R2V platform's business model reconstruction in the metaverse era: Based on network effects and bundling

Abstract

This paper aims to investigate the motivations behind the reconstruction of the business model for Real-to-Virtual platforms in the metaverse era. By developing a pricing model for metaverse platforms that consider both social network effects and cross network effects, we analyze the mechanism of network effects on the bundling strategies of Real-to-Virtual platforms. These strategies, in turn, give rise to different business models for metaverse platforms. We find that network effects have a crucial impact on the bundling strategy and business model of Real-to-Virtual platforms. When the social network effects are weak, platforms choose between mixed bundling and independent sales to accommodate both real and virtual businesses, resulting in what we term Digital Twin Platforms. When the cross network effects are relatively weak, platforms may prefer mixed bundling to encompass both types of products, leading to what we term Digital Collaboration Platforms. However, when the two types of network effects are comparable, platforms will adopt a dynamic approach and switch between three strategies to maintain their market position according to the strength of the two network effects and competitive market environment, which is classified as Real-virtual Interconstruction Platforms. Thus, network effects and bundling constitute important aspects that distinguish different Real-to-Virtual platforms, playing a crucial role in platform performance.