I'm also slightly in awe of them.

I'm in awe of their power

in terms of imagination, in terms of technology,

in terms of concept.

But I think, above all,

I'm in awe at their power

to motivate, to compel us,

to transfix us,

like really nothing else we've ever invented

has quite done before.

And I think that we can learn some pretty amazing things

by looking at how we do this.

And in particular, I think we can learn things

about learning.

Now the video games industries

is far and away the fastest growing

of all modern media.

From about 10 billion in 1990,

it's worth 50 billion dollars globally today,

and it shows no sign of slowing down.

In four year's time,

it's estimated it'll be worth over 80 billion dollars.

That's about three times the recorded music industry.

This is pretty stunning,

but I don't think it's the most telling statistic of all.

The thing that really amazes me

is that, today,

people spend about

eight billion real dollars a year

buying virtual items

that only exist

inside video games.

This is a screenshot from the virtual game world, Entropia Universe.

Earlier this year,

a virtual asteroid in it

sold for 330,000 real dollars.

And this

is a Titan class ship

in the space game, EVE Online.

And this virtual object

takes 200 real people

about 56 days of real time to build,

plus countless thousands of hours

of effort before that.

And yet, many of these get built.

At the other end of the scale,

the game, Farmville, that you may well have heard of,

has 70 million players

around the world,

and most of these players

are playing it almost every day.

This may all sound

really quite alarming to some people,

an index of something worrying

or wrong in society.

But we're here for the good news,

and the good news is

that I think we can explore

why this very real human effort,

this very intense generation of value is occurring.

And by answering that question,

I think we can take something

extremely powerful away.

And I think the most interesting way

to think about how all this is going on

is in terms of rewards.

And specifically, it's in terms

of the very intense emotional rewards

that playing games offers to people,

both individually

and collectively.

Now if we look at what's going on in someone's head

when they are being engaged,

two quite different processes are occurring.

On the one hand, there's the wanting processes.

This is a bit like ambition and drive -- I'm going to do that. I'm going to work hard.

On the other hand, there's the liking processes,

fun and affection

and delight --

and an enormous flying beast with an orc on the back.

It's a really great image. It's pretty cool.

It's from the game World of Warcraft with more than 10 million players globally,

one of whom is me, another of whom is my wife.

And this kind of a world,

this vast flying beast you can ride around

shows why games are so very good

at doing both the wanting and the liking.

Because it's very powerful. It's pretty awesome.

It gives you great powers.

Your ambition is satisfied, but it's very beautiful.

It's a very great pleasure to fly around.

And so these combine to form

a very intense emotional engagement.

But this isn't the really interesting stuff.

The really interesting stuff about virtuality

is what you can measure with it.

Because what you can measure in virtuality

is everything.

Every single thing that every single person

who's ever played in a game has ever done can be measured.

The biggest games in the world today

are measuring more than one billion points of data

about their players, about what everybody does --

far more than detail than you'd ever get from any website.

And this allows something very special

to happen in games.

It's something called the reward schedule.

And by this, I mean looking

at what millions upon millions of people have done

and carefully calibrating the rate,

the nature, the type, the intensity of rewards in games

to keep them engaged

over staggering amounts of time and effort.

Now, to try and explain this

in sort of real terms,

I want to talk about a kind of task

that might fall to you in so many games.

Go and get a certain amount of a certain little game-y item.

Let's say, for the sake of argument,

my mission is to get 15 pies,

and I can get 15 pies

by killing these cute, little monsters.

Simple game quest.

Now you can think about this, if you like,

as a problem about boxes.

I've got to keep opening boxes.

I don't know what's inside them, until I open them.

And I go around opening box after box, until I've got 15 pies.

Now, if you take a game like Warcraft,

you can think about it, if you like,

as a great box-opening effort.

The game's just trying to get people to open about a million boxes,

getting better and better stuff in them.

This sounds immensely boring,

but games are able

to make this process

incredibly compelling.

And the way they do this

is through a combination of probability and data.

Let's think about probability.

If we want to engage someone

in the process of opening boxes to try and find pies.

