Second Life Lost 879 Private Sims and $500K to $2M in Revenue in '11 -- I.E., Why Tier Costs Won't Likely Lower
Second Life lost 879 private sims in 2011, according to Tyche Shepherd's indispensable Second Life economic analyses. I double-checked this data with her, and this amounts to a drop in total land revenue for Linden Lab from about $62 million in 2010 to about $60 million in 2011 -- or, accounting for other factors, a likely annual revenue loss between $500,000 to $2 million.
I checked these figures with Linden Lab, and spokesman Peter Gray told me this:
"As a private company, we don’t disclose financials, so we're not able to go into details for questions like this. The change in private estates last year represents only a minor portion of total land in Second Life, and land revenue itself is only a portion of our total revenues. As a result, the impact of changes like this is diminished and can also be offset by changes in other revenues." Likely that would include monthly Premimum subscriptions, which are probably rising (though the company hasn't released figures on that.)
In any case, this again emphasizes two interlocking points I brought up in 2011:
- Linden Lab's land revenue model is not sustainable, and needs to be (gradually) replaced. And to fully replace it, SL and Linden Lab probably need mass growth far beyond its existing userbase.
- While SL landowners complain about the existing land tier they are paying now, it's very unlikely Linden Lab can lower tier prices, without jeopardizing their profit margin. About 500 SLers -- i.e. the largest SL land barons -- are paying 73% of SL's total land revenue. If they were to receive a tier discount, the total revenue loss for Linden Lab would be drastic.