Are virtual worlds too good to be true?

With a potential estimated audience of 13 million, advertisers are starting to take notice of the rise of virtual worlds and games on the web. But are the opportunities for them real or all in the mind? David Fickling reports.

There's a whole new world out there. It has barely experienced advertising, is inhabited largely by 18 to 34-year-olds who pay for the privilege of being there, has a population the size of Greece and an economy bigger than that of the Cayman Islands.

A few brave pioneers have begun advertising in corners of this world, and certain parts of it are showing explosive commercial growth. Major business figures, such as Amazon founder Jeff Bezos, are investing millions of dollars in it.

If this sounds exciting, there's a catch: strictly speaking, this new world doesn't really exist. Welcome to the strange world of massively multiplayer online games, or MMOGs for short: huge collaborative internet-based games in which thousands of players socialise and carry out tasks together in realistic 3D worlds. MMOGs were once the realm only of computer nerds, but are now rapidly becoming too big to ignore.

The most recent figures suggest 13 million people worldwide are paying monthly subscriptions of around £10 to spend time in worlds that exist only in the form of data flickering between internet servers, and that figure is growing fast. At the Millennium they were played by only a handful of people, but three years ago MMOG subscriptions passed the five million-mark. And of course, it's not just size that counts. These players are often early adopters and the people advertisers want to meet.

Mainstream activity

But it's not just the population that's significant. Jupiter Research estimates the value of the MMOG market at a staggering $350bn and even within the games themselves there are virtual economies estimated to be worth as much as $1.5bn - equivalent to five months' worth of British TV advertising. Players trade clothes, attributes, weapons, skills, land, vehicles - even sex.

Jean-Paul Edwards, head of media futures at Manning Gottlieb OMD, believes MMOGs are now approaching the tipping point into becoming a mainstream commercial activity. "It's only been in the last year that it's been something worth considering, but what was once the preserve of the ultra-hardcore gamer is now turning into something that ordinary people can dip in and out of, and that's heading towards being a mass-market concept," he says.

Major companies are taking notice. Software giant Sun Microsystems recently compared its financial trading platforms to MMOGs - a comparison that would have attracted ridicule just a few years ago - and David Gardner, chief operating officer of computer games developer Electronic Arts, last week predicted in-game advertising was the future of gaming. But despite this enthusiasm, many of the most popular MMOGs present major hurdles to advertisers. Roughly 98% of them are massively multiplayer online role-playing games (MMORPGs), in which players engage in Dungeons and Dragons-style quests battling orcs and goblins in pseudo-mediaeval worlds.

Justin Bovington, founder of London-based MMOG brand consultancy Rivers Run Red, believes the opportunities in MMORPGs, such as the 6.5 million-subscriber World of Warcraft, are slight. "They're what we call the magic circle," he says. "World of Warcraft is incredibly spectacular, but for marketers it's very difficult because it depends on a suspension of disbelief that brand messages might interfere with."

There is also the problem that most MMORPGs involve users paying a subscription. One of the oldest rules of media is that people accept advertising if it lets them get something for free, but often lose their patience when it starts to intrude on paid-for arenas. Examples of media shown within MMORPGs are rare as hen's teeth.

Nonetheless, there are opportunities: one of the promotions admired by media experts was Pizza Hut's partnership with EverQuest last year, which enabled gamers to use one of the MMORPG's online commands to order pizza.

In any case, the area really starting to excite marketers is massively multiplayer online social games (MMOSGs), which present worlds more like our own, real one. The emphasis is more on hanging out and socialising than on defeating goblin armies. Most also offer free access, although users can pay for more functionality.

One game above all gets media figures excited: Second Life. Opened to gamers in 2003, it has generated a world as complex as real life. There is a virtual currency, the Linden dollar, which can be legally traded with the real US dollar, and players have intellectual property rights over objects they create inside the game.

The result has been an online industrial revolution, comparable to the business boom that has grown up around eBay. A counter on the front page of Second Life's website shows the amount of money spent in-game over the past 24 hours: US$226,458 at time of writing.

There are entrepreneurs selling programs to make your in-game character, or avatar, wink; a virtual property company employing half-a-dozen real-world employees in China; an in-game business magazine to help develop your ideas. At the seedier end of town, you can visit a strip club and pay to watch a Lycra-clad werewolf poledancing.

By its competitors' standards, Second Life is small fry - only 250,000 users visited in the past 60 days, roughly 2% of the overall MMOG market. But it is growing at up to 30% a month, and its developer, Linden Labs, predicts it will have 3.5 million users by next July. More importantly, media experts believe the way it is wholeheartedly embracing the commercial world provides an opportunity advertisers would be mad to miss out on.

"When I first started telling people about Second Life, a lot of them just couldn't understand what the attraction was," says Richard Eyre, former ITV chief executive, IAB chairman and Media Week columnist. He signed on to Second Life under the avatar (online alias) Crimson Goodnight after reading an article about it earlier this year.

"A lot of people think you would only spend time in this completely made-up environment if you can't deal with reality. But there's all sorts of things that we do to escape from reality: we watch fake people in Coronation Street or EastEnders to escape from reality."