We want to make sure it's neither too easy,

nor too difficult, to find a pie.

So what do you do? Well, you look at a million people --

no, 100 million people, 100 million box openers --

and you work out, if you make the pie rate

about 25 percent --

that's neither too frustrating, not too easy;

it keeps people engaged --

but of course, that's not all you do -- there's 15 pies.

Now, I could make a game called Piecraft,

where all you had to do was get a million pies,

or a thousand pies.

That would be very boring.

15 is a pretty optimal number.

You find the -- you know, between five and 20

is about the right number for keeping people going.

But we don't just have pies in the boxes.

There's a hundred percent up here.

And what we do is make sure that every time a box is opened,

there's something in it, some little reward,

that keeps people progressing and engaged.

In most adventure games,

it's a little bit in-game currency, a little bit experience,

but we don't just do that either.

We also say there's going to be loads of other items

of varying qualities and levels of excitement.

There's going to be a 10 percent chance you get a pretty good item.

There's going to be a 0.1 percent chance

you get an absolutely awesome item.

And each of these rewards is carefully calibrated to the item.

And also, we say,

'Well, how many monsters? Should I have the entire world full of a billion monsters?"

No, we want one or two monsters on the screen at any one time.

So I'm drawn on. It's not too easy, not too difficult.

So all this is very powerful.

But we're in virtuality; these aren't real boxes.

So we can do

some rather amazing things.

We notice, looking at all these people opening boxes,

That when people get to about 13 out of 15 pies,

their perception shifts, they start to get a bit bored, a bit testy.

They're not rational about probability.

They think this game is unfair.

It's not giving me my last two pies. I'm going to give up.

If they're real boxes, there's not much we can do,

but in a game we can just say, 'Right, well."

When you get to 13 pies, you've got 75 percent chance of getting a pie now.

Keep you engaged. Look at what people do --

adjust the world to match their expectation.

Our games don't always do this.

And one thing they certainly do at the moment

is, if you got a 0.1 percent awesome item,

they make very sure another one doesn't appear for a certain length of time

to keep the value, to keep it special.

And the point is really

that we evolved to be satisfied by the world

in particular ways.

Over tens and hundreds of thousands of years,

we evolved to find certain things stimulating,

and as very intelligent, civilized beings,

we're enormously stimulated by problem-solving and learning.

But now, we can reverse engineer that

and build worlds

that expressly tick our evolutionary boxes.

So what does all this mean in practice?

Well, I come up

with seven things

that, I think, show

how you can take these lessons from games

and use them outside of games.

The first one is very simple:

experience bars measuring progress --

something that's been talked about brilliantly

by people like Jesse Schell earlier this year.

It's already been done at the University of Indiana in the States, among other places,

It's the simple idea that, instead of grading people incrementally

in little bits and pieces,

you give them one profile character avatar

which is constantly progressing

in tiny, tiny, tiny little increments, which they feel are their own.

And everything comes towards that,

and they watch it creeping up, and they own that as it goes along.

Second, multiple long and short-term aims --

5,000 pies, boring,

15 pies, interesting.

So you give people

lots and lots of different tasks.

You say, it's about

doing 10 of these questions,

but another task

is turning up to 20 classes on time,

but another task is collaborating with other people,

another task is showing your working five times,

another task is hitting this particular target.

You break things down into these calibrated slices

that people can choose and do in parallel

to keep them engaged

and that you can use to point them

towards individually beneficial activities.

Third, you reward effort.

It's your 100 percent factor. Games are brilliant at this.

Every time you do something, you get credit, you a credit for trying.

You don't punish failure; you reward every little bit of effort --

your little bit of gold, your little bit of credit -- you've done 20 questions -- tick.

It all feeds in as minute reinforcement.

Fourth, feedback.

This is absolutely crucial,

and virtuality is dazzling at delivering this.

If you look at some of the most intractable problems in the world today

that we've been hearing amazing things about,

it's very, very hard for people to learn

if they cannot link consequences to actions.

Pollution, global warming, these things,

the consequences are distant in time and space.