A new and perhaps underestimated market is emerging from virtual reality into the real-world global economy - a market which has gained much marketing attention, except in the financial services sector, according to TowerGroup.
This new market is driven by the popularity of "massively multiplayer online role playing games" (MMORPGs) and online "virtual social worlds" (VSWs) - such as the popular Second Life - where the lines between online and offline commerce are rapidly blurring.
The latest research from TowerGroup found that, in 2005, online (non-travel) sales exceeded US$83 billion, of which virtual social worlds contributed an amazing US$1.5 billion.
As these MMORPGs quickly develop into complete online economic systems, TowerGroup forecasts that the "real world" revenue they generate will reach US$2.5 billion in 2006, and that the market will grow to 40 million people spending US$9 billion annually by 2010.
These virtual games include complete social and economic systems for which players use specialised browsers to engage in a virtual life. Each game provides the potential of interacting with multiple players simultaneously, and on a global basis.
Retailers already on-board
Major brands such as Levi and Nike have already seized the opportunity to engage millions of paying consumers in these complete economic and social systems, which are replete with virtual currencies that can be traded for real world cash in currency exchanges.
Wells Fargo has launched an educational MMORPG, called Stagecoach Island, to address financial training by making a learning game out of ATM, deposit, or payment services. However, TowerGroup warns that most financial services institutions have either ignored these thriving marketplaces, or have relegated marketing efforts to banner advertising or online links.
TowerGroup believes that by reallocating funds from existing marketing, advertising, and R&D budgets, firms like financial service providers can put themselves at the forefront of these emerging markets.
The report, Online Social Worlds as Emerging Markets: A Dose of (Virtual) Reality, was written by Rodney Nelsestuen, a senior analyst in the cross-industry practice at TowerGroup, and discusses why financial institutions should take MMORPGs and VSWs seriously as an emerging global marketplace.
But Nelsestuen's research also highlights the importance of understanding the risks involved in conducting business in the unsettled and changing territory of virtual social worlds.