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    1. 1. Higher education in Virtual Worlds - Industry and Competitor Analysis in Europe/US Group 3a February 7, 2011
    2. 2. <ul><li>Higher Education in VWs </li></ul><ul><li>Case Study VWET </li></ul><ul><li>Industry Analysis </li></ul><ul><li>Conclusions, thoughts and recommendations </li></ul><ul><li>References </li></ul>Contents
    3. 3. Executive Summary <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. </li></ul><ul><li>The bargaining power of buyers (universities, governments, organizations) is medium but are expected to decrease due to external trends. </li></ul><ul><li>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. </li></ul><ul><li>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. </li></ul><ul><li>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. </li></ul><ul><li>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. </li></ul><ul><li>Future predictions point towards learning, social interaction and entertainment will become integrated; growing share of user-generated content and self-created platforms; freemium models </li></ul><ul><li>Social media/ </li></ul>
    4. 4. Higher Education in VWs - General Information <ul><li>Higher Education in Virtual 3D Worlds </li></ul><ul><li>Higher Education in Virtual World’s can be divided into two main strategies based on the platforms: </li></ul>Sponsor interviews Virtual Worlds with optional eLearning possibilities Virtual Worlds that have eLearning as their single purpose e.g. Second Life e.g. OLIVE
    5. 5. Higher Education in VWs - Value chain Internet Server Software 3D VW Platforms Org with education and/or training Recipients <ul><li>Second Life </li></ul><ul><li>Active Worlds </li></ul><ul><li>OLIVE </li></ul><ul><li>OpenSimulator </li></ul><ul><li>Croquet Consortium </li></ul><ul><li>Universities </li></ul><ul><li>Governments </li></ul><ul><li>Organizations </li></ul><ul><li>Students </li></ul><ul><li>Employees </li></ul>“ Support-centered companies focused on helping universities, organizations and other institutions for educational and business usage of virtual 3D environments” Warburtson, S, 2009; OpenSim Grids; 3D Virtual Worlds List <ul><li>ReactionGrid </li></ul><ul><li>3 rd Rock </li></ul><ul><li>VWET </li></ul>3D VW and education consultants
    6. 6. <ul><li>“ Virtual Worlds are still new, they are still developing, people are still not comfortable with it” (quote J.F.) </li></ul>Case Study : Virtual World Education Technologies (VWET) “ ESMG/VWET offers the kind of service and support that makes the transition from real life to virtual life almost effortless” <ul><li>Support-centered company </li></ul><ul><li>Use SL as one of their environments </li></ul><ul><li>Designed own platform as well, making them a VR provider </li></ul><ul><li>Currently support some of the most forward thinking institutions in SL </li></ul><ul><li>Biggest competitive advantage: “Clients are still acquired face-to-face, not only virtually” </li></ul><ul><li>Committed to providing the highest quality environment and support for educators working to provide educators with a viable option to current platforms </li></ul>Sponsor interviews,
    7. 7. Industry Analysis – Porter’s Five Forces Bargaining Power of Buyers (-) More buyers than sellers (-) Quality vital for the buyer (-) High switching cost (-) Seldom negotiate (+) Possibility of backward integration (create own platforms) (+) Complementary element (Change in the future) MEDIUM Bargaining Power of Supplier (-) High ability by industry buyers to do backward vertical integration (create own platforms) (-) Supplied products (platforms) are undifferentiated (-) Many suppliers LOW Sponsor interviews, Porter (2008) <ul><li>Buyers </li></ul><ul><li>Universities </li></ul><ul><li>Organizations </li></ul><ul><li>Governmental institutions </li></ul><ul><li>Suppliers </li></ul><ul><li>VW Platforms </li></ul><ul><li>Open source frameworks </li></ul>
    8. 8. Industry Analysis – Porter’s Five Forces (-) Low capital requirements (+) High switching cost for buyers (-) Low product differentiation (-) No legal/regulatory Barriers (+) A few companies have a first mover advantage  likely to change Threat of Substitutes (+) Similar functions (+) Socio-cultural beliefs (Traditionalism) Sponsor interviews, Porter (2008) <ul><li>Substitutes </li></ul><ul><li>2D-platforms </li></ul><ul><li>E-learning </li></ul><ul><li>Barriers to Entry </li></ul><ul><li>Relationships </li></ul><ul><li>Knowledge/ </li></ul><ul><li>know how </li></ul>HIGH MEDIUM
