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VWC Viewpoints July 2007

Opportunities and Challenges in Virtual Worlds

Developments in virtual worlds may enhance or enable new forms of socialization, communication, entertainment, collaboration, and commerce in ways that would be difficult of impossible in real life.  Moderating the opportunities are a number of challenges that include the need to have substantial computing power, improve usability. deal appropriately with issues of identity and privacy, manage and control commercial brands, and develop new models of governance.  The opportunities and challenges ahead for virtual worlds will likely intertwine in ways that are not yet predictable but will likely result in successful business outcomes for individuals and organizations that are willing to explore, test, and develop new ideas in these virtual worlds as the technologies and related business models coevolve.

The growing popularity of virtual worlds - exemplified by Second Life (a visually rich, avatar-mediated three-dimensional virtual environment) and the massively multiplayer online game World of Warcraft - is fueling the development of new online planforms, technologies, and processes that may, in turn, enable new forms of socialization, communication, entertainment, collaboration, and commerce.  Like the virtual-reality systems that showed promise in the 1980s and 1990s, virtual worlds typically offer 3-D environments that users can "walk through" and explore, but the new systems have social and economic ramifications that were unheard of in previous decades.  Today's virtual worlds do not use virtual reality's cumbersome and expensive immersive hardware (such as head-mounted displays) and are unlikely to do so in the foreseeable future.  Instead, virtual world rely on server-side software, Internet communications, and client software running on desktop computers, consoles, and (potentially) handheld devices.  As a result, these worlds are accessible to mid- to high-end computer uses - enabling much greater participation than virtual-reality systems ever did.  Typical features of virtual worlds include avatars, real-time interaction among a large number of users, 3-D environments, in-world social activities, and tools for users to create in-world objects.  Some virtual worlds also support financial transactions, and Second Life and Entropia Universe have seen some individuals make sizable profits through in-world commerce (user-to-user transactions in Second Life are currently about $1 million per day).  Some virtual worlds are open, public, environments; others are closed, private, environments, with even-greater heterogeneity developing over time as various developers try different mixes of approaches and await for market acceptance.

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Opportunities and Challenges in Virtual Worlds