SNWF Habbo Presentation

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Information about SNWF Habbo Presentation

Published on March 20, 2009

Author: christianp


My name is Sampo Karjalainen and I’m the Co-founder and Chief Creative Officer of Sulake. Sulake is best known for Habbo, a virtual world for teenagers. We have been developing it for over 8 years now and it’s nowadays one of the biggest virtual worlds in the world. On monthly basis we have over 11,5 million unique visitors per month (source: Google Analytics). Today I’m going to talk about virtual worlds in general, what are they good for. I don’t know where this a bit cheesy title of my speech came from. But anyways, I will try also to talk about how social networks and virtual worlds could benefit from each other. 1

What are virtual worlds? People usually think they know when they see one. But what are the common characteristics of all virtual worlds? Typically it starts with a computer-simulated space. It can be 2D or 3D or even textual, but there’s usually some type of a spatial world where the action takes place. The users are represented by avatars in the space. They can move around and communicate thru those characters. The communication and interaction typically happens in real-time. This is different from social networking services, where communication is mostly asynchronous. I don’t think that real-time is better. It’s just another way of interaction that is appropriate in some contexts, but not in all. Virtual worlds typically have lots of simultaneous users. The term Massively Multiplayer Online Game demonstrates this fact. And last, the world is persistant. It doesn’t disappear when you log out and turn off your computer. It keeps on running and developing on the servers. 2

I think virtual worlds can be roughly divided into two camps. Although the line can get a bit blurred in some cases. On one hand, we have game worlds, which exist primarily for goal- oriented gaming. In these worlds, the game developer has built the environment and most of the content in the service. The players come and play it by consuming the pre-written quests and missions. On the other hand, we have social and open worlds. They don’t have pre-defined goals, set by the developer. In that sense they are more like social networking services that can be used for all kinds needs. The world and content is often mostly user-created. And the social experience is important part of the appeal of the service. This is one way of dividing virtual worlds. Some may divide themby platform, or by visual representation. For example 3D vs. 2D is the classic debate. But I don’t think it’s the most important factor. Usually overall accessibility is much more important than 3D graphics. Too many of the great 3D virtual worlds are just too difficult to get started with. And in the end it’s not really the visuals that count, it’s usually other things as we’ll see in a sec. 3

How do Virtual Worlds compare to Social Networking Services in size? Unfortunately virtual worlds (as well social networking services) can be measured in various ways and even analysts tend to find it difficult to compare the numbers of different services. So they all tend to avoid exact lists. But here’s one of the lists by GigaOM technology blog. It’s “Top 10 most popular Massively Multiplayer Online Worlds” by active users or subscribers. As you can see World of Warcraft and Habbo are there on the top, followed by Runescape, Club Penguin, etc. The numbers have changed a bit after this. Now the latest from both Wow and Habbo is 11.5M. The list is also missing some Asian games like MapleStory and Fantasy Westward Journey. But in general it gives some scale on the size of virtual worlds compared to social networking services. The latest number from biggest SNSs are from Facebook’s 175M actives and Myspace’s 125M actives. So if we just compare the biggest services in both categories, virtual worlds are one tenth in size. 4

So the question is… 5

Let’s first look this from the user’s point of view. There are four main things that people get out of virtual worlds. 6

1. Gaming People use virtual worlds to compete. Worlds like Maple Story, Runescape, World of Warcraft are game worlds. 7

People primarily come for the game. This is the Massively Multiplayer Online Game MMOG area. There’s an old saying in MMOG design that “People come for the game, but stay for the people.” So they start to play the game, but then they make friends, set up guilds and actually keep on coming back because of their online friends. 8

The element of achivement, having pre-defined goals and reaching those goals is appealing for many users. Many games have missions, quests or achievements that can motivate some users to keep on using the service for a long time. 9

It’s an element that has been brought to many of the more casual social virtual worlds, too. Goals give people things to do and make it easier to get started. A completely open world can be a bit confusing. What am I supposed to do? We have introduced some achievements in Habbo just for this reason. We also have some multiplayer games inside the environment that appeal to gaming 10 oriented users.

Many of the younger kids virtual worlds have lots of small games. Actually for example in Club Penguin, it seems that the small games overshadow the social experience. To me it seems like a wonderful entertainment package, with a thin social layer on top of it. 11

Second, people user virtual worlds to make friends and meet their existing friends. 12

Virtual worlds provide a very playful way to meet people. It’s an exciting experience to meet someone thru an avatar. 13

It applies to all ages. People use virtual worlds for dating. Couples are formed in these worlds. And there’s also some cybersex going on in adults’ virtual worlds. 14

Third, virtual worlds are really good for creative self-expression. You can show your own style and interests thru your avatar, your space and places you hang around. In Second Life there’s a vivid fashion scene where people design new clothes and run even magazines on virtual fashion. 15

Dressing up your character is a big part of Stardoll, a popular service among girls. Its focus is not really in real-time interaction so technically it may not be a virtual world, but there’s tons of options for dressing up your character and furnishing your space. 16

