in a particular level of the PlayStation 2 game Ratchet and Clank, so he called the tipline printed on the game disk and found he’d called a phone sex line, KNDO TV reports. “The number appears on multiple games, including top sellers like Hot Shots Golf, and a similar number on other games leads to the same service.” When the boy’s mom called Sony, the company said it hadn’t used that number for about two years and couldn’t be responsible for it.

Net Family News - kid-tech news for parents

I wasn’t going to pass this along… except for one thing. Isn’t Sony trying to buy Club Penguin (latest rumors aside)???

Seems awful irresponsible to me that a company looking to broaden its horizons by jumping into the U13 environment (granted, CP will only be a tiny portion to the conglomerate that IS Sony) doesn’t take responsibility for it’s products. Tsk tsk. Not good press indeed.

Virutally Good…ies?

People spend over $1.5 billion on virtual items every year. Pets, coins, avatars, and bling: these virtual objects are nothing more than a series of digital 1s and 0s stored on a remote database somewhere in the ether. What could possibly possess people to spend real, hard earned cash on ‘objects’ that have no tangible substance?

The virtual worlds space has received tremendous press attention in the last year, fueled in no small part by Wild West stories of fortune and anarchy in worlds like Second Life and the plight of the Chinese gold farmer in World of Warcraft. But people aren’t paying attention to the bigger story. While people preoccupy themselves with mocking the absurdities of some of these virtual worlds, the reality is that there are many businesses out there making
meaningful amounts of money in virtual goods:

• Tencent is one of the largest Internet portals in China with over 250 million active user accounts. They generated $100 million+ in Q1 of 2007 and over 65% of their revenue comes from virtual goods.
• Habbo Hotel has over 75 million registered avatars in 29 countries and 90% of their $60 million+ yearly revenue comes from virtual goods.
• Gaia Online does over 50,000 person to person auctions and 1 million message board posts a day- making them the 3rd largest auction site and the 2nd largest message board on the Internet. Their average user consumes 1200 page views a month. They employ 3 people whose sole job it is to open snail mail envelopes full of cash that people send in for virtual goods.
• There’s a commonly held misperception that virtual goods are only for online gamers. Both Dogster and HotorNot
  are succeeding with a hybrid ad/virtual goods business model. Currently, over 40% of HotorNot’s revenue comes from virtual goods.
• Major mainstream brands are now buying advertising in the form of virtual goods in social networks. Gaians can now purchase and pimp their virtual Scion xBs. Coca Cola and Tencent partnered to allow Tencent’s users to trade codes taken from real Coke cans for virtual objects in the Tencent network. Wangyou, a Chinese based social network, has also been extremely aggressive in experimenting with branded virtual goods.

It seems incomprehensible to many that people would spend so much money on virtual objects. A Techcrunch article on Facebook’s new virtual gifting service was met with jeers:

• “the whole virtual gift via icons idea seems tacky…i just don’t see it”
• “I think if any of my friends knew I paid $1 to post a puppy icon
  on a friend’s facebook profile, they would quit talking to me… that
  seems really creepy.”
• “Who buys money for that junk? I feel sorry for anyone who wastes their money on such futile nonsense.”
• [and that was just from the first 16 comments]

So why do people spend real money on virtual objects? There are four major reasons:

Virtual objects aren’t really objects - they’re services

Virtual objects aren’t really objects - they are graphical metaphors for packaging up behaviors that people are already engaging in.  (izzy says: go to the article’s link to read more about this)

Virtual objects create real value for people

Each day, thousands of transactions take place via markets such as eBay for virtual swords, currency, or clothing across a multitude of virtual world environments. For people who purchase virtual items such
as swords or armor, buying these items increases the overall satisfaction she receives from spending time in this virtual world / online community / online game. (izzy says: go to the article’s link to read more abotu this section)
I’m an avid player of multiplayer online games. A couple of years ago, I spent 10 real dollars to buy 1 million gold in a game [yes, it was legal and part of a world where real money trade is not prohibited.] My friends mocked me and told me I was throwing money away, so I tried to explain it to them: 1 million gold would give me 20 hours of entertainment. If I were to go to the movies, 10 real dollars would buy me 2 hours of entertainment. Assuming that 1 hour of movie
watching entertainment gives me the same personal satisfaction as 2 hours of game playing enjoyment, I would have been willing to pay $50 in exchange for that 1 million of virtual currency. In fact, I felt like I had gotten a bargain paying only $10!

Probably the most powerful way that virtual objects create real value is through self expression. RockYou is now serving 150 million+ widgets a day - widgets that people put on their Facebook profiles to differentiate themselves - much as they do in the real world with accessories and bling. The US retail market for apparel is ~$300 billion - there’s good reason to believe that people’s strong drive to personalize and differentiate in the real world will proliferate online as well. Widgets are a form of virtual good - though most widget companies are ad supported today, **I see widgets fueling a massively distributed microtransaction economy in the not too distant future.