As we speak, Crimson Goodnight is wandering into a virtual car yard and notices a couple of vending machines standing against the wall - one for Red Bull, the other for Coke. Walking over to them, he is offered a free virtual can of drink. The detail that will get businesses salivating is that these vending machines don't even appear to have been installed by media agencies - a game player has simply added some iconic brands to the landscape to make it more realistic.

Although he doubts MMOGs will ever overtake the giants of traditional media, such as soap operas, Eyre believes the change will be inevitable. "When a new thing comes along the advertisers have to go where the audience goes," he says. "If there's a significant number of people spending their time in MMOGs rather than engaging in other media, then anyone who wants to reach that audience has no choice."

Of course, there are risks, as there are with any new platform. Media agencies have to bear in mind they're entering a world with its own rules, meaning they lose any control over their brand's promotion.

Protests, including graffiti, "subvertising" and sit-in strikes, are a relatively common occurrence. In the social world There, users have erected blank billboards to block out existing ads if they feel they are destroying the virtual view or "spamming" the community with unwanted messages. Some companies have even attempted to use this perceived anti-commercial bias to their own ends: Disney's Toontown Online MMOG sets its characters to fight against "Cogs", grey corporate figures with names like "Spin Doctor" and "Red Tape" who want to turn Toontown's colourful world into a grim world of offices and business. The battle smartly puts Disney - which is often characterised as a paranoid, control-obsessed company - firmly on the side of fun.

According to Universal McCann's director of strategic marketing technologies, Damian Blackden, this proves successful MMOG advertising can enhance players' experience of the game rather than intrude on it. "People in these worlds often use brands as a way to define themselves, so brands that can provide things in the game that would be useful to players are likely to find a receptive audience," he says.

The point is echoed by Rivers Run Red's Bovington, who refuses to run billboard-style promotions within Second Life because he believes customers will only respond to creative messages they can interact with.

Virtual versions

Along with US consultancy Electric Sheep, the agency has created an astonishing array of campaigns within Second Life. Suzanne Vega and Duran Duran have performed concerts there, while Radio 1 broadcast its Big Weekend festival this summer in front of a virtual crowd. Hip US clothing store American Apparel has built a virtual shop on a virtual island where players can buy virtual versions of its real-life clothes. For the launch of X-Men 3 this year, Bovington organised a red carpet premiere that attracted avatars for up to four hours.

"We're still only looking at hundreds of thousands of users in the UK, but the people who play these games can be opinion formers," says MG OMD's Edwards. When Rivers Run Red promoted the BBC Big Weekend in Second Life, only 6,000 avatars turned up but more than 50 real-world publications ran stories referring to the event.

The trick is to take advantage of the "shadow consumer" - the in-game avatar - and its relationship with the real-world consumer playing the game. Someone who visits a Starwood hotel or Amazon bookshop within Second Life, or uses a McDonald's outlet or Intel computer within the Sims Online, might be more likely to visit their real-world equivalents. The approach won't suit every company - although the demographic of MMOG players is rapidly broadening, the vast majority are still young men and women who would be unlikely to show much interest in, say, investment advice. But for any brand wanting exposure among difficult-to-reach 18 to 34-year-olds spending hours at a time in these virtual worlds, the attractions are obvious.

Virginia Featherston, trend analyst at Publicis, says companies should start staking out their presences in the virtual world sooner rather than later. "This is still a fledgling market and it's still quite affordable," she says. "If you want to get involved it's going to be best to do it now before all the possibilities have been explored. In a year or two everyone else will be there driving up the prices."

GLOSSARY OF TERMS

MMOG: Massively multiplayer online games

MMORPG: Massively multiplayer online role-playing games, involving sword-and-sorcery-style quests, such as World of Warcraft and EverQuest

MMOSG: Massively multiplayer online social games, in which users interact in the manner of MySpace, such as Second Life and There

PVW: Persistent virtual worlds. Often used to refer to more basic virtual worlds, such as Habbo Hotel and Dubit, popular with teenagers

Avatar: A player's online persona, which can be customised and accessorised to reflect their own self-image

Shadow consumer: the in-game avatar

Contextual advertising: in MMOGs, refers to the practice of letting avatars try out virtual products in the hope that they will invest in the real thing

RL: Short for "Real Life": acronym used within Second Life to refer to the real world, as opposed to in-game "SL"

TOP VIRTUAL WORLDS

Habbo Hotel: the biggest PVW, claims 40 million avatars since it was established in 2000, although this is likely to overstate the number of individual users. Mainly popular with teenagers

World of Warcraft: the biggest MMORPG, with 6.5 million paying subscribers

EverQuest: until the advent of World of Warcraft, the most popular MMORPG in the West. Subscribers have now shrunk to 200,000

Second Life: the biggest MMOSG with a total of 560,000 users, although only 250,000 have visited in the past 60 days

The Sims Online: a MMOSG which pioneered some of the first examples of in-game media, and now has around 35,000 users

There: a smaller MMOSG with around 20,000 users, regarded as the most promising world for media after Second Life.

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