PESTLE Analysis on PESTLE Analysis on Virtual WorldVirtual World

EconomicEconomic

Group 4Group 4

Group 4Zhang Yuanyuan : 70381@student.hhs.seZhong Wei :70382@student.hhs.seChi Mingli :70365@student.hhs.seGuo Xing :70368@student.hhs.se

Economic FactorsEconomic Factors

Global Economic CrisisGlobal Economic Crisis Companies such as Gaia interactive and Habbo are expecting a bCompanies such as Gaia interactive and Habbo are expecting a b

oost as consumers reduce spending on real-world goods and luxoost as consumers reduce spending on real-world goods and luxuries and console themselves with so-called virtual goods—digituries and console themselves with so-called virtual goods—digital copies of products that can cost just pennies, allowing users to al copies of products that can cost just pennies, allowing users to indulge their materialistic fantasies without spending much.indulge their materialistic fantasies without spending much.

“ “As the ‘real world’ gests worse, virtual worlds get better,” As the ‘real world’ gests worse, virtual worlds get better,” --Gaia Chief Executive Craig Sherman--Gaia Chief Executive Craig Sherman

Potential Impact: MediumPotential Impact: Medium

MarketplaceMarketplace The release of Blizzards’ World of Warcraft in 2004 and its subseThe release of Blizzards’ World of Warcraft in 2004 and its subse

quent huge success across the globe has forced both MMORPG aquent huge success across the globe has forced both MMORPG and their secondary markets into mainstream consciousness, and nd their secondary markets into mainstream consciousness, and many new market places have opened up during this time. many new market places have opened up during this time.

Hundreds of companies are enormously successful in this new foHundreds of companies are enormously successful in this new found market, with some virtual items being sold for hundreds or eund market, with some virtual items being sold for hundreds or even thousands of dollars. ven thousands of dollars.

Although virtual markets may represent a growth area, it is uncleAlthough virtual markets may represent a growth area, it is unclear to what extent they can scale to supporting large numbers of bar to what extent they can scale to supporting large numbers of businesses, due to the inherent substitutability of goods on these usinesses, due to the inherent substitutability of goods on these markets plus the lack of factors such as location to dispense demmarkets plus the lack of factors such as location to dispense demand. and.

Potential Impact: HighPotential Impact: High

Taxation Taxation

Income from sale of virtual items is being considered as real Income from sale of virtual items is being considered as real revenue as players in such games have ascribed a real-revenue as players in such games have ascribed a real-world value onto them: "By taking any aspect of the game world value onto them: "By taking any aspect of the game and connecting it directly to the real world, the games have and connecting it directly to the real world, the games have only brought this possibility on themselves." And as that only brought this possibility on themselves." And as that ascribed value is being increasingly converted into to real ascribed value is being increasingly converted into to real dollars, attention is now being given by those in taxation dollars, attention is now being given by those in taxation law and in governments. law and in governments.

Potential Impact: HighPotential Impact: High

Virtual CrimeVirtual Crime Monetary issues can give a virtual world problems similar to thosMonetary issues can give a virtual world problems similar to thos

e in the real world e in the real world

South Korea: gangs and mafia in games threatened beginners to givSouth Korea: gangs and mafia in games threatened beginners to give money for their “protection”.e money for their “protection”.

The Sims Online: a 17-year boy opened a cyber-brothel to provide cThe Sims Online: a 17-year boy opened a cyber-brothel to provide cybersex services that paid by sim-money.ybersex services that paid by sim-money.

Potential Impact: HighPotential Impact: High

Stability Stability For a persistent world to maintain a stable economy, a For a persistent world to maintain a stable economy, a

balance must be struck between currency sources and balance must be struck between currency sources and sinks.sinks.

Actions by players can destabilize the economy.Actions by players can destabilize the economy.

Potential Impact: HighPotential Impact: High

Ownership Ownership In most games players do not "own", materially or In most games players do not "own", materially or

intellectually, any part of the game world, and merely pay intellectually, any part of the game world, and merely pay to use it (one exception being to use it (one exception being Second lifeSecond life). Because this ). Because this "virtual property" is actually owned by the game developer, "virtual property" is actually owned by the game developer, a developer who opposed real commerce of in-game a developer who opposed real commerce of in-game currencies would have the right to destroy virtual goods as currencies would have the right to destroy virtual goods as soon as they were listed on eBay or otherwise offered for soon as they were listed on eBay or otherwise offered for real trade. However, such a decision would be controversial real trade. However, such a decision would be controversial with game participants. with game participants.

Potential Impact: HighPotential Impact: High

ReferencesReferences Virtual economy, Virtual economy, From Wikipedia, the free encyclopediaFrom Wikipedia, the free encyclopedia A 'Virtual' Escape From Economic Pain, A 'Virtual' Escape From Economic Pain, Mary Jane IrwinMary Jane Irwin Second life economic statistics, Second life economic statistics,

https://secure-web8.secondlife.com/whatis/economy_stats.phphttps://secure-web8.secondlife.com/whatis/economy_stats.php Real money in a virtual world, Real money in a virtual world,

http://news.cnet.com/Real-money-in-a-virtual-world/2030-1069http://news.cnet.com/Real-money-in-a-virtual-world/2030-1069_3-5905390.html_3-5905390.html

PEST/PESTLE Analysis Tool and Template,PEST/PESTLE Analysis Tool and Template, http://www.rapidbi.chttp://www.rapidbi.com/created/the-PESTLE-analysis-tool.htmlom/created/the-PESTLE-analysis-tool.html

Thank You!Thank You!

Group 4Group 4

2008.1.272008.1.27