Linden Lab To End Era As Second Life-Only Company In 2012

Next year, Linden Lab will end a 9 year corporate history as the developer of a single product, Second Life. Confirming what several sources have told me in recent months, Linden CEO Rod Humble just announced this in his Outlook for 2012 post on the company blog:

In addition to delivering new features and increasing our support for Second Life, we will be launching some completely different products next year not related to Second Life. Some of them will be very experimental, but all will fit within our company’s proud history of enabling creativity, which I hope may interest some of you.

Using the plural of "product" is notable, because up until now*, Linden Lab has only confirmed that they are planning to release a single non-SL product. The company is creating several game-like experiments, so evidently we will get to get our hands on some of them too.

This move is inevitable, when you think about it, and I'm coming to be convinced, probably the only thing that will keep Second Life and Linden Lab itself alive. Here's why:

• Despite numerous improvements to Second Life's new user experience and performance in 2011, user growth in terms of monthly uniques still refuses to grow. Some improvements coming down the pike may change this, but given past performance, it's foolish for the company to make that bet.
• While SL refuses to grow, neither does it shrink -- some million or so people log into it every month, a large existing audience with which to build on.
• And while SL is profitable now, most of that profit comes from virtual land sales and tier fees. This revenue is inherently unsustainable and will continue eroding over the next few years, eventually to hazardous levels.
• The best thing to do now is use much of the profit from Second Life to finance numerous game and game-like projects, cross-promote them to the existing SL userbase and the broader consumer market, and hope that one or several of them build a mass audience, and new revenue sources.

This doesn't necessarily mean Linden Lab will move its focus away from Second Life, and the company will likely continue improving and updating the product in order to keep the existing userbase happy (while transitioning as many of them as possible to monthly Premium subscriptions, a more sustainable revenue source than land.) At the same time, if one of these new products goes big, the company's focus will likely shift to it, away from SL. But as I said, a successful second or third product besides Second Life would help keep SL alive, since it can then be cross-promoted to this large new audience, while new revenue sources can help finance whatever changes are needed to keep SL stable, when the land revenue finally dries up. And at some point in there, or maybe even sooner, Linden Lab will likely change its mission statement, which now reads, "to create a revolutionary new form of shared online experiences known as Second Life", to something far broader.

2012 should be an interesting year.

Update, 2:05PM: Benjamin "Benoc Linden" O'Connor, who was a Systems Engineer for Linden Lab, but just announced he's leaving the company, just Tweeted his view of the new products: "I've seen some. They are slick, different, and awesome. Hope you'll all agree when they are released."

*Speaking of which, some readers have noted that Rod Humble briefly mentioned something about "new products" at the last SLCC. At the time, however, it wasn't as clear what he meant by that, or how they fit into Linden Lab's overall strategy. (Back then, I had the impression they would be small side projects.) After talking with several insiders since then, however, I've become convinced they're part of a very significant change in Linden's direction -- hence the analysis above.

Comments

[Ann Otoole InSL]

LL is using the money we pay for SL to do things we never asked for. And to make matters worse LL's Oz Linden appears to support the stupid idea we should pay LL to work on non SL stuff and also pay fired LL devs to fix LL's defective programming. /me shakes head

[Skylar Smythe]

YAY!!!

Completely agree with you Hamlet! With all the success and rapid growth of gamified communities it makes perfect sense for them to diversify and then feed into the central community.

I see Linden Lab recruiting new users with simplified games. Creating advanced users by familiarity with both Linden Lab and with the concept of avatar identity and 3D social networking... Those advanced users (a percentage of them) will look for the next level of interaction or recognize other potential for commerce in Second Life.

We know why retention is low in SL. It's a complex game (I know... I used the bad word) but in comparison to other digital environments it is. And it requires an investment of time to become engaged with not just the user features of the grid, but the community (or interest groups).

If they are to be entry level gaming worlds... it will be something like Linden Lab nurturing new users on easy plaforms first, and enabling their migration to the more complex grid of Second Life.

YAY! YAY! YAY!...

Did I mention YAY?

Skylar

[Tateru Nino]

I'm sure the plural form 'products' was used at SLCC.

