Nick Higham, moderating
Ed Bartlett, vice president, Europe, In Game Advertising (IGA)
Justin Bovington, CEO, Rivers Run Red
Gavin Forth, head of entertainment, Orange
Timo Soininen, CEO, Habbo Hotel
John Burns, senior director of e-commerce, Electronic Arts Europe

NH: Justin, what is Second Life?

JB: Virtual world where users create everything in the world. 5m unique users. But that’s half the story. 1.6 million people log in in for average of 4 hours in there. Very difficult to monetise social networks. Second Life has an economy. 1.7 million USD exchanged, thousands of businesses earning real money within SL.

NH: How is this money transferred to the real world?

JB: Linden Dollars have an exchange rate with USD, just like air miles have an intrinsic value, so do Linden Dollars. SL is just one – there’s also things like World of Warcraft.

NH: What do people do?

JB: People create things, run events, wedding planners, all sorts of thing. From the last panel, content and brand, people are getting behind their own content and their own brands.

NH: Who are these?

JB: Average age of SL is 33 – these are not 17 year olds, it’s actually very sensible people. [audience laughs] All high education mostly college graduates, 10% are professionals, e.g. doctors.

TS: Difficult to explain Habbo without being able to show it. Business model is different to most, it’s end-user based, not advertising. It’s a personal virtual world ad online community for 13 – 15 year olds, 50/50 split male female, non-violent, moderated virtual world. About self-expression, UGC, about being who you want to be and playing together. Four areas, Habbo Hotel, 19 ones around the world; Habbo home page; Habbo multiplayer game section; users’ own web pages.

74 million player characters, started in 2000, 7.5 unique users per month, 400m page views.

Opportunities for companies to sponsor an area, or have in-game advertising, or holed events, create your own virtual area and advertising using interstitials as people navigate from room to room, us IM to communicate message, sponsor games and prizes. Market surveys are popular because kids are very responsive – response rates 10x higher than industry average. Create background themes. Brands are most powerful form of self-expression for teenagers.

Brands that have used Habbo including iPod, and various music artists, Moo cards (?? – they looked like them).

NH: What’s the different to SL?

JB: Mythical thing about ‘brand immersion’, how you move people from conversation to brand loyalty. SL allows people to have immersive experience, collaborating with the brand. How do you make brands content, that’s when people will really engage. But the bottom line is that if you add value to someone’s virtual life that you’ll be successful, if you try to crowbar your message into their world, they won’t engage with you. The internet has always been about the head, about information, but SL have really hit people’s hearts, it’s very emotive.

JN: EAE has a more conventional history. How do you see this going/

John B: I agree with Justin’s point, gaming itself is a reality now as a media forum, and a forum for a vast group of consumers. It’s not niche. And the online revolution is happening and the definition of online for games is changing, all gaming is beginning to develop an online aspect, whether through broadband or mobile. Tremendous opportunity for major bands and consumers. We have a franchise, Battlefield, and we have an active community playing that game, 1.2 million users, and people interact, it’s not a passive experience. Beyond gaming being such a large market, and online being key, one of the differences between gaming and a lot of the other things that exist on the net, Gaming is interactive, we make people engage, sometimes at a deep level.

JH: Who are the gamers? Habbo it’s 12 – 15, but SL is 33?

JohnB: Both are correct. ‘Gamers’ is too narrow a definition, it’s consumers. Gaming is on your mobile, it’s on the net, it’s many things on many platforms. We see this, yes there are hardcore consumers, but when you look at the Sims which is one of the most popular games, they are female with a broad age range, so the stereotype of gamers is out of date.

Ed: This is an entertainment media, our core demographic is 18 – 34 male, but we have a lot of female, and a lot of ‘grey gamers’, so we cover a large range of people and products. Cost of developing games has spiralled, so some of the EAE teams are over a 100 people, and the games themselves are getting cheaper, so the margins are narrower. So advertising is a way to do that.

2003, Hive was the first product placement for gaming, did a lot of work with RedBull – couldn’t make product claims on TV but could put them into a game. Move to become a platform channel, so aggregate games into a single channel. When you look at these games, there are so many choices, so we take entire game spectrum, and aggregate together through our tech, can then insert ads seamlessly, and can do it in context.

Games are now very realistic, and these environments have to be believable, and adding brands increases the realism. Can also add geographical relevance – can geotarget advertising, so someone in Germany would see different advertising to someone in the UK.

NH: How important is this for Orange?

Gavin: Gaming is the second largest revenues stream for Orange. Lagest is music and ringtones in particular. It’s interesting when you start looking what peopple are doing with virtual communities and how you can start bringing that into mobiles. Starting to see mobile access and get people playing against each other in environments that reflect the real world, e.g. if it’ ssnowing in the real world it’s snowing int he game.

Broad spectrum of users, from deeply immersed people who are into Second LIfe; mid-range gamers who like console games; also strong area of casual gamers, like most people in the audience, playing things like Sudoku, most of those people are significantly different to traditional gamers, so older, more females, and they are games like Sudoku, crosswords, and ‘Deal or No Deal’.

NH: What are the ad opps?

Gavin: branding is key, so one of the most successful was Sudoku sponsored by The Economist. Looking at sponsors to subsidise the price of the game, as most games are around £5, so sponsor puts ads on to make those games cheap or free. Provide click-throughs after the game, that works.

NH: How welcome are branded messages and advertising in the game environment?

TS: The biggest risk is that people start treating it as another media space, but it’s not, it’s the space of the users. Don’t allow any flashy banners, or anything in-your-face. Kids love and hate brands, but they are self expression, so we give them the opportunity to use the brand in clever ways. But we are taking careful measures not to over-commercialise it, because otherwise that’s the end of the story. We work with things like Coca-Cola, but I’m sceptical of brands going there directly, and brands have to go where the users are, not that he users have to spend time with the brand.

