Engage! Expo - Virtual Goods, Games, Social Media (San Jose, CA - September 23-24, 2009)

To anybody that is a computer hobbyist, gamer, or virtual socialite, this year’s Engage! Expo would have seemed a bit like visiting a toy store to a child. Lots of toys to see, learn about, and play with. And although the show was small in scale with only one exhibit hall and four conference rooms, it definitely had the vibe of a larger show such as COMDEX or CES. Having attended a number of those in the past I guess I can say with some sense of authority that for the most part the show was a success in getting the message out about the latest virtual world technologies and business models that are built around virtual worlds and social networking ideas.

The two day convention that took place on September 23^rd and 24^th of 2009 in San Jose, CA was focused in two main areas, conferences and exhibits. There was one exhibit hall with about two dozen exhibitors which I found to be small at first sight, but realized that it was actually fairly well rounded in terms of the types of products and services offered. The conferences were a bit more numerous compared to other shows and were broken up into four topics: Social Media Strategies, Virtual Goods, Digital Law, and 3D Training, Learning, and Collaboration or just 3D-TLC.

The Conferences

During the two conference days about twenty panels (each consisting of about a half dozen members) assembled to discuss four main topics associated with virtual worlds, social media sites, and the business and legal contexts in which they operate. The four conference topics were presented in different rooms simultaneously so the attendees needed to choose which one they wanted to attend.

The Social Media Strategies conferences were generally focused on helping the attendees gain an understanding of what constitutes social media, what distinguishes it from other mass media businesses, explaining virtual world demographics, ongoing market trends, and the process of engaging the audiences. Although it’s impossible to sum up the nature of social media strategies in one paragraph, it appears to me that the most successful social media strategies have a viral component to them. The quality of the entertainment and the user engagement (or involvement) are important elements to keep the experience going, but ultimately rapid growth of these businesses is fueled by the viral component. By viral component I mean the element of getting friends and relatives involved and into the environment. Having become aware of this important growth driver, if someone handed me a virtual world or social networking site business plan today which didn’t clearly explain the viral component, I’d probably throw it in the trash. The viral component seems to be that important, and companies undertaking such ventures ought to give proper consideration to designing and implementing this component because it makes the difference between linear or exponential growth.

The main agenda of the Virtual Goods conferences was to promote understanding of monetization practices in virtual worlds and on social media sites. In these presentations the panels generally described their businesses and offered whatever information they had on what their approach was to monetizing their social environments and how effective that approach has been. The essence of these conferences was that users of virtual worlds and social sites seek to express themselves in those environments. This expression is similar to the real world. Some people choose to drive fancy cars, build houses on hills, collect huge wardrobes, and so on. The basic need of individuals to express themselves in virtual worlds creates a demand for what is referred to collectively as virtual goods. Virtual goods can be any type of virtual item or service that is only available in the virtual world. Examples of virtual goods are: leased virtual world spaces, furnishings for those virtual spaces, special avatars, avatar accessories (clothes, hair, shoes, earrings, etc.), game power-ups and special features. The term microtransaction is used to describe the transactions associated with trading virtual goods. The main reason for calling virtual goods transactions “microtransactions” is that the value of the virtual goods is generally very small (under or in the range of $1). Focusing on building the microtransactional facilities and the virtual goods into a virtual world or social media site is an important step toward profitability for these businesses, and it forms another separate stream of income (beside ad space sales) to complement overall revenues.  In a popular virtual world microtransactions can amount to millions of dollars each year, or in the case of Second Life, even a billion dollars over the life of the company so far.

The Digital Law conferences for the most part dealt with the main issues concerning virtual world operators. The topics discussed included: the need to protect against security breaches and user fraud, digital content piracy, patents, ownership rights to virtual goods, tax incentives for game development, ethics and virtual world moderation, as well as issues arising from differences in international laws. The conferences also discussed the best practices in the industry, along with anticipated future issues (i.e. what happens to your virtual assets if a virtual economy fails?)

The 3D-TLC (or 3D Training, Learning, and Collaboration) conferences were about discussing the integration of virtual worlds into the business process. Some of the greatest surprises to me were in this area because I’ve always been a bit of a skeptical about the viability of 3D worlds for anything other than a game or chatting experience. As it turns out a range of companies have developed sophisticated technologies to import content from the outside world and share it with the participants of the virtual worlds. For example a person can make a speech, do a power point presentation, or video conferencing through the virtual world environment much like they would do in real life. With the help of these technologies people from all over the planet can now attend virtual world meetings and have audio/video conversations that are both visible and audible to the other participants. The main ideas at the 3D-TLC conferences however were about the readiness of businesses to adopt these new technologies along with case studies of what certain companies have done and what the gained from doing so.

The Exhibits

The Exhibit Hall had about two dozen booths demonstrating a variety of technologies that can be utilized in virtual world creation and servicing. Here is the complete list of exhibitors:

While walking through the show floor and familiarizing myself with the companies and their wares, the following companies have gotten my attention.

