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.