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  1. 1. 1<br />Higher education in Virtual Worlds- Industry and Competitor Analysis in Europe/USGroup 3aFebruary 7, 2011<br />1<br />
  2. 2. 2<br />Contents<br /><ul><li>Higher Education in VWs
  3. 3. Case Study VWET
  4. 4. Industry Analysis
  5. 5. Conclusions, thoughts and recommendations
  6. 6. References</li></ul>2<br />
  7. 7. 3<br />3<br />Executive Summary <br /><ul><li>Support-centered companies are needed because of the complexity of many of these VWs. This industry works as a middle man between the VW technology and the institutes wishing to expand their educational borders towards a 3D virtual world.
  8. 8. The bargaining power of buyers (universities, governments, organizations) is medium but are expected to decrease due to external trends.
  9. 9. The bargaining power of suppliers (3D VW’s, open source frameworks) is low but are expected to increase due to technological advances in the near future.
  10. 10. The threat of substitutes (2D platforms, e-learning) is high but are expected to decrease due to higher acceptance of the use of 3D virtual platforms and consumer requirements.
  11. 11. The barriers to entry (relationships, know-how) are at the moment medium and are expected to decrease because of better integration and availability of technology.
  12. 12. The key success factors for the industry are: good use of mobile internet devices, Relevant contacts/ networking and on long term, develop a strategic focus.
  13. 13. Future predictions point towards learning, social interaction and entertainment will become integrated; growing share of user-generated content and self-created platforms; freemium models
  14. 14. Social media/</li></li></ul><li>4<br />Higher Education in VWs - General Information <br /><ul><li>Higher Education in Virtual 3D Worlds
  15. 15. Higher Education in Virtual World’s can be divided into two main strategies based on the platforms:</li></ul>Non-specialized<br />Specialized<br />Virtual Worlds with optional eLearning possibilities<br />Virtual Worlds that have eLearning as their single purpose<br />e.g. Second Life<br />e.g. OLIVE<br />Sponsor interviews <br />4<br />
  16. 16. Higher Education in VWs - Value chain<br />3D VW Platforms<br />Recipients<br />Org with education and/or training<br />Internet Server Software<br />5<br /><ul><li>Second Life
  17. 17. Active Worlds
  18. 18. OLIVE
  19. 19. Universities
  20. 20. Governments
  21. 21. Organizations
  22. 22. ReactionGrid
  23. 23. 3rd Rock
  24. 24. VWET
  25. 25. Students
  26. 26. Employees</li></ul>3D VW and education consultants<br /><ul><li>OpenSimulator
  27. 27. Croquet Consortium</li></ul>“Support-centered companies focused on helping universities, organizations and other institutions for educational and business usage of virtual 3D environments”<br />Warburtson, S, 2009; OpenSim Grids; 3D Virtual Worlds List<br />
  28. 28. 6<br />Case Study: Virtual World Education Technologies (VWET)<br />“Virtual Worlds are still new, they are still developing, people are still not comfortable with it” (quote J.F.)<br /><ul><li>Support-centered company
  29. 29. Use SL as one of their environments
  30. 30. Designed own platform as well, making them a VR provider
  31. 31. Currently support some of the most forward thinking institutions in SL
  32. 32. Biggest competitive advantage: “Clients are still acquired face-to-face, not only virtually”
  33. 33. Committed to providing the highest quality environment and support for educators working to provide educators with a viable option to current platforms</li></ul>“ESMG/VWET offers the kind of service and support that makes the<br />transition from real life to virtual life almost effortless”<br />Sponsor interviews,<br />
  34. 34. 7<br />Industry Analysis – Porter’s Five Forces<br />Buyers<br /><ul><li>Universities
  35. 35. Organizations
  36. 36. Governmental institutions</li></ul>Bargaining Power of Buyers<br />(-) More buyers than sellers<br />(-) Quality vital for the buyer<br />(-) High switching cost<br />(-) Seldom negotiate<br />(+) Possibility of backward integration (create own platforms)<br />(+) Complementary element (Change in the future)<br />MEDIUM<br />Suppliers<br /><ul><li>VW Platforms
  37. 37. Open source frameworks</li></ul>Bargaining Power of Supplier<br />(-) High ability by industry buyers to do backward vertical integration (create own platforms)<br />(-) Supplied products (platforms) are undifferentiated<br />(-) Many suppliers<br />LOW<br /> Sponsor interviews, Porter (2008)<br />7<br />
