+

in Virtual Worlds

Live Case 02/07/2011Group 4B – Emilie, Charlotta, Johan,

Alexandra

Charities

+Executive SummarySecond 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.

+Industry analysis 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

Second Life

Artist

Linden Lab

Bank

Peace Train

Donors

Charity Projects

Peoples Needs

+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

+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. Mahaley2 www.wikipedia.org/wiki/501(c)

+

High

Medium

Low

To run a charity organization in SL is not that profitable monetarywise, but the presence can serve other purposes as raise awareness etc.

Porter´s 5 forces

+Competitor Analysis: Strategic Groups

SMALL LARGE

LOCA

TIO

NRL

& S

LO

NLY

SL

American Cancer Society

Peacetrain

Coalition of women for peace

BORDC WARChild

Virtual Ability

SECOND Pride

Veterans for Peace

www.fourbridgesproject.org

www.fourbridgesproject.org/orgs.aspxwww.cancer.orgwww.nonprofitcommons.org

SIZE

+Peace TrainInformation

Founded in 2007 by three avapreneurs.

Approx 100members

Mission: ”…to advance the cause of peace in the world”.

PeaceFest is an yearly event with the aim to raise money.

Interview MahaleyTeigland (2009)

Resources

Human: Core team (4 people) Knowledge & networks Volunteer workers (approx. 15

active members) -> intrinsic motivation and engaged in the cause

Intangible: Open source programs -> low

operating costs Collaborations with other

organizations e.g. university for an internship project

501 c 3 (government charity certificate and American tax exempt)

SL office PayPal Account

Organizational Capabilities

Organizing and hosting events in SL

Organization and coordination of artists

Coordinating actions between different members

Enable donations from avatars

+Virtual AbilityResources

Human: 50 Active members SL knowledge & RL

network Specialization in

disabilities

Tangible Office in RL

Intangible: 6 areas in SL Collaboration with SL Activities in “InWorldz” Brand known for

specialization 501 c 3 certificate

Virtualability.org; Interview Gentle Heron

Information

Founded in 2007 – started on dating website and moved to SL

Approx 500 members , 10 % active to support the cause.

Mission: “..enable people with a wide range of disabilities …to enter and thrive in online virtual worlds like Second Life”

Income from RL Projects, donations in SL as well as rent paid from tenants in SL.

Organizational Capabilities

Raise money in RL to support cause in SL

Provide meaningful virtual experiences to people with disabilities

+American Cancer SocietyInformation

Entered SL in 2005; build up own island in 2007

2000 members in SL (in 2008)

Mission: ”…dedicated to eliminating cancer...”.

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.orgwww.relayforlife.org/secondlife

Resources

Human: SL & RL knowledge and

networks Corporate structure and

strong management Volunteer workers e.g. 140

teams in Relay for Life 2010 who plan and execute multiple fundraising events in SL

Intangible: Brand and reputation Collaborations with other

organizations e.g. corporate sponsorships

501 c 3 (government charity certificate and American tax exempt); IRS Form 990

Resources in SL: Own island

Tangible:

Organizational Capabilities

• Networking capability; managing corporate relationships

• Strategic control of SL activities

• Organization & coordination of events /members

+ Peace Train ACS Virtual AbilityStrengths Host popular

events, bridge gap between avatars/donors and small projects

Strong brand image, nationwide recognition, host popular events, large & sustainable volunteer base, corporate sponsors

Active community, ability to raise money in RL to SL projects

Weaknesses Dependence of SL and avatar volunteers

Bureaucratic (high administrative costs)

Low conversion rate of members to volunteers

Competitive Advantage

Agile and small organization that is able to increase the connection to small charity projects with low overhead costs.

Charity organization with a strong brand that is able to raise awareness for cancer and reach a large number of donors and attracts support from corporate sponsors.

Highly committed members with personal connection to the cause that help directly in SL.

Sustainability of the organization

Endangered in case of closure of SL

High in case of continuous investments in brand image

High if increased presence in other VWs In

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+The future

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

Threats Opportunities

+

Q & A

+References http://virtualability.org/va_history.aspx

(02/04/2011)

http://fourbridgesproject.org/orgs.aspx (02/04/2011)

http://www.nonprofitcommons.org/ (02/04/2011)

https://www.portfolio.du.edu/portfolio/getportfoliofile?uid=73430 (02/04/2011)

Interviews Steve Mahaley - PeaceTrain Gentle Heron – Virtual Ability Meeting in SL: NPC meeting – several

leaders from different charity organizations in SL.

Maheley, S., Interview 02/02/2011

http://www.pcgames.de/Second-Life-PC-128601/News/Second-Life-Microsoft-als-moeglicher-Kaeufer-Linden-Lab-UK-wurde-geschlossen-776425/ (02/03/2011)

Teigland, R., “Born Virtuals and Avapreneurship: A Case Study of Achieving Successful Outcomes in Peace Train – a Second Life Organization”, JVWR, 2009.

http://www.welt.de/wirtschaft/article7999480/Warum-keiner-mehr-Second-Life-haben-moechte.html (02/03/2011)

http://www.youtube.com/watch?v=q31boZfjwSs (02/03/2011)

http://www.relayforlife.org/secondlife (02/04/2011)

http://www.cancer.org/ (02/04/2011)

+Appendix Relay for Life 2010:

http://www.youtube.com/watch?v=H330iUlxKGk