NH: What about Second Life? Lots of brands have stores in Second Life and they’re all empty.

JB: there are monolithic buildings that sit empty, and you have to ask why do that? Have to think about where the brands are going rather than corporate identity. Most brands think of themselves as content, and virtual worlds are an obvious part of their mix. It’s all about picking the right audience for the right product, so in Second Life, have had some weird and wonderful people thinking they can come in and get something from it. What wouldn’t work would be, say, Cillit Bang adverts. It’s less traditional things that you think would work, and Penguin publishers are great, because people can discuss novels. Radio works, because people can come together as an event based processed.

John: Our experience is that advertising in games in and of itself isn’t new, so consumers have adapted to that, they like it, it ads reality to their experience. What is new is connectivity, think of games in the broad sense. As that accelerates, that enables us to change ads to messaging. E.g. Need for Speed, ads are relevant to today, and tomorrow you’ll see new, different ads. You have to be sensitive to the needs of the users, and understand what they will accept. As more games go online, our ability to deliver great content is growing. Major brands should look at games as a valid place for their spend.

Questions
Historically, minority markets haven’t been well catered for, e.g. gay and lesbian.

Gavin: Games are being developed for all communities, including niche communities such as battlefield surgeons. ten years ago games were all about shooting, but companies like Nintendo span every genre, sexuality, race. Everyone is a consumer, and everyone can find something to entertain them.

Lord Puttnam: Replicating real life online, Timo said that brands are the most powerful way of expression for children, but that’s alarming. I’ve worked hard to support creativity in the online world, and it’s an entertainment medium, but so is TV and radio, and they are also agents for serious change. When will the creatives in this medium join the human race and start tackling serious problems instead of being pure entertainment?

JB: Youth don’t define themselves so much through fashion, and inside Second Life there’s been a huge outpouring of political movements, in France, Mr Le Penn opened offices and was greeted with derision. But people in Habbo and SL, People are creating their own stuff, young film makers and content producers are coming through and creating their own culture. People ask how does someone spend all this time in there? Well, these people are not watching TV so much or going to the cinema, and it’s up to all of us to go with them.

TS: Habbo is a social environment and if you behave badly, you’ll not get friends. It’s like practising real life. Average session is 35 minutes a day, so it’s a part of their life for socialising typically with existing friends from school. Habbo culture is non-violent, it is responsible, and want to be the good guys. Work with several governmental and non-profits, sponsoring virtual infobus, where there are trained adults who can talk about problems users face, like obesity, or drugs. Not trying to simulate reality, but as these things are important to them.

John: I think we already have that, clearly gaming is an entertainment medium so you serve a variety of tastes, but we all understand the validity of the question and the gaming industry continues to offer positive things to consumers: helping people to act responsibly in online spaces, helping them work around making decisions and choices which they might work into their life. So there are many positive things in games.

Ed: It’s a good question. We have a network of over 50 games, and lots of engagement. Games industry only really 30 years old, only since 95 that it’s become the industry it is now. So we’re seeing the same stories about games that our parents saw about rock music. It’s become so commercial now, it has to have a commercial element to it. But you are seeing more serious games, using it for helping people with disabilities, or helping reform people in prison.

Q: What’s the space for government in these communities?
Q: What do brands do if they aren’t cool? Can we still get involved? E.g. universities.

Gavin: Any advertising has to be relevant to the customer, so if you put advertising for government in front of people who aren’t interesting it’s not going to work.

Ed: The COI are one of the early adopters in this space, it’s a great way for them to engage with things ike drugs messaging. Universities might be less relevant but we’re all expanding into new areas

John: Yes, there’s absolutely space for it. In some of our games we had a campaign from Frank, the drug advice agency. And cool brands have their place, but the real estate in games is pretty broad, so I think.

Timo: It’s all about packaging and making it relevant. If you have to go there and deal with the issue to that it fits with the environment, not be too serious, offer something interesting. Non-profits are popular because they’ve worked in a style that fits with the environment. Virtual worlds and communities have an opportunity to refresh your brand, but you can’t just put banner ads up.

JB: Lots of examples of this already in SL, Swedish Embassy is in SL, John Edwards and Rudi Giuliani are already in there Great captive audience to get your message across. Cool brands have to still tell their story better.

NH: Are today’s gamers people who will behave differently or will they grow out of it?

Gavin: No, people continue to game as they grow.

Ed: TV is evolving, and gaming is a part of that. Trick is to get as many eyeballs together at once as possible.

John: There is a shift, it’s just part of the entertainment medium, but it’s at the cutting edge of the move from passive to interactive. In other passive mediums, like TV, they are trying to become more interactive, but gaming’s already there.

Timo: Yes, we’re like a training platform for the more serious online games, so people learn the netiquette, learn behaviours that are never going to go away. People talk about user generated content, but we’re moving to user demanded advertising.

JB: Step forward 10 – 15 years, I’m from the Star Wars generation and that’s where my cultural references rae from, where as these people’s references will be from games.

—

I’m surprised that no one mentioned in their answer to Lord Puttnam’s question the variety of serious projects going on in Second Life. There are support groups for stroke victims and educational places such as a house which explains what it’s like for someone who has schizophrenia. There’s also a huge presence from universities whose students are gathering not just for social reasons, but to attend classes and tutorials. And there are NGOs such as Creative Commons who hold talks and lectures and provide information. I’ve no doubt that’s that’s just the tip of the iceberg, because I’m way behind with my Second Life news these days.

Technorati Tags: changingmedia, Guardian, media 2.0