Qwaq (Teleplace)

The company’s main product is a collaboration solution called Teleplace which allows enterprises to manage data-intensive projects and operations across multiple geographical locations. Teleplace’s features include drag-and-drop content publishing to the virtual world, the ability to share documents and applications both privately and publicly, VoIP chat and text chat, environment customizations, visual controls, streaming video, archiving, and smart rooms that update when outside content sources change.

Company Web Site: http://www.teleplace.com/

Electrotank

This is a flash game development company that also markets game servers and universe platforms (or development kits) besides their computer games. The company also does custom game development. Two of the company’s main products are its Virtual World Dev Kit the Electrotank Universe Platform (or EUP for short) and the ElectroServer 4 Multiplayer Server.

Company Web Site: http://www.electrotank.com/

Forterra

Forterra provides enterprise grade virtual world software that is used for corporate collaboration and training purposes by various businesses, healthcare and educational organizations, and the government. The company’s On-Line Interactive Virtual Environment (OLIVE) product is ideal for: Collaborative Meetings, Training & Learning, Hosting Events, and Specialized applications.

Company Web Site: http://www.forterrainc.com/

Offerpal Media

Monetizing virtual worlds is easier when you have Offerpal Media by your side. The company has a turnkey payment platform which allows virtual world, social media sites, and online multiplayer game operators to provide the mechanism for converting virtual currencies into real world currencies. The Offerpal platform allows users to earn points, credits, and other virtual currencies by participating in 4,000+ targeted advertising offers. These offers may come in the form of filling out surveys, signing up for promotional magazine subscriptions, or participating is some online activity. Users of the Offerpal platform can also purchase virtual currencies for a great number of games and virtual worlds through a variety of integrated payment options such as credit cards, mobile billing, and prepaid cards.

Company Web Site: http://www.offerpal.com/

AdParlor

This company is also a virtual world, game, and social media application monetizing solution. The company’s primary goods are integration into its international banner network and virtual currency monetization platform.

Company Web Site: http://www.adparlor.com/

Pillsbury Winthrop Shaw Pittman Law

Pillsbury is a full-service diversified law firm with expertise in the energy, financial services, real estate, and technology sectors. The company also recognized the explosive growth of virtual worlds, and assembled a legal team of nationally recognized lawyers who are knowledgeable about the issues in this emerging industry. With a multidisciplinary staff of about 20 attorneys Pillsbury represents some of the largest players in the industry and some of the most promising newcomers.

Company Web Site: http://www.pillsburylaw.com/

Utherverse

This company claims to be the next generation of the Internet which they call the VWW or the Virtual World Web. The experience is a lot like what you get on Active Worlds or Second Life except that it’s supposed to be more fun due to the entirely new idea of planned social interactions. On Utherverse people can interconnect in 3D communities and explore a virtual world where both virtual goods and real goods companies are represented.

Company Web Site: http://www.utherverse.net/

Web3D Consortium

X3D’s intention is to bring 3D graphics to a wider audience, where one does not need to be trained in the art of 3D graphics programming in order to create virtual worlds. Effectively the Web3D Consortium develops and deploys a 3^rd Generation VRML standard called X3D which is both ISO Certified and extensible. X3D defines the file format and run-time architecture needed to construct and operate virtual worlds based on the open standards. This standard is implemented by the consortium and a number of third party software providers to create virtual worlds and integrate the technology into web browsers and client applications.

Company Web Site: http://www.web3d.org/

Some other companies that were also promoting at the exhibits:

• ProtonMedia: http://www.protonmedia.com/
• Vindicia: http://www.vindicia.com/
• Avvo: http://www.avvo.com/
• The National Law Review: http://www.natlawreview.com/
• Bitmanagement Software GmbH: http://www.bitmanagement.com/
• Super Rewards: http://www.srpoints.com/
• Linden Labs (Second Life): http://www.secondlife.com/
• E-Calcio (Football Village): http://www.footballvillage.net/

To summarize the overall Engage! Expo experience briefly, I can say without exaggerating that it was quite interesting, educational, had a friendly atmosphere, and decent food. The conference even had a unique feel to it due to the beer drinking socials that capped each day.

As far as the overall message that the various exhibitors and speakers were trying to get out; my interpretation of it was that virtual world technologies are good for gaming, socializing, and corporate educational and collaboration use. A lot of attention was also given to explaining the process of monetizing virtual worlds through establishing virtual currencies and virtual economies by providing facilities to create and trade virtual goods. In addition this process also requires providing functionality to move real money in and out of virtual worlds. Being on guard against legal issues that may arise from the process of building and operating virtual worlds was also something that I felt the audiences were cautioned about by illustrating the international and changing nature of the legal landscape which these businesses operate in, as well as provide examples of the legal woes of existing players.

Event Pictures