Market Conditions and how they will effect us

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Permalink Reply by Gina on March 14, 2008 at 9:43pm

The economy is going into recession to be sure, if not already there. People however always need entertainment, so when they can't afford to go out - they go online. That $50 to take the fam to the movies would go a long way on IMVU, the less savvy will hit the video store - but alas, people need diversion and will spend for entertainment - from home - in the worst of times.

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Permalink Reply by Bigpolepete on March 15, 2008 at 6:31am

recessions will always happen whether in the real world or the global virtuel worlds, but where as in the real world goverments have plans and resurves to lessen the impact and help the recovery from recession how many virtual worlds have the resurves and capabilitys to do this ?

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Permalink Reply by moonlitpanther on March 15, 2008 at 7:19am

We may not have a government to bail us out, but we can survive any form of recession. We may not be able to buy as many new credits as normal, but as long as we can keep the existing credits in circulation, we will be okay until the economy bounces back. Of course, in IMVU, they make that difficult, by taking their cut whenever they can, but it is workable. For example, custom work. Whether avatar/graphics art, or special requests and custom items, any time where the customer pays you direct, you are promoting interest in the game (which could be lost during difficult times) and maintaining current credit levels in the system. Direct sales aren't the ideal way to go, because you only make about 10% of the credits spent, therefore 90% are taken out of the system.
As long as there is not a shortage of credits with no one willing or able to buy them, we will be okay. It may be slower sales-wise, but as long as we do not shut down entirely, and find new avenues of virtual income, we will survive.
(This of course does not cover other aspects of recession, such as cutting off your internet to free up more income, but the internet has become such a necessity to so many, I do not see that as a major problem.)

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Permalink Reply by ChickaFlicka on March 15, 2008 at 8:09am

I would be curious to learn how other VW's are effected by fluxuations in the RW economy.

I never pay much attention to the stock market, unless Goose runs down the hallway saying "Gold is up!" and even then I wonder if he is referring to Everquest II - LOL - oh wait...they do the "silver and plats" thing there...don't they?

At any rate...any AVW members...have you seen any notable changes?

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Permalink Reply by Gina on March 15, 2008 at 10:09pm

Only since IMVU screwed up the catalog, LOL

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Permalink Reply by Dave Elchoness on March 15, 2008 at 10:37pm

Virtual worlds are a diverse bunch. So it may be that some people spend less on entertainment in virtual worlds, but it may also be that companies with tighter travel budgets, looking for cheaper labor markets, and striving to reduce their carbon footprint increase spend on virtual worlds to enhance employee relations and engagement, while reducing air travel. I think that one needs to be nimble in any economy and this applies in virtual worlds or not. So consider -- if you spend your time today creating clothing in a virtual world for entertainment, maybe tomorrow you develop apps or some other service geared towards real life businesses using virtual worlds. The thing is that virtual worlds are ultimately a communications medium, so the economy I think isn't a determining factor of whether they will succeed. In a great economy, we talk on the phone telling our friends that we killed in the stock market. In a lousy economy, on the same telephone, we tell our friends how we got killed in the stock market. My two cents. d

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Permalink Reply by Goose on March 15, 2008 at 10:42pm

Very good points Dave.

I don't especially remember hard times online back in 2000, 2001. Not in the gaming end/ making money online etc.

It was just business as usual.

I think maybe as many people constrict and leave because of economic uncertainty there are as many coming in, looking for new things to do and spend time doing.

I hope this is the case .

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Permalink Reply by Dave Elchoness on March 15, 2008 at 10:48pm

Yes, the mindset changes. That's for sure. But -- the value of this medium is clear, and its applications are so diverse, it won't go away. My suggestion is to look around you and at others in this network. You have games, entertainments worlds, MMORPGs, business worlds, kids worlds, social networks, etc etc represented. We need to realize that the forum we like best is not the entire industry and that opportunity abounds.

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Permalink Reply by Gina on March 16, 2008 at 8:46am

One of the best examples of this change of mindset would be e-learning. At many educational institutions, e-learning income exceeds brick and mortar tuition. This was embraced merely out of convenience, the world has gotten too busy with far too many demands on us all. After a long workday people do not want to drive somewhere and sit in a classroom. Taking the class virtually from home, especially those where they may complete the work at their own convenience are especially palatable. Due to the dire state of our own local school system, my daughter attends high school online in a competely interactive environment, video conferences with her teacher once a week, does college courses online as electives, and is GPA 4.0 receiving a superior education, at 1/3 the price of any private school offerings in our area. E-learning is a great success story. Even in the simplest moments of needing information, do you drive to the library? Or hit google?

Corporate America has been slow to grasp and explore available technology to take those cost cutting measures where meetings could be held virtually, rather than adding up the frequent flier miles. Face to face is important and we do now have superior video conferencing tools to allow a rich user experience, along with doc sharing and all needed to conduct a meeting just as they would have in a board room. Japan is leagues ahead with their government having required an estimated 20 million of its workforce work virtually from home at least one day a week within the next 10 years. Corporate America has diverted their call centers to overseas or mom's working from home in their bunny slippers, but have a long way to go in exploring and embracing available collaborative technology. Some of this stems from bandwidth and our infrastructure being outdated, we started the internet as a dirt road and a lot of that dirt road is still out there, with many still surfing on copper and some on dial up. Some other countries are leagues ahead, having adopted the internet later, flying all on fiber optics. While we do need upgrades, corporate America needs education of available technologies. Given Japan's government decision, perhaps a VR Consortium lobbying Congress for similar legislation would be in order. It's green ecologically and green in dollars saved.