Building and furnishing your own space has become a bit of a standard feature for all of the virtual worlds. 17

And it’s a strong element in Habbo, too. Habbos create all kinds of rooms that represent their style or interests. And they also come up with all kinds of creative activities and events in their own spaces. 18

This is one example from Habbo. It may not look like one, but it’s actually a virtual horse stable. Some of the Habbos dress up in all brown, black or white and they play the horses. The other some in to take care of them. And then they roleplay the scenario. We don’t have any horse stable furniture available in our catalogue, but they make-believe this creative scenario and that’s why they feel like it’s their own thing. 19

Fourth, virtual worlds provide a get- away to a fantasy setting. 20

It doesn’t appeal to everyone, but for some it’s important. It can be dungeons and dragons,… 21

Or space science fiction. Eve online is a complete universe of its own, consisting of over five thousand star systems. Players have their own ships and professions and can form corporations and alliances. 22

So in short these were the four main appeals of virtual worlds from user’s point of view. 23

Then, business. There are two main areas: User revenues and advertising. 24

The classic user revenue model in MMOG Games has been the monthly subscription. Players pay a monthly fee to play the game as much as they want. It’s a solid model, but it requires a bit of dedication. But an active player and subscriber can remain with the game for a long time. Especially when they achieve higher levels and get friends in the game, they may stay subscribers for a long time, even when they are not actively playing anymore. They pay the monthly fee just to keep their status and friend network available. 25

With Habbo, some 8 years ago, we started with a micropayments model. Instead of subscription, we let users buy Habbo coins with various payment methods. And this where 85%-90% of our revenues come from. Users can buy coins with premium SMS, IVR phone lines, credit cards, scratch cards, internet biling and so on. There are over 150 different payment channels available around the world. With these Habbo coins, the users can buy virtual content from the… 26

… online catalogue. There are all kinds of virtual brands and items available, some decorative and some functional. We also have some rare items that are on sale for a limited time only. Collecting and trading items becomes a big part of the experience for some of the users. 27

Active traders and collectors set up their own web pages where they list the values of different goods. They may buy some items now and put them ‘on ice’ for a certain period and wait for their value to rise. 28

And the same happens in other virtual worlds, too. If you type in World of Warcraft gold into Google search, you get tons of sites selling virtual gold. The virtual asset sales and trading has become a sort of a game and a major business on top of these worlds. But virtual asset sales have a bit of different role in games andsocial virtual worlds. In some games, it’s seen as cheating when you buy a 29 level 60 character. But in social worlds it’s usually more about self-

It’s an area of research. Why do people buy virtual goods? It’s a valid question. Once we understand the motivations, we can extend this model to other services, such as social networks. Facebook has had the gifts for some time already. 30

So, user revenues are one part. The second part is advertising. 31

Here are some examples from campaigns done in Habbo. The campaigns typically contain elements such as virtual furniture, … 32

Branded rooms. Activities taking place in these rooms. 33

Habbo home pages, billboards and special competitions. So, this is the secondary revenue source in Habbo. 34

In general we want to have brands that bring some interesting content with them into the service. In US, we have partnered with American Idol and we have all kinds of related activities taking place in Habbo. 35

Business: 1. user revenues and 2. advertising. 36

In short, virtual worlds provide a good basis for monetisation, either with user revenues (people are willing to pay) or engaging advertising campaigns (brands are interested in them). How could social networks utilize these ideas? There are at least two ways. Some elements of virtual worlds can be brought into SNSs. Things like virtual asset sales, achievements, and so on. Or the other way is to build a virtual world extension to the SNS. As said here at the conference, we need to give basic functionalities for free to build a sizeable community. But the virtual world can be a way to monetise it. As a last concrete example, lets have a look at what already exists. Facebook’s app platform has been a good ground for virtual world meets social networking experiments. 37

If we look at the most active games in Facebook… 38

we can see that some of them have virtual world –like features. Seventh there on the list, with 4,5 M monthly actives, is actually quite a full-blown virtual world, YoVille. 39

It’s also available in MySpace, and if we combine the numbers from both, it starts to look like it could be bigger than for example World of Warcraft in the US. 40

So it looks like this. 41

You can create a character, your own space, meet people and so on. You and utilize your existing Facebook friends in the service and offline users are reprented with avatars as well. You can earn one game currency by playing… 42

Or buy more with real money. There’s also another link for earning more… 43

… in which they link to all kinds of questionnaires and promotions that users can follow to earn YoCash. I don’t know if this is truly successful marketing for all of the parties, but similar activities take place in Second Life, too. It’s a way of turning users’ attention into an asset in the virtual economy. 44

So in summary, it can be either the developer of the SNS who wants to monetise the service better by introducing a virtual world component or virtual assets to the service. Or it could be a brand who provides a virtual world experience as an app or a widget to engage users of SNSs and get great results. If the social graph becomes more portable between services, it may also be that it can be a totally independent party who just taps into the existing friend networks in a successful way. It’s still a bit of an uncharted territory, so lets see what we come up over the next years. 45

Thank you. 46

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