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Parks Associates' Michael Cai: Business Gets Done in Virtual Worlds

By Blake Glenn
Sep 11, 2008 4:00 AM PT

Virtual worlds come in all shapes and sizes, says Michael Cai, director of broadband and gaming for Dallas-based research firm Parks Associates.

Parks Associates' Michael Cai: Business Gets Done in Virtual Worlds

Virtual worlds can be categorized by graphics type (2D, 2.5D, 3D), applications (enterprise worlds, social worlds, entertainment worlds, gaming worlds), and by demographics (adult worlds, teen worlds).

In this exclusive interview with ECT News Network, Cai discusses how virtual worlds are currently being implemented in the enterprise and offers his best guess as to how virtual worlds will shape up in the enterprise in the next three to five years.

Key enterprise applications currently being implemented include the following:

  • marketing and promotion
  • e-commerce
  • recruiting
  • events and meetings
  • customer service
  • training
  • consumer research

We're only about three years into serious applications of virtual worlds in the enterprise, according to Cai. Business applications are still very much in the experimental stage. Tech companies such as Cisco, IBM and Intel are leading the way in adapting virtual worlds for business purposes.

IBM is one of the leading players in helping corporations to implement virtual worlds. Other players in the enterprise virtual worlds space include industry leader Second Life, Multiverse, ActiveWorlds and Rivers Run Red.

For the future, Cai expects a deeper adoption of virtual worlds by corporations.

He also makes an interesting note about the future of virtual worlds in the enterprise.

In five to 10 years, teens who have grown up with and engaged heavily in the pure entertainment offered by virtual worlds will begin bringing their expertise to the corporate suite, Cai predicts. This will probably translate into longevity for virtual worlds in the real world of business.


Listen to the podcast. (18:36 minutes)

Here are some excerpts of our conversation:

LinuxInsider: What reasons would a company have for utilizing virtual worlds from a business perspective?

Michael Cai: There are a variety of reasons. First of all, for the brand companies and media companies, they use virtual worlds to market and promote their brands and content and products, and also to interact with their fans. In terms of the enterprise side of the story, there have also been efforts in experimenting with e-commerce through virtual worlds. For instance, a Circuit City or a Sears might be using virtual worlds to promote some of the new products they have, or for experimenting with conducting real-world e-commerce through virtual worlds.

And then if we look at what some of the large global companies are doing with virtual worlds: collaboration, customer service, events and meetings -- whether it's internal meetings or external meetings with clients -- training, product and concept development and validation, as well as consumer research. Those all have been done in virtual worlds in the past several years. Also, virtual worlds have been used for serious purposes, such as military training healthcare applications, first-responder training and educational purposes. Actually, a lot of universities have set up a presence in virtual worlds.

LI: It sounds like there's a variety of different companies in the market delivering these services. How old is the virtual world market?

MC: It's been around for more than 10 years, actually. ActiveWorlds started a simple version of virtual worlds back in the early '90s, but Second Life made the virtual world industry known to the public because of all the press coverage they got -- good or bad. And then in terms of really serious use of virtual worlds for enterprise applications, that kind of emerged in the past three years or so, but more so in the past year than before.

LI: You mentioned some applications on the enterprise side for virtual worlds -- like marketing and training and events, and things like that -- but what do you see as the real sweet spot in terms of how virtual worlds can really positively impact business that you haven't talked about?

MC: In terms of positive impact on business, I think right now when companies evaluate whether they should invest in virtual worlds and use some of those enterprise applications, I think cost saving is normally an incentive. But right now, because the market is still very early, most of the companies are still experimenting. But not many case studies have been established, so I think that focusing on cost-benefit analysis is probably not the only method for judging whether you should invest or not. It also depends who you are, what kind of business you're in. If you're a technology company, if you're a large global company, yeah, I think it's definitely worthwhile experimenting.

LI:Are large corporations leading the way, or do you see mid-size and smaller companies jumping on board as well in the near future?

MC: I think right now, percentage-wise, we're seeing more large companies, global companies. If you think about IBM, Cisco, Sun Microsystems and, more recently, Nortel -- all [are] kind of jumping into this and supporting the virtual world industry for enterprise applications. Most of them are not only large global companies, but they're technology companies as well, so they have some vested interest in promoting these.

Then, after these kinds of companies, you also have several large global companies that are not directly in the technology space, but because they are so global, geographically distributed, it's hard for them to hold regular events or training exercises or what have you among the employees scattered around the world. So you have Accenture, PWC -- a lot of the consulting companies, as well as Unilever and those kind of global brands -- utilizing virtual worlds for their global employees.

In terms of smaller companies, there are small companies kind of experimenting -- not only small enterprise but even SOHO (small office-home office) and entrepreneurs who have very, very small businesses. Some of the applications can include, like, if you're in the design business, you can build a virtual showcase, a 3D showcase, a really fancy version, and show your clients without flying to them and visiting them. You can show them in the virtual world.


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