The virtual world model -- is a variant of the community business model. For Linden Lab, this model works directly. The benefit for ABC is not to derive revenue from the community, but to become a part of the community and develop the two-way traffic flow. It remains to be seen how viable this tactic is as an eBusiness strategy as it is an emerging concept. It is essentially a form of public broadcasting, but it relies on the two-way traffic flow to bring customers out of the virtual world into one were ABC can gained revenue directly.
At the beginning of March, 2009, global media outlet Reuters closed its Second Life bureau (Reuters, 2009). The company had utilized only a couple of writers at the bureau, and reported primarily on happenings within the virtual world. The departure was explained as a reaction to the stagnant user growth of the first ae of 2008 (Krangel, 2008).
There were few strengths with respect to Reuters virtual world presence. One was that the company maintained strong brand continuity. The Reuters reflected in Second Life was an accurate representation of Reuters in the real world.
In terms of weaknesses, there were several. One was that the Reuters presence in the virtual world was not tied to any overall corporate objective. They reported on events in the virtual world but by segregating their virtual and real world operations they failed to drive traffic between the two. This relates to the second weakness, in that Reuters did not have a discernable purpose in the virtual world. They performed their same base function, but this did not have any virtual or real world revenue generating potential. Moreover, Reuters has a weak real world presence -- they have a respected brand but one since they have few proprietary media properties they are less able to engage in real/virtual world cross-promotion in the way the ABC does.
There were opportunities inherent with the Reuters involvement in the virtual world. They could have used their presence to raise their profile among consumers, and to communicate their brand proposition. Reuters could have used the virtual world to reflect real world event, which ultimately are of more relevance to virtual world members than the events in the virtual world. Another opportunity was to build a strong virtual world presence. If Reuters could have established its brand in Second Life, and if Second Life experienced strong user growth, Reuters could effectively have a strong virtual market share, one that could have translate in part over to the real world.
In terms of threats, there were many. Aside from the overall structural threats that also apply to ABC, there was intense threat of competition. There are few barriers to entry in the virtual world, so competitors from all over the world to set up. Given the relatively low traffic in Second Life, this puts the Reuters presence in front of very few eyeballs, dramatically reducing the potential benefits of presence.
One of the reasons that Reuters left the virtual world was that there is no viable eBusiness model in that world. As ABC has learned, the most viable eBusiness model is to drive traffic back to the real world. Reuters' original entry into the virtual world, however, was to experiment with the concept and discern the possibilities. They were reporting on virtual world events primarily. This was not a revenue generating activity and had no hope of becoming one. Reuters' separation between the virtual world and the real world precluded any viable eBusiness model, as no model has been successfully adapted to a virtual world with its own virtual currency.
Winterford, Brett. (2007). Virtual Worlds a Risky Bet for Business? ZDNet Australia. Retrieved April 16, 2009 from http://www.zdnet.com.au/insight/security/soa/Virtual-worlds-a-risky-bet-for-big-business-/0,139023764,339281415,00.htm
ABC Island in Second Life. (2009). Australian Broadcasting Corporation. Retrieved April 16, 2009 from http://www.abc.net.au/services/secondlife/
Wagner, James Au. (2009). Exclusive: Second Life Starts to Grow Again. Gigaom. Retrieved April 16, 2009 from http://gigaom.com/2009/04/15/exclusive-internal-second-life-data-shows-returning-growth/
Reuters Second Life page. (2009). Retrieved April 16, 2009 from http://secondlife.reuters.com/
Krangel, Eric. (2008). Why Reuters Left Second Life, and how Linden Lab can Fix it. Silicon Alley Insider. Retrieved April 16, 2009 from…
Threat of New Entrants -- Medium
Supplier Power -- Medium
Buyer Power -- High
Threat of Substitute Products - Low
Competition -- High
Qantas's Strategy for Competitive Advantage
Finding New Innovation
Threat of New Entrants -- Medium
Australia has deemed that it is good for the public if any international airline that is foreign owned is allowed to operate in Australia's domestic markets. While this may be good for the overall level of