[Nanu]

it was in the air...

option 1: make SL mass-market-able (which would mean to completely change its architecture and lose its current users).
option 2: keep SL as a niche with low attention at the side as long as it still earns some money and concentrate on new products.

option 2 won !!! SL is officially a niche now !!!

[Ann Otoole InSL]

I suspect skylar will be bummed out when LL turns SL off, tells the SL residents to go be "misfits" in some other world, and to go to hell, and focuses on childish 2.5D facebook games. But tablets are the future so kiss your delectable looking avatars and immersive worlds goodbye. Money is all Kapor and Gurley care about. Not sl residents. We do not matter. Never did actually.

[shockwave yareach]

@ann - I heard people predict the end of the desktop in the mid 90s when laptops first came out. I also heard people predict the end of the desktop when the PDAs came out. Then when the smartphones came out. Then when the tablets came out...

Surprise!! Go to any Frys and you'll see that 2/3 of the computers for sale are STILL desktops! The death of the desktop has been predicted for almost 2 decades and they haven't been right once. They never will, for the same reason people still have ovens while they own microwaves and still own big SUVs and little compact cars as well -- we do some stuff with one and other stuff with the other.

[Metacam Oh]

I wish Rodvik was hired a few years ago, he is really doing some good things. Emphasis on customer service, the new gaming functions and features to enable us to create more stuff, is dead on target for what needs to be done, I just hope it is not too late.

I do agree about the non related SL products, with them leaving features like Mesh broken and having the customers pay someone to fix it. However if it does lead them to a new source of revenue so that they can allow for the customers to host their own servers and end this ridiculous closed garden nonsense where landowners are paying the price it costs to lease a car for 1/8th of server rental.

[Inara Pey]

Actually, and without nit-picking.

Rodvik actually used the term "productS" (plural) at SLCC-2011. His exact words were:

“You are going to see Linden Lab working on other products as well as Second Life,”

Ergo, no real surprise that he again uses the plural in his blog :).

[Jack Pitts]

Well there goes the neighborhood.

They need to simply fix the product that got them here. SL is broken has been broken and will continue to be broken until they get their heads out of their asses and realize it's broken.

I mean when people logon and see nothing but water because the viewer chooses not to render the rest of the world. There is something wrong. When voice randomly doesn't work without having to relog. There is something wrong. I can list a million things. 90% of which have existed for years. Does anyone fix them ... Nope. We just sit and hope and grumble about them.

If they want the user base to grow the simple solution to that is LOWER THE PRICES! then you'll see it grow. 295.00 per month for private regions w/ 1000.00 setup fee is just unrealistic, to expect continued growth.

I guarantee you if they lowered the prices. People would flock. Existing people would buy more. But to expect people to keep paying a car payment for virtual land is just nuts.

[Ann Otoole InSL]

@shockwave what is "frys"? The bestbuys here are minimizing desktops (and associated components) and mainly carrying ipads. The desktop era is over. So are heavy graphics video games.

You will like 2.5D or will be ousted as worthless to the corporate borg.

[DD Ra]

I would like to be as enthusiastic as Hamlet, but my opinion is more akin to Miss Ann Otoole's.
Let's hope the progress announced by Rodvik will take place and the Lindens will continue working on SL and, as much as possible, with the residents.

[Serious Starsider]

I see a lot of organizations, including my own, that did RL work in SL moving to the OSGrid or some Unity based environment. So soon enough I think that will really catch on and you will see a migration from SL that leaves behind SL for entertainment only. That's it's big feature now. They drove the nonprofits out with huge fee increases. SL has all the people and all the content but if OSGrid catches on you will see a massive migration. I run my own two island sim on a home server for absolutely free. So Linden really is making the right move here I think, they have to try something else.

[Josain Zsun]

How are they going to support more product(s), if their SL programmers can barely keep up with bugs introduced/re-enabled with their occassional client updates and their "Technical Support" has yet to learn what the industry standards are for Customer Services?

[shockwave yareach]

@Serious - I spearheaded an approach where we were going to simulate assembly in a fake hanger in SL to get the documentation correct before the prototype stage, saving millions of dollars and half a year of development. However, LL's bait-and-switch actions caused me and my company to abandon the idea and we chose to make small 3d plastic models on a Makebot instead. We did this because we could not do business with a company that wouldn't stick to a contract and repeatedly unilaterally changed them.