The cost of buying objects can be cheaper than “earning” them

Who hasn’t heard of the Chinese gold farmers in World of Warcraft? Typically, these farmers are young students who spend up to 12-14 hours a day playing the game. They can then sell these goods or characters to US based players for US dollars. The term ‘farming’ refers to the fact that they spend hours performing the same tedious in-game action over
and over again to yield a certain payoff. This industry has arisen to take advantage of arbitrage opportunities that result from the disparity in opportunity costs. The Chinese farmers value their time much less than American players. This isn’t a moral statement, it’s just one of economic fact. While it might take both players 60 hours to progress a character up to level 40, the opportunity cost for the American player could be $900 (60 hours * $15/hr,) whereas the
opportunity cost for the Chinese player could be $30 (60 hours * $.50/hr). The American player is willing to pay up to $900 for a level 40 character, creating profit opportunities for the Chinese player. [Note to all the flamers: I don’t sanction farming in environments where it’s clearly prohibited by the game designers. I’m just trying to
explain why this makes sense to some of the buyers and sellers.]

You can make money off of virtual objects

Last year we were inundated with stories about Second Life’s first real estate millionaire. Though it might seem ludicrous to spend as much money on a virtual island that you could otherwise use to purchase real acreage in the physical world, the buyer in this case could actually be quite financially savvy. Buying an island in this virtual world is a other virtual assets and real estate development. The buyer could in turn subdivide the island into multiple parcels and make a healthy
return reselling the land to other players. Of course, this type of investment strategy requires market liquidity; that is, a sizeable and willing market of buyers willing to pay your desired price. With the rapid growth in number of players in virtual world environments and burgeoning market infrastructure, market liquidity is likely to
increase with time.

Virtual Goods: the next big business model

That’s a GREAT article.

Gaming: Bringing worlds AND FAMILIES together

Parent videogamersI love the parenting message in this Associated Press story,
and I think it applies to teen social networking as well as
videogaming. Across the US, according to the AP, many parents say
hanging out with their children in the virtual worlds of videogames
brins kids closer “by providing a safe, convenient way to stay in touch
and talk to their children on their own terms.” Eighty percent of the
parents who play videogames (35% of US parents) play with their
children, according to an Entertainment Software Association study
cited by the AP. One dad said “the time spent with his daughter …
matters much more than the games themselves,” and the AP cites an
expert saying that “videogames equalize the physical size differences
between fathers and their kids. That means children often have the edge
in a video game, and they may feel more willing to communicate.” That’s
something I’ve been suggesting since I started writing this newsletter
– that empowering kids (letting them be, e.g., the family chief
technology officer or just asking them to guide a parent through
software preferences) fosters both communication and mutual respect,
which is increasingly protective of online kids. It’s protective
because on the 24/7 user-driven Web it’s so easy, when parent-child
communication breaks down, for kids to operate at greater risk online
“underground” where parents can’t be involved.

Net Family News - kid-tech news for parents

Well said!

It’s like the old boardgame, right? Forget Scrabble– skool (pronounced ’school’, lol) mom or pop in Mario Cart!

Crazy enough– games allows the parent into the inclusive world of youth, while building bridges of friendship, common understanding, and silliness.

My Mom loved the tetris– it was the only thing she’d play on our gray gameboy of yore. She liked it, and we always tried to beat her score (she had perfect patience for it, unlike me who had the attention span of a goldfish). But my dad? He wouldn’t be caught dead playing such a thing. But you know what? That’s okay. He made up for it playing soccer with me, hitting the tennis ball, and taking me to Dunkin Donuts on saturday mornings.

Really… I don’t know how I’d feel if my parents wanted to play more games WITH me. I kinda grew up with this definitive line between grown-up things and kid things. I always preferred the kid things, even to this day– I’d rather watch Nickelodeon than Wheel of Fortune or the news. I’d rather drink chocolate milk than diet pop. Blending the line between kid things & grown up things would have messed my little world up. But then again– back then, we didn’t have such invasive & adventureous worlds online. My world was in the weeds in the side yard, building my own worlds in my head (explains a lot, right?).

In high school & college, however, I loved showing them around the net… like it was my backyard. Still to this day, I get a sense of grown-up glee whenever I get to help my parents do something online. I showed my mom blogs. She has one. Hasn’t done a thing to it. My dad always asks me the same question. “What is a blog?” I like that they’re interested in the net, and that they look proudly on me as I “talk shop.”

It’s funny how different generations appreciate the same things in different ways.

Anyway, enough of that ramble. on to other blog-worthy finds.

technorati tags:parents, parenting, youth, online