Following BusinessWeek’s story (Link) on AOL’s intention to create a platform to “better enable its users to share and create content” off of it’s instant messenger service, Mashable’s entry on this development has spurred the beginnings of a discussion. Go see what a few people are saying – Link.

Imagine that. Discussion about whether or not there’s discussion space in a limitless space.

Via this Blue’s News entry today (Link) comes an interesting quasi-announcement: Sony Online Entertainment is changing their massive multiplayer online game PlanetSide from a purely subscription-based offering (US$12.99/month) to a mixed free/paid service. Well… kind of. The free account has a one-year time limit.

This doesn’t really come as a surprise since Sony has already announced some important changes suggesting how they intend to operate their online gaming business in the future. The first announcement that really received attention was their policy shift regarding the sale of virtual goods and their subsequent establishment of the Station Exchange marketplace (see related posts – Link 1 and Link 2). The second announcement was that they’ll be offering an entirely free MMORPG sometime later this year (see earlier entry – Link).

To be honest, I’m not a user of Sony’s products, but it appears that the only game currently using their Station Exchange service is Everquest II. Still. It’s their most popular game I think, and at US$14.99/month it’s probably a cash cow they don’t intend to touch. In contrast, I’ve not heard encouraging things lately about PlanetSide. So I suspect that this move is both an attempt to save the product from extinction as well as perhaps teach Sony some lessons they need to learn in preparation for the entirely-free offering they intend to release later.

Even if PlanetSide goes under, the lessons learned would still likely be invaluable. In my opinion though, enticing players into PlanetSide with free accounts (even time-limited ones) and, perhaps, letting them deal in virtual goods – assuming they add PlanetSide to the SE service – might be the best move they’ve made to date. If however they don’t add it to the Exchange, I don’t think people will bother. They’re not the only (free) game in town.

{Image Copyright © Sony Online Entertainment}

Back in the 1980’s the increasing popularity of VCR’s really shook up the movie industry. Many of you either remember hearing about it back then or have read of it as it’s often included as background in copyleft arguments. As someone making simple, Super 8 movies with friends, reading niche magazines like Cinemagic, and occasionally wondering how this relatively new technology might affect me as someone dreaming of a possible career in film, the emergence of this technology didn’t really concern me. It was just another tool, and I was too busy creating to be overly concerned with the politics surrounding it. I suppose like many musicians today, the mere hint of some easier method to distribute something I created trumped whatever some industry lobbying group representative had to say. Except as someone dreaming of breaking into that industry, I did pay some attention and I did feel some empathy for the industry; not difficult to do if joining it is one of your dreams.

After receiving a hard lesson in critical thinking from my freshman literature professor (translation: she painted my previous essay with red ink), that particular controversy seemed as good as any on which to write my next “redemption” essay. A lot of thought went into that piece. It was only three or four pages long; about the size of a long blog entry, but the resulting work both saved my professor’s red pen from going dry and earned me the highest praise I ever received in all my nine years as an undergrad. I don’t know if I still have that bit of writing (I probably do… somewhere), but if you want to know what conclusion I came to in the “VCRs vs Theaters” debate, just head over to Mark Cuban’s blog and read something quite a bit like it (Link). Here’s one bit that most sounds like something I wrote 20+ years ago:

Going to a restaurant. Going to a sporting event. Going shopping. Cabin Fever is alive and well. Wanting to get away from your parents, your kids, your job, your apartment, your house, your problems will never, ever go out of style. For the next thousand years the question will be asked…

What do you want to do tonight ? For the next thousand years, people will want to get the heck out of the house. The question is where to and why.

Further, if you read an earlier post of mine titled “Selling the Experience” (Link), then this part will also sound familiar:

It didnt take me long to realize that the business of the Mavericks was not selling basketball, it was selling a fun night out and creating a favorable brand identification with our team and our players, with the hope that people would be excited to buy merchandise , products and services from us.

Now here’s the thing: if I could figure this out as a wet-behind-the-ears, 19 year-old college kid, does anyone believe that industry insiders don’t understand? It’s obviously not a difficult concept and they’re not stupid. The reasonable answer is that they’re feigning stupidity because they simply don’t want to change. The cushy, status quo life is good for some people, I suppose. Give me interesting times.