    9. 9. Industry Analysis – Porter’s Five Forces (+) Equally balanced competitors (-) High industry growth (-) Low fixed costs  low exit barrier (-) Possibility of strategic differentiation in strategy (-) High profit potential :Sponsor interviews, Porter (2008) Rivalry LOW
    10. 10. Industry Analysis – STEEP Analysis Europe <ul><li>Larger acceptance towards VW (games) </li></ul><ul><li>Social media integration </li></ul><ul><li>Large linguistic and cultural diversity </li></ul><ul><li>Mobile internet usage 40% in 2014 </li></ul><ul><li>Fiber-based network in all Europe by 2020 </li></ul><ul><li>Currently slow GDP growth in EU crisis </li></ul><ul><li>Students suffer rising tuition fees, primarily in the UK </li></ul><ul><li>Large attitudinal differencies between countries about of climate change . </li></ul><ul><li>Joint effort within EU to improve bandwith </li></ul><ul><li>Central decision on R&D and harmonization </li></ul>Internet sources: ”STEEP” Economical Environmental Social Technological Political
    11. 11. Industry Analysis – Overview Sponsor interviews, Internet sources; STEEP Bargaining Power of Suppliers Threat of Potential Entrants Bargaining Power of Buyers Threat of Substitutes Rivalry Between Competitors Political Economic Socio-cultural Traditionalism Technological Environmental Legal Bargaining Power of Suppliers Threat of Potential Entrants Bargaining Power of Buyers Threat of Substitutes Rivalry Between Competitors Socio-cultural Social media integration  new types of competitors Large accep-tance for VW and distance learning Improved attitute for VW interaction /social media int.  Industry growth make room for more players Technological Higher demand for suppliers’ high-tech Tech dev. will make it more accessible and attractive Higher user requirements on prestanda, mobility, etc Lower demand for substitutes mentioned <ul><li>New </li></ul><ul><li>types of competitors, wide- spread usage of tech </li></ul>Economic Somewhat affected by national GDP Tuition fees rising  Unsure effect Environmental Increasing environmental consciousness  Promotes industry growth Political EU-wide investments in R&D Joint effort within EU on bandwidth  Lower barriers  More competitive landscape
    12. 12. Industry Analysis – Key Success Factors What do users want? How do we survive competition? KEY SUCCESS FACTORS <ul><li>Good understanding of institution/organization </li></ul><ul><li>Ease of use </li></ul><ul><li>Adaptability </li></ul><ul><li>Proximity to IRL relationships to peers, teachers etc . </li></ul><ul><li>Social media/ OER integration </li></ul><ul><li>Good use of mobile internet devices </li></ul><ul><li>Relevant contacts/ networking </li></ul><ul><li>On LT, develop a strategic focus </li></ul>Sponsor interviews, <ul><li>Technical functionality </li></ul><ul><li>Training of/ communication with buyers </li></ul><ul><li>Acknowledgement among institutions for higher education </li></ul>
    13. 13. Industry Analysis – Future Predictions <ul><li>Learning, social interaction and entertainment´become integrated </li></ul><ul><li>Growing share of user-generated content and platforms where educators can build their own environment </li></ul><ul><li>Freemium models/ larger proportion of free material </li></ul> , Sponsor interviews
    14. 14. Conclusions <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 </li></ul><ul><li>While the threat of substitutes is high, the bargaining power of buyers and the barriers to entry can be categorized as medium </li></ul><ul><li>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 </li></ul><ul><li>This is supported by the STEEP analysis which reveals support amongst all factors (e.g. future technological developments and social acceptance of VW:s) </li></ul><ul><li>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>
    15. 15. Sources <ul><li>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 </li></ul><ul><li>Interview John Fennessy, 2011-01-31 </li></ul><ul><li>Interview Jeroen van Veen, 2011-01-28 </li></ul><ul><li>Interview Steve Mahaley, 2011-02-04 </li></ul><ul><li>Interview Erik Wallin, 2011-02-02 </li></ul><ul><li> </li></ul><ul><li>OpenSim Grids, , 2011-02-05 </li></ul><ul><li>3D Virtual Worlds List, , 2011-02-05 </li></ul><ul><li> </li></ul><ul><li>Porter, M.E., “The Five Competitive Forces that Shape Competitive Strategy”, HBR , 2008. </li></ul><ul><li>STEEP </li></ul><ul><li>http :// 2011-02-05 </li></ul><ul><li>http :// 2011-02-05 </li></ul><ul><li>http :// 2011-02-05 </li></ul><ul><li>http :// 2011-02-05 </li></ul><ul><li>http :// 2011-02-05 </li></ul><ul><li>http :// 2011-02-05 </li></ul><ul><li>http :// 2011-02-05 </li></ul><ul><li>http :// 2011-02-05 </li></ul>