  38. 38. 8<br />Industry Analysis – Porter’s Five Forces<br />Substitutes<br /><ul><li>2D-platforms
  39. 39. E-learning</li></ul>Threat of Substitutes<br />(+) Similar functions<br />(+) Socio-cultural beliefs (Traditionalism)<br />HIGH<br />MEDIUM<br />Barriers to Entry<br /><ul><li>Relationships
  40. 40. Knowledge/</li></ul> know how<br />(-) Low capital requirements<br />(+) High switching cost for buyers<br />(-) Low product differentiation<br />(-) No legal/regulatory Barriers<br />(+) A few companies have a first mover advantage likely to change<br />Sponsor interviews, Porter (2008)<br />8<br />
  41. 41. 9<br />Industry Analysis – Porter’s Five Forces<br />Rivalry<br />(+) Equally balanced competitors<br />(-) High industry growth<br />(-) Low fixed costs low exit barrier<br />(-) Possibility of strategic differentiation in strategy<br />(-) High profit potential<br />LOW<br />:Sponsor interviews, Porter (2008)<br />9<br />
  42. 42. 10<br />Industry Analysis – STEEP Analysis Europe<br /><ul><li>Larger acceptance towards VW (games)
  43. 43. Social media integration
  44. 44. Large linguistic and cultural diversity</li></ul>Social<br /><ul><li>Mobile internet usage 40% in 2014
  45. 45. Fiber-based network in all Europe by 2020</li></ul>Technological<br /><ul><li>Currently slow GDP growth in EU crisis
  46. 46. Students suffer rising tuition fees, primarily in the UK </li></ul>Economical<br /><ul><li>Large attitudinal differencies between countries about of climate change. </li></ul>Environmental<br /><ul><li>Joint effort within EU to improve bandwith
  47. 47. Central decision on R&D and harmonization</li></ul>Political<br />Internet sources: ”STEEP”<br />10<br />
  48. 48. 11<br />Industry Analysis – Overview<br />11<br />Sponsor interviews, Internet sources; STEEP<br />
  49. 49. 12<br />Industry Analysis – Key Success Factors<br />What do users want?<br />How do we survive competition?<br /><ul><li>Good understanding of institution/organization
  50. 50. Ease of use
  51. 51. Adaptability
  52. 52. Proximity to IRL relationships to peers, teachers etc.
  53. 53. Technical functionality
  54. 54. Training of/ communication with buyers
  55. 55. Acknowledgement among institutions for higher education</li></ul>KEY SUCCESS FACTORS<br /><ul><li>Social media/ OER integration
  56. 56. Good use of mobile internet devices
  57. 57. Relevant contacts/ networking
  58. 58. On LT, develop a strategic focus</li></ul>Sponsor interviews,<br />12<br />
  59. 59. 13<br />Industry Analysis – Future Predictions<br /><ul><li>Learning, social interaction and entertainment´become integrated
  60. 60. Growing share of user-generated content and platforms where educators can build their own environment
  61. 61. Freemium models/ larger proportion of free material </li></ul>, Sponsor interviews<br />
  62. 62. 14<br />Conclusions<br /><ul><li>Applying Porter’s 5 Forces and a STEEP analysis on the industry for Higher Education in Virtual Worlds reveals its rising importance and potential of growth
  63. 63. While the threat of substitutes is high, the bargaining power of buyers and the barriers to entry can be categorized as medium
  64. 64. Rivalry within the industry and the bargaining power of suppliers (VW platforms) on the other hand, appear to be relatively low indicating potential for companies involved
  65. 65. This is supported by the STEEP analysis which reveals support amongst all factors (e.g. future technological developments and social acceptance of VW:s)
  66. 66. Therefore it can be concluded that Higher Education in Virtual Worlds will play an important role in future learning and – as an industry – offers opportunities of profitability</li></ul>14<br />
  67. 67. 15<br />Sources<br />Warburtson, S; Second Life in higher education: Assessing the potential for and the barriers to deploying virtual worlds in learning and teaching, British Journal of Educational Technology, Vol 40 No 3, 2009<br />Interview John Fennessy, 2011-01-31<br />Interview Jeroen van Veen, 2011-01-28<br />Interview Steve Mahaley, 2011-02-04<br />Interview Erik Wallin, 2011-02-02<br /><br />OpenSimGrids,, 2011-02-05 <br />3D Virtual Worlds List,, 2011-02-05<br /><br />Porter, M.E., “The Five Competitive Forces that Shape Competitive Strategy”, HBR, 2008. <br />STEEP<br /> <br /> <br /> <br /> <br /> <br /> <br /> <br /> <br />15<br />