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SSE Charities in Virtual Worlds group4b
1. Charities in Virtual Worlds Live Case 02/07/2011 Group 4B – Emilie, Charlotta, Johan, Alexandra
2. Executive Summary Second Life (SL) is a virtual world (VW) where several charity organizations operate. The industry of charities in SL is characterized by strong supplier power, high threat of new entrants and substitutes as well as a medium power of buyers. In addition, the rivalry between industry participants is medium, and thus the profitability (i.e. ease of raising funds) of being in the industry are rather low for organizations only present in SL. Worth noting is that the presence in SL has several other benefits, such as reaching a global audience and acquiring members without geographical restrictions. The competitor analysis between Peace Train, American Cancer Society and Virtual Ability, which primary serves the purpose of benchmarking, reveals the resources and capabilities each organization possesses. Peace Train is an agile organization that is particularly strong at bridging the gap between individual avatars and small charity projects, but needs to find ways to decrease the dependence on SL. American Cancer Society has a strong brand image that attracts a large number of volunteers and donors. However, they need to work with their high administrative costs. Virtual Ability attaches its members on a personal level due to its SL activities for people with disabilities. They would benefit from increasing their marketing efforts on the internet. To sum up, in the future organizations within the industry should consider to migrate into other platforms, incorporate real life activities with virtual world presence, contribute to raising awareness of VWs and engage in strategic partnerships.
3. Industry analysis Charity Projects Linden Lab Bank Second Life Peoples Needs Peace Train Donors Artist Definition of the industry: The industry of charity organizations that operates primarily in Second Life (their “base” should be in Second Life, but they can have activities in the real world as well). They raise money in the Second Life and donate it to real life charity projects. Geographical Scope: Charity organizations from Europe/US (western world) and Asia
4. Porter´s 5 forces Second Life High switching costs Few substitutes Differentiated products Suppliers not dependent on charity organizations Linden Lab troubled1;2 Cancelled discount for charity organizations and education3 Artists Many substitutes High switching costs when signed High supplier power Donors Many potential donors – but limited to members of SL High price sensitivity - trust Small amount of money for each buyer Differentiated organizations/causes in SL Few switching costs Charity Projects RL organizations have Limited knowledge of virtual worlds Medium buyer power Buyer Power Supplier Power 1 http://www.welt.de/ 2 http://www.pcgames.de/ 3 Interview – Gentle Heron
5. Porter´s 5 forces Low capital requirements Low start up cost Low fixed cost Easy access to the internet Limited knowledge required WOM: SL unstable Government restrictions 501 C3 status applicable 1;2 High threat of new entrants Other experiences in SL Motivation behind “purchase” – donation or experience in SL? Charity org in other VWs. Real Life Charity Organizations On/offline Direct Personal donations Personal Engagement High threat of substitutes Threat of New Entrants Threat of Substitutes Large number of organizations of different size Low exit barriers Moral commitment Differentiated Causes Resource Sharing Four Bridges Medium Rivalry Rivalry 1 Interview S. Mahaley 2 www.wikipedia.org/wiki/501(c)
6. High Medium Low To run a charityorganization in SL isnotthat profitable monetarywise, butthepresencecanserveotherpurposes as raiseawareness etc. Porter´s 5 forces
7. Competitor Analysis: Strategic Groups Peacetrain ONLY SL SECOND Pride Virtual Ability LOCATION Veteransfor Peace BORDC WARChild Coalition of womenforpeace American Cancer Society RL & SL SMALL LARGE SIZE www.fourbridgesproject.org/orgs.aspx www.cancer.org www.nonprofitcommons.org www.fourbridgesproject.org
37. Tangible:Information Entered SL in 2005; build up own island in 2007 2000 members in SL (in 2008) Mission: ”…dedicated to eliminatingcancer...”. Why in SL? Reach a new communities & new markets Relay for Life (24hrs) most important event (since 2005), but expanded to other activities that span several months e.g Sail For Life; Fashion For Life Donations Relay for Life: USD 220 000 (in 2010); 1579 participating Avatars www.cancer.org www.relayforlife.org/secondlife
38. Interview S. Mahaley Interview GentleHeron www.relayforlife.org/secondlife https://www.portfolio.du.edu
39. The future Threats Opportunities Dependence on one platform Perceived distance Dependence on the knowledge of VWs Unorganized impression if a mixture of a large number of charity organizations Migration to new platforms in RL, 2D, 3D Incorporate RL activities with VW presence Exposure and WOM of VWs Strategic partnerships for mutual benefits
43. Teigland, R., “Born Virtuals and Avapreneurship: A Case Study of Achieving Successful Outcomes in Peace Train – a Second Life Organization”, JVWR, 2009.
Second Life: High concentration: Few virtual worlds in High switching costs: Users need to be moved, knowledge of how to perform their operations, get contacts, build brandDifferentiated products: The same activities could not be performed in another virtual worldSuppliers not dependent: SL dependent n active membership, but still the PT avatars are not different from anyone else in SL. Linden lab: Decreased the number of employees by 1/3 in 2010 as they were not sure about the future. Microsoft potential buyer. http://www.welt.de/wirtschaft/article7999480/Warum-keiner-mehr-Second-Life-haben-moechte.htmlArtists:Many sub: There are many sub, but a famous artist has power as it attracts more visitors. As the artist is signed, their power increases – PT advertises the specific event and is dependent on the artist showing up one time. Buyer Power:DonorsMany potential: But you have to be a member of SL – and thus also have a new computer, tech skilss etc. High price sensitivity: Wilingness to spend is lowe as its hard to investigate the credibility of the charity org. Differentiated: all org have different aims. Few swithcing cost: one time transaction. Charity projects: Individual projects have low power, but if organizations want to go through a RL org, the porwer increases as the org have limited knowledge about VWs.
New EntrantsLow capital: Only basic technological skills, new computer etc needed. Both start up costs as well as fixed cost.Government restrictions: Threat and opportunity. Makes the industry more credible. Barriers to enter is technology: “Entering Second Life requirestheinstallation of a large “client” programthat will onlyrun on a relatively modern computer (Windows, Mac orLinux), with a fast and stableconnection to theinternet. Giventhefinancialconstraintsthatmanynon-profitsoperatewithin, thiscanpresent a seriousstumbling block.“ (Panganiban 2007)Also newusersarealienatedbythelandscape. many, manypeopletry Second Life, getfrustratedordisoriented and thenleave, never to return. (Panganiban 2007)SubstitutesOther experiences: why are people donating? Exchange for an event or as a donation?RL charity org: Both off and online – in SL, but also internet campaign. Paypal payment? % that reach the target?Direct: If people want to donate – to homeless people etc in community. Personal engagement: People can feel that they donate their time. RivalryNo focus on price, as the different causes differentiates the organizations. The organizations share certain resources among them, as islands etc. Experiences in SL that are not hosted by charity org. Internet based campaigns: E.g. myspace campaigns
