Avatar-Based Commerce: The Business World of the Future?

Chiou-Pirng Wang
Volume 5, number 4, Communications of the IBIMA, 2008, pages 20-23


In order to keep up with fierce competition in the forever distributed, global and virtual business world, big name companies like IBM, Toyota, etc. have ventured into exploiting the potential of Massively Multiplayer Online Role-playing Games (MMORPG) technology, via Second Life, to reinvent themselves.  Investigating existing business models in Second Life, a virtual world, to see whether the avatar-based commerce is a hype or a real potential. In this preliminary study, based on the tool, Internet Business Graph Analysis Models (IBGAM) developed by the author in 2003, the  analysis of the business models of 14 avatar-based business unveiled that the avatar-based commerce, though growing rapidly, it may not be roaring like the Internet businesses in the 1990’s due to a fundamental structural constraint in running avatar-based business, as they have to run with the  restricted  tools, services, and rules provided by the owners of virtual worlds.  These restrictions are a major deviation from the Internet, which has no owner. The author also found that indirect business models such as brokerage, e-auction, etc. are hard to be found in the virtual worlds. Consequently, direct exchange business models will most likely flourish in virtual worlds and avatar-based business may face some constraints.