After that last post, I don’t feel much like writing (“and there was much rejoicing“). So instead, just check out some of these old ray gun designs over on PatentRoom.com (Link).

via Wonderland

{Temporary Note: Harvard Business Report readers surfing here might wish to skip down to the bold text “Okay, so let’s piece things together.”}

For those people in the online gaming community who bitterly complain about companies inserting advertising into their gamespace, I have some bad news. Ad Age is reporting that Wal*Mart has lured the influential director of marketing communications at Chrysler Group, Julie Roehm, over to what some might consider the dark side (or maybe just darker). If you’ve been reading this blog, you know I’ve posted a few entries about Chrysler’s online efforts, including their branding of online avatars. All things considered, Chrysler’s marketing group really does seem to grok the potential in pursuing these new channels; and now apparently Wal*Mart has hopped on the clue train as well by reportedly creating a position especially for their new hire and successfully stocking her in it. From the Ad Age story (Link – free registration required):

She was part of the team that drove the automaker into cool, online lifestyle campaigns and video gaming that led to Advertising Age naming Chrysler Group as its first Interactive Marketer of the Year in 2005.

So does that mean we’ll be seeing virtual retail outlets in Counter-Strike or Everquest? Not necessarily, although anything’s possible. More likely – considering Wal*Mart has licensed some well-known brands – we may be seeing some recognizable products and logos virtually popping up in a greater variety of online spaces than we’ve seen to this point.

For example, those General Electric® appliances you see in Wal*Mart stores aren’t manufactured by GE; those are imported from foreign suppliers specifically and exclusively for Wal*Mart. So for example we might see GE-branded small appliances… like thermo-electric coolers… placed in popular sports videogames or in something seemingly off-the-wall which in fact might be important to them because it ties back to a significant, related product category (e.g they may need to move inventory in their fishing department and plug a branded OPP item in, for example, a fishing videogame).

The Arkansas-based retailer has also licensed the Better Homes and Gardens® brand from Meredith Corporation. So we might see Better Homes and Gardens® furnishings in virtual spaces like The Sims or There or Habbo or any number of more socially-oriented online games or virtual worlds targeting an older, female demographic that seems to prefer those over most first person shooters (e.g. Half-Life). If Coke can find a spot for their brand in these online worlds, you can bet Wal*Mart will find a place for this brand.

Additionally, Wal*Mart also has the exclusive US license to the mary-kateandashley® clothing brand (Reference) and as recently demonstrated by the localized Subway ads placed by upstart ad agency Engage (see previous post – reLink), Wal*Mart could honor the terrestrial limits of that license. I’m not sure what other clothing brands they license which might give them world wide rights, but it’s worth pointing out that some of their own in-store brands do pretty well in spite of their questionable quality (their Faded Glory® line comes to mind). Clothing brands (both licensed and unlicensed) could show up pretty much anywhere – from cell phone avatars to Second Life – and we should expect that they will.

You get the picture, but now let’s take this a bit further. One of the big reasons cited for Wal*Mart’s phenomenal success is their early adoption of computing systems to track and manage inventory not just within their own walls, but within their network of suppliers as well. They’re famous for this aspect of their organization. But to show you just how forward-thinking they are/were, back around ’94 I was contracted to work on a project for Telxon, the wireless, bar code scanner company swallowed by Symbol. You should know Symbol – they’re the company that makes all those ubiquitous check-out counter scanners… including the one’s at Wal*Mart. Symbol is a big chunk of the hardware muscle that powers Wal*Mart’s business system (btw, Symbol just rolled out some interesting products intended to expand their market – Link).

Among the products Telxon was developing when Wal*Mart was just starting to source from China were arm-mounted scanning devices to be used in warehouse operations. These things used their own built-in wireless technology developed by one of their divisions called Aironet (later spun off completely on its own only to be acquired by Cisco). This arm-mounted device was specifically being developed with Wal*Mart in mind, and was one of several interesting programs Telxon was pursuing; common enough now, but cutting-edge stuff at the time (btw, here’s a pretty bad picture of a very quick, blue sky concept model I designed for Telxon after the project was complete and the design firm had some remaining budget to expend – Pic) . Though I don’t know, it’s probably safe to assume some of these programs were being driven by everyone’s favorite growing retail chain.

Okay, so let’s piece things together. We’ve got the ability to inject advertising into online games… and do it locally. We’ve got a major retailer that has its own massive worldwide intranet for tracking products and getting them manufactured “just in time”. And we’ve got companies like Nike linking game content to online purchasing and even product customization (reLink).

