Business Models for Online Communities: The Case of the Virtual Worlds Industry in China

The rapid growth of Internet usage has enabled many new online communities to develop. A particularly interesting phenomenon that has arisen through Internet communities is the virtual world (VW). This paper identifies the challenges that developers of VWs will face in their efforts to find viable business models. This is a single case study of China as an exploratory project to determine the issues surrounding business models for virtual world developers and users. The paper discusses the feedback effects between broadband adoption and online games as well as issues such as culture, history, Waigua, private servers, virtual property trade, developer control, governance, and regulation. In spite of the profitability of major Chinese VW operators, close observation of the Chinese case suggests that even the most successful VW operators are still in the early stages of their business model development.