And it'll be a cold day in hades before we consider ANY product by LL for anything we do. The company cannot be trusted to stick with a contract -- how can we do business with someone proven to break contracts with their clients whenever the mood strikes them?

[Paradox Olbers]

"For landowners, existing land tier pricing will not go up in 2012." - Rodvik
At last, a stable tier policy for a year, not the 68 hours notice given in November 2006 of a 50% increase in tier (hastily changed to 15 days notice)!!! Or the 100% increase in educational regions' tier by ending the educational 50% discount in late summer 2010, *after* most universities had set their academic year budgets. Or the 'void islands'/low-prim abrupt changes in between.

Avs who depend on land for their economic model are more likely to stay now.

-Paradox Olbers

[Ignatius Onomatopoeia]

Even though I recently returned a project to SL, I've got my Plan B in place still. So it's time to pop some popcorn and watch.

Whatever happens, a chapter in the history of the Internet is about to get a new and interesting twist. I agree 100% with Hamlet that the land-sales/tier-based model proved to be a mistaken turn. To be fair to LL, back in the utopia-now days of Philip, we all drank some of that Kool-Aid.

Hope you are taking notes for that next book, Mr. Au.

[shockwave yareach]

@ignatious - I actually think that paying for the area I call "mine" is a good approach. I need more area for my mazes and games, so I should have to pay more. Where I think the problems are: 1, the price is too high and has not come down over time like the hardware and "premium service" warrant. 2, the price should be a flat rate per square meter. Not this ridiculous leveling system where adding a single m^2 to the 8K parcel costs the same as doubling it.

I personally don't have an issue with paying for land except it's too expensive, not logically priced, and while server performance is 32 times greater since 2003, the sims have the same bugs and limitations we had almost a decade ago. For such large fees, I expect far better performance than SL delivers.

[Dizzy Banjo]

this is great!
Im excited about a fresh wave of innovation that could flow though Linden which would benefit SL too :) Look forward to what these projects could be..

[MIstletoe]

Clive's sake, how much mileage are you going to get out of that photo?

[rikomatic]

Color me curious about what these new "Products" look like.

[Jjccc]

Rodvik this is what you do, now listen carefully as this will make you alot of money. Develop multi stack sim environments to make 100,000 seater stadium's in second life, imagine having a super group like u2 or Duran Duran wanting to do a gig in second life to that many people all at the same time and streamed out as well one gig could be watched by millions of people world wide, are you seeing the possibilities. It is possible for this to happen right now, its up to you to make it happen simple im sure you can do it, or some one else will do it and leave you behind

[elizabeth (16)]

"Clive's sake, how much mileage are you going to get out of that photo?"

ya lol

like whos that dude with hamlet

jhejejejeje (:

[Hamlet Au]

"how much mileage are you going to get out of that photo?"

I bet Rod is wondering the same thing. That "thumbs up" is just SOOOO hard to resist.

[Vanessa]

If you read the LL positions vacant site here http://lindenlab.com/careers, it would appear that SL development is NOT ceasing, SL is NOT disappearing, and new products are on the way, along with specialised improvements to the current SL that we know and love so much. I'm a bit over doom and gloom forecasting of the death knell of SL, which I have been seeing for 5 years. Get over it people, SL is not going away. Not everyone uses SL simply to have a short term entertainment buzz. The possiblities are as endless as ever, but not for those who use it for a quick buzz. This is what Facebook is for.

[DMC Jurassic]

Second Life appears to be re-positioned as just a game now. And, it's very niched - too niched.

We will support SL into 2012 and we will remain open to serving a role as possible LL solution provider operating within SL.

However, with an interest in building a new Internet and Virtual Reality business, we are not seeing the vision for virtual environments really being pioneered by LL through SL anymore.

I look forward to seeing what new products/services the Lab has to offer, yet I think my company will be moving past relying on LL technology - it's time to develop our own!

Yes there are new features and gradual improvements in SL, but the core functionality to make SL mainstream and massively-boost concurrency and performance capability is just not being addressed in SL.

Having grown up in SL (as a part of our startup journey) we really see our future in being able to use our observations and experience learned through SL to create our own online network and virtual environments.

SF.