Posts Tagged China

Boom Watch

While the summer olympics may put a spotlight on virtual goods because of China’s huge ambitions, signs of the coming boom are popping up everywhere. The most significant recent news concerns a virtual currency engine called Twofish Elements:

… users are looking for interactive experiences online that are too costly to be paid for by ads alone, so micro-transactions are the logical next step.

… That’s where Twofish Elements comes in, with an offer to help game companies optimize these transactions.

Its software is a plug-and-play platform, and is a sort of combination of web analytics and Paypal for games. Twofish watches what players do and helps create transaction steps to optimize revenue. It handles the micro-payments (even those from players overseas) and protects against the risk of fraud and chargebacks.

VentureBeat: TwoFish Elements launches for micro-transaction economies on the web and someday the web?

Twofish Elements, billed as a “turnkey solution” for companies with online worlds and game networks that want someone to handle in-game currency, micro-transactions and other features that comprise a virtual economy.

GigaOM: Virtual World Economy in a Box

It will be interesting to see how open this is and whether Linden Lab will enter this space any time soon. Technology News has a high level overview of virtual currency systems and I’ve rounded up some notable quotes dealing with virtual goods:

the business of selling virtual items that enable internet users to express themselves is booming. Over $2bn is spent on virtual items every year and I don’t think this is a trend to bet against. Disney certainly didn’t with its purchase of Club Penguin, which could be worth up to $700m.

And it was announced yesterday that Paramount has inked a deal with Habbo Hotel to create merchandise for one of Paramount’s upcoming movies.

e-Consultancy

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Server Commoditization & The Coming Boom

With a current close-up of a macro trend I’ve been tracking here over the past 18 months, Dave Winer hits the nail on the head driving home the impact of the commoditization of scalable servers:

Right now I can’t buy a Jabber server that scales without also hiring someone who will scale it for me. But in a few years I should be able to buy a Jabber server that, when it needs more CPUs, just asks for them all transparently to the user, the same way my word processor asks the OS for more memory today.

I remember word processors that didn’t do memory management, you got a 64K buffer and that’s it. One document. When you filled it up, you started another.

Technology will go forward and scaling won’t be a black art, it’ll be something built into the software you license.

Scaling is like memory management

On a related note, Dave has recently made some very good observations about the demise of the priesthood and need for a change in business model which puts more profit in the hands of content creators. I basically agree with these looks though I think they’re part of a much larger picture. Clearly, Second Life is showing the way and others like Facebook are diving into the new model, but it will take the energy and virtual world infrastructure China’s putting into the coming boom to bring about real change.

Related Links(Updated)

XMPP(a.k.a. Jabber) is the future for cloud services

XMPP Could Really Take Over The World

Gear Mesh: Power to the Peers

Power to the Prosumer

MJ Links on virtualization

Rhythmeering links on virtualization

Mind Mesh

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China and the Coming Boom in Virtual Property

Reading reBang’s When Retail Goes Virtual post about “the impact virtual worlds will almost certainly have on real world commerce.”, I was reminded of some links I hadn’t gotten around to posting yet:

American government officials and economists from Secretary of the Treasury Hank Paulson to Senator Chuck Shumer to Paul Kruger have focused on balance of trade issues with China, the RMB-USD exchange rate, and China’s huge foreign reserves. But few mainstream economists or Government officials have looked at new forms of currency emerging in China that already is beginning to greatly affect China’s underlying economy – virtual currency.

Investors should not fail to look at this sector. Xinhua News has reported that the volume of virtual currency has reached several hundred million USD a year in China. My firm estimates the size to grow 30% in 2007.

China’s Virtual, e-Commerce Currency – Seeking Alpha

reBang references an article from the Guardian which quotes Robert Lai, chief scientist of the Beijing Cyber Recreation District talking about virtual worlds capable of supporting billions of avatars(). The Chinese are VERY serious about the meshverse. The Guardian article goes on to say:

… this is a bold attempt to repeat what China has done in manufacturing (ie, conquering the world) in services. Be warned.

… At the moment, Britain and other western economies benefit from cheap Chinese manufactured goods and the low inflation they bring while also benefiting from huge wholesale, retail and distribution markups on the same goods. If they too migrate to China, what will there be left for us to do? That is a very serious question.

Virtual China looks for real benefits

Others have raised this very serious question:

  • Whether or not such e-commerce is even feasible may be a moot point. I feel it speaks volumes as to where the country is, culturally. Now, technology futurists are in a sense saying, “You will be able to point, click, and buy anything, just how you want it, directly from any factory in the world”—so much for “Buy American.” The Beijing Cyber Recreation District is being billed as a so-called “online counterpart” to Beijing’s China Recreation District, a physical, real-world endeavor that will boast entertainment and shopping; the center is set to open in time for the 2008 Olympics, according to the AP. And where will this new entertainment center be built? In an abandoned Chinese steel plant. Can’t you just feel the irony?

thefabricator: Point, click, buy anything — from anywhere

  • Need a new refrigerator or a pair of pants? Go window shopping (that is, in your Explorer window) online in a virtual world and then buy it directly from the factory in rural Asia where the item is made. That’s what the Chinese government is proposing. According to an Associated Press report (“China Plans Virtual World for Commerce,” October 15, 2007), China’s central government is methodically constructing a vast virtual world, dubbed the Beijing Cyber Recreation District.
    “Some supply-chain experts say the project is impossibly grandiose in its goal to provide direct links between tens of thousands of Chinese manufacturers and millions of individual customers around the world,” AP wrote. But if this turns out to be the surprise hit that no one has foreseen, PLM vendors may need to refashion their sourcing and supply-chain management features.

    CADalyst: CADfidential

The west is going to have to come up with some serious innovation to cope with this but the trends I’ve covered here such as Desktop Manufacturing and DIY Gone Wild indicate that this innovation is already underway. The above-mentioned reBang post is even more expansive.

China may have low cost labor but western desktop design & manufacturing entrepreneurs can ship from down the street and do meet-ups with both creative trend setters(music, fashion, sports) and customers. This competition will play a key role in driving demand for virtual property. The coming boom in virtual property will be more far reaching than the US/USSR space race.

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