The economy at home; people will certainly drive less when possible, stretch meals and curtail a lot of entertainment and indulgences such as movies, shows and concerts and dining out. But they will not sit at home and stare at the walls either. In the worst of times, people need entertainment moreso than ever. On a budget, virtual entertainment wins hands down over outings. As I previsouly noted, that $50 to take the family to a movie will go a very long way in virtual worlds in comparison.

So far as the 'kids' NB, as a mom I disagree, parents always want their children to have more than they had, And sadly where most parents now both work, love has become the latest game system. They all get handed their first cell phone by 6th grade with the iPod close behind. The parents will cut their own budgets back to give their childen what they want and need first. We certainly do. The teen scene is probably the biggest consumer graphic, any woman over 30 shopping can attest how hard it is to find age apropriate clothes - all is geared toward the kids. To illustrate best example in your own life, I will wager that like most everyone else, you have cut your Christmas shopping list - you have cut the adults to gift only the children. I see online gaming and virtual worlds remaining strong for the younger set, people need happy kids and are not going to take that away from them.

Life online will only continue to grow, whether for work, socialization or entertainment. A bad economy will actually help as it is a more economical medium for all.

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Permalink Reply by sinsual on March 17, 2008 at 3:11am

I actually think that the state of the economy will prove a boon for virtual worlds. I think we'd all agree that the virtual world existence is extremely addictive. Even more so, I believe, for individuals who seek an escape from the reality of their actual day-to-day lives for whatever reason, financial straits, relationship drama, job stress, self esteem issues, etc.,

There is a large population of users who enjoy the anonymous safety of their virtual world existence because it enables them to create the life they would like to live, or even to simply experiment with different lifestyles or self manifestations that they would not comfortably embrace or express in their out world lives.

As the economic circumstances become more dire for people, they are even more likely to seek this anonymous escape to a world where they can be beautiful or handsome, self-assured, popular and wealthy for the relatively minuscule monthly expenditure of $50 or even less.

I've read people post on the IMVU forums that they shaved their food budget to be able to afford their virtual world fun. Granted that's a bit extreme, but I think it's actually a true representation of how important this opportunity to escape to fantasy ranks in the minds of some people who are probably not a minority population. These individuals will find the $50 per month to fund their escape even if it means doing without or doing with less of something else that would normally be included in their budgets.

Women can dress like Ivanna Trump when the cost of a new dress is less than $1.00 and an entire sumptuous outfit is attainable for less than $3.00. In the fantasy escape of virtual worlds people can own islands and jet planes and yachts and dozens of beautifully landscaped pool scenes that they can share with hundreds of people from all over the world who view them as the image they choose to create for less than the cost of a monthly cable TV subscription.

I speculate that increasingly more people, in fact, more and more each day will find this escape from reality to be a much more gratifying expenditure of their more and more precious dollars than the cost of that cable TV subscription where they can not actively participate in the fantasies played out on a TV screen that they would view as an outside observerm

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Permalink Reply by feathergoblinglimmer on March 17, 2008 at 11:39am

I think that the VW's will be alright. I think as others have said there will be a reflection of world economics in the virtual worlds but then whether thats to its benefit or not i await to see.

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Permalink Reply by Tora Kuo on March 16, 2008 at 3:36am

As I see it, part of the issue in a recession, is the fact that the more people feel as if they are being constricted, the more they tighten the purse strings. This in turn leads to less money flowing in the system, and therefore, again, driving prices up, which in turn causes more purse tightening.

For people that are involved in virtual worlds online, the economy will have an impact, but as Dave says, even businesses, and people with by far more money and time on their hands will always be around to feed into the system, keeping it going when others whom are less fortunate are tightening their purse strings and keeping their wallets in their pockets.

It would be foolhardy to think that the real world economy won't affect virtual world spending when it comes to real cash, but it's also just as important to remember, that those that use it for any purpose are going to be hard pressed to step away from it and lump it with the non-necessities.

I agree that if it's just the kids online messing with the virtual world of choice, then the parents might put the foot down and deem it's time for them to go mow some lawns for their creds to spend. So even then, the kids market might slow down, but it's not necessarily going to grind to a halt.

As for the adult sites, well, adults are an ornery bunch that won't be denied their diversions, so yeah, there's that. When people want something... They want it. Period. Especially when they're addicted to something the way that VWs addict people, they're going to get it no matter what. They'll just budget their virtual spending better... I.E. won't spend as much at one time, and likely won't buy as many credits... But they'll still buy credits... Things will slow down, but it's not going to crash. Even if the stock market does.

This is a fact that people never seem to think about. Very heavy hitting economies... Very rich nations... Large organizations got started way before the stock market existed. The stock market isn't the only factor in an economy. Business as usual doesn't require investors. They just tend to make it easier to reach profitability and/or fund projects.

There are plenty of applications for virtual worlds. The thing that Dave pointed out that is of paramount importance for people to take from this, is that virtual businesses need to be flexible in what Goose is calling a Bear market, and not be stuck in doing the one thing they've always done when they start noticing the profits from it tank.

Seek out other markets. This is somewhat contrary to what I say about "a machine that does everything generally does nothing well", but it's also a point that it's possible to make a shift from doing one thing, and creating a new division that does nothing but something else, to supplement the first. A sort of creating "multiple streams" rather than relying on one big river, when someone plans on building a damn up the way.

Just my take. If it makes sense, lol.

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