Wednesday, October 10, 2007

Demographics in virtual worlds: Numbers and charts and predictions, oh my!

I've stayed with the Community track at the Virtual Worlds Expo. The featured morning panel on that track was "Demographics and Numbers: Where Things Are Heading".

First up was Nic Mitham, managing director of K-Zero. He forecasts growth for virtual worlds. One big reason -- the number of kid-based groups. Pretty soon children will be outgrowing the kids' worlds, and they will look for new worlds to get into. There's a huge marketplace already of children using virtual worlds who will migrate up the food chain as they grow older.

Said Mitham, growth in virtual worlds will come from Western Europe, from Russia, Eastern Europe, South America, and Asia. He said he doesn't yet see much virtual worlds activity for and from "silver surfers" or Baby Boomers. He said he also feels that corporate communities are prime for growth in virtual worlds, as is the educational space.

Mitham said the most exciting area for him was product development -- new virtual worlds, and new interfaces, that he feels will help grow the overall virtual worlds space. He says the typical profile of today's virtual worlds user is an early adopter (though I actually think this is wrong -- we're just now getting early adopters in virtual worlds. According to the original Everett Rogers adoption curve, it's the Innovators who are currently best represented in virtual worlds populations).

Mitham said easier interfaces will trigger growth for early adopters, and serve as a bridge to get new people into virtual worlds. One thing that will engage people is to make the overall experience easier. Also helping will be Web-based remote viewers, using a browser to access virtual worlds, including mobile devices. New worlds will help growth as well. A Google My World would be a huge source of growth.

Mitham also sai that diversification would be helpful in growing overall vw user numbers. He cited the rise of category-centric vertical worlds such as Football Superstars (currently in development). There's potential for growth in community-based worlds where the draw is the content, not just "early adopters" (or Innovators!) looking for the next new thing. Finally he cited cross-world avatars as having the potential to grow the total population, though not the number of unique users. But cross-world avatars could help more people get engaged in vws.

Mitham put forward some growth projections for the period Q407 to Q408 in selected virtual worlds. These are increases in the numbers of registered accounts, where the first number is the Q407 number of registered accounts and the second number is Mitham's prediction of the number of registered accounts for Q408:

Second Life 10m to 20m; 1 m to 7 m, Kaneva 0.6m to 3m, HiPiHi 0m to 10m, Whyville 3m to 10m, Club Penguin 15m to 30m, Football Superstars 0m to 3m

Next up was Parks Associates' Michael Cai, who put forward numbers form a recent Parks survey:

6% of US broadband users visit virtual worlds on a weekly basis.
18% have tried a virtual world at least once.
Second Life is the number 1 virtual worlds, followed by teen worlds and kid worlds. Most regular virtual worlds users visit more than virtual world.

He also had numbers on virtual worlds vs social networks -- he reported huge gaps betwen social network and virtual worlds usage among various demographics. Such as -- 40% of 25- to 34-year-olds participate in social networks, vs 12% of that age group participating in virtual worlds; 71% of 18- to 24-year-olds participate in social networks, vs 10% of hat age group participating in virtual worlds; 35% of females participate in social networks vs 5% females participating in virtual worlds; and 29% of males participate in social networks vs 7% of males participating in virtual worlds.

Cai also had numbers (from a 9,500 user study) on what people do less of in the real world while they participate in virtual worlds:

60% don't watch as much TV
22% don't sleep as much
18% don't read as much
16% don't know what they do less of (I found that illuminating -- people just don't really know how they spend their time!)
15% work less
15% spend less time with friends and family
12% don't do sports as much
11% don't shop as much
7% other

Finally, Cai said the majority of users think Second Life is a good medium to promote a brand or product

Last up was Market Truths' Mary Ellen Gordon, who presented an update of research whose first wave was done in the first quarter of this year (n=201 Second Life users in Q! and 190 SL users in Q3, after excluding questionable respondents)

60% of respondents have positive perceptions of real-life brands in Second Life, which is an improvement over the Q1 numbers.

Between quarters, the perceptions of brand effects and consequences hasn't changed. Brands bringing in new resources to virtual worlds are considered a good thing, and people are not as afraid that real-life brands will damage small content creators in Second Life.

Gordon said that as the Second Life population has grown, some concerns abotu brands "taking over" Second Life are still there, but the new people coming in too SL now are more mainstream and don't have as many concerns.

Here are the tactics Gordon's research says work best for brands in Second Life:

Give away SL versions of real-life products; co-create real-life products; sponsor brand-related events; customize real-life products for SL use. People tend to like things that link Second Life and real life, that offer two-way interactions.

What doesn't work: advertising via IM in-world; advertising using notecards for neutrally perceived brands (brands that are not already high-profile in Second Life). Most tactics are perceived more positively when undertaken by brands for which pre-existing attitudes are positive.

Gordon also presented numbers on consumer behavior in and out of Second Life:

57% considered buying a real-life product as a result of a recommendation they received from someone in Second Life.
55% recommended a real-life product to someone they were chatting to in Second Life.
25% have gone to look at a product in real life after seeing it in Second Life.
9% have purchased a product in real life after seeing it in Second Life.
8% have bought a real-life product in Second Life.

Gordon's research on brand types: High-awareness brands in Second Life are currently concentrated in five categories: Of 24 brands meantioned unaided, they were concentrated in information technology, athletic shoes, soft drinks, cars, and media

Gordon said that given the word-of-mouth numbers form her research, it's important for brands to start looking at soft measures as well as metrics -- measures such as word of mouth, engaging with the brand/product in real life, in-world effects vs real world effects vs cross-channel effects, and buying process.

Both active and passive measures have issues in terms of user acceptability. People in focus groups have said they value their privacy and don't really want to be tracked in Second Life as closely as is now possible, let alone will be possible in future.

Finally, Gordon said that some of the brands with the highest awareness do not have an official presence, but their awareness is the result of people making unofficial versions of their products available in Second Life. There's a concern among brand people about whether or not these products represent their brands as they would like. Brands need to work with small content creators in a way that works for the brand yet doesn't cause a backlash.

Questions from the floor:

What's the most underserved demographic in virtual worlds? Mid-40s and up, said KZero's Mitham, although he doesn't know whether the demand is there yet. He said, we know these people are active web and email users. Cai from Parks said the social networking crowd isn't well-served yet, and he doesn't understand why and such sites haven't been in virtual worlds yet. He also said females are underserved.

How many virtual world users are there today worldwide, and projections through 2011? If someone knows the answer to that, I'd ask them to buy my lottery ticket, said Mitham.

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