Now imagine you’re inside a virtual space and you meet another online entity (could be another real person or it could be an artificial intelligence) and it’s wearing an appealing article of clothing. Let’s imagine how the online conversation might go:

Entity: “Hey, I like your av. What you think of mine? I esp like these {insert brand} jeans.”
You: “yea. nice. never seen any like em.”
Entity: “Me niether. But I like being a trend setter! hahaha”
Entity: “U want a copy? Its free.”
You: “sure”
Entity: “Can share it w your friends to”
You: “ty”

Pretty simple. Truth is, this kind of conversation happens online every day in virtual communities. But most important here is that someone has been engaged in a potentially traceable transaction. Your avatar identity can be – and in this example will be – logged in a database along with your IP address and perhaps any key words from the exchange. Also, anything that can be discerned (virtual location, time of day, day of week, the weather in your real world geographic region, etc) will go into that database. This can then be linked to any other information already volunteered perhaps through some “profile” you’ve submitted or game network you’ve joined which already tracks your other online activities (like XBox Live). It might include a link to your homepage or Myspace webpage, mention of your occupation (true or not), or marital status (again, true or not). Anything and everything of interest will be filed away for future use. It’ll also probably be shared with other real world organizations (government, commercial, private, non-profit, whatever) who might then be able to correct any mistakes (intentional or not) and improve the profile accuracy. As I’ve already said in an earlier post (reLink), online anonymity is rapidly becoming a thing of the past

But this isn’t the half of it. Your in-world activities can now potentially be tracked. Let’s say you walk past a virtual billboard advertising those jeans your avatar is now “wearing”. Your presence in front of that 3D object – from your in-world Cartesian coordinates (x,y,z,w) to what you’re seeing on your computer screen (and for how long you’re seeing it) – is information that can be harvested and added to what’s already been collected. I guess I don’t need to say that this is a gold mine for marketing analysts.

Now here’s where it gets really interesting as far as I’m concerned. Let’s say you watch a streaming video commercial on one of those virtual 3D billboards. The billboard senses your attentiveness by checking your directional vector and it’s duration (indicating you’re watching). Having met certain project criteria, the billboard then sends you a personalized message. It might go something like this:

Brand Billboard: “Hi You! Do you like the jeans in that commercial? I notice you’ve got some on.”
You: “yea. these are pretty kewl.”
Brand Billboard: “You know they’re planning to sell those at the Wal*Mart store near you.”
You: “really? i shop there sometimes. didn’t see any”
Brand Billboard: “Tell me your size and I can check to see if they have them or something close to them in stock so you can stop in and check them out.”
You: “k. thx.”
You: “waist – 33”
You” “length – 34”
{At this point, they’ve just added two more things to the file being kept on you. The virtual object connects to the company’s intranet to update your profile and perhaps check the local outlet’s inventory – assuming there is anything to check.}
Brand Billboard: “Looks like that store doesn’t have any of those in stock at the moment, but they should have a shipment in 3-5 days. Can you wait?”
You: “well…”
Brand Billboard: “I can send you an email or private message when they get some in. Or text you on your cell. I’ll even give you a full 50% discount if you place an order now since we’re making you wait. And they’ll be held for you so they don’t sell out.”
You: “that’d be nice. but if they dont fit, can I return em and get my money back?”
Brand Billboard: “Of course! You’ll get a refund on the spot. These are hot right now. We can sell them to someone else pretty easy.”
You: “ok”
{At this point an in-game monetary transaction takes place.}

Here’s the fun part. Behind the scenes in this example something almost magical gets set in motion. The “Billboard” sends the order to the company’s purchasing department; in this example Wal*Mart. The thing is, Wal*Mart may not actually be selling this item when the order is placed (read the above exchange closely, it doesn’t actually say this is a product that’s already on the market). If they choose their words carefully, they could make it sound like they’re available, but in fact they’re just gathering orders, setting delivery times (“3 to 5 days”, “a week”, “within the next two weeks”, aso) and receiving bids from their vendors during this period.

So the original Entity might only be giving out those particular items within a particular time frame. After they give it to potential consumers, they move on to the next product. Those individuals who received a copy can pass it on to their friends because it’s free to copy and give away; a truly viral product. Only if no one “wears” it, then it’s not worth anything – virtual or real. And Wal*Mart’s investment – and loss – is minimal. If on the other hand people clothe their online avatars in this virtual article of clothing, then it might have real world potential, at which point the Brand Billboards go into action. They might go “live” for a week, and during this time track users who are actually using that particular piece of content. When it interacts with consumers, the artificial intelligence scales the options in its conversation with them to the product’s situation at that moment. Initially it might only offer someone an update via email since no one has actually placed an order. But later, when a pre-determined critical mass of interest is reached it starts offering the item for sale.

After they receive sufficient orders, the retail chain can then go out to suppliers and request bids. As the orders come in, bid requests and the bids themselves are updated. And when a predetermined deadline arrives, the automated system alerts Wal*Mart’s purchasing people who then approve a vendor, a price and all the rest. At that point, the data is dumped to the winning vendor, product is manufactured and shipped to the user’s location.

It’s coming folks. And it looks like it’s going to be the scariest smiley face gamers have seen since Stephen King’s Pennywise.