An Examination of the Business Strategies in the Second Life Virtual Market

Abstract

Second Life (SL) is now experiencing its own dystopia. The SL in-world market is crowded with homogenous products and erects few entry barriers. This study thus took a diagnostic approach using real-world business strategies of cost leadership, differentiation, and focus to examine whether the largest businesses are creating a defendable position in the market and what choices they have to obtain competitive advantage. The analysis of the 20 largest SL businesses showed that no businesses pursued a pure strategic thrust, 9 businesses adopted hybrid strategies such as a cost-focus mix, and the rest were stuck in the middle or had unclear strategic actions. The present study suggests that treating hybrid strategies as a stepping stone to strategy purity may be a way to create competitive advantage.

Key Words:

• virtual media
• Second Life
• business strategies
• cost leadership
• differentiation
• focus