Friday, March 08, 2013

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Why Losing Second Life Sims is So Serious to SL's Future

When I argued yesterday that it's not good enough for Second Life to coast while it's core revenue base of private sims erodes, amazingly, many readers were skeptical, with some even arguing that it's a good thing SL keeps getting smaller. But Ener Hax has another way of looking at the problem, and maybe her perspective will convince some of those skeptics (though sadly, I'm not holding my breath):

SL sim loss

Money quote: "If we assume a constant ratio of 54% full to 45% homesteads... that would mean that in November of 2008, Linden Lab was making $5.4 million a month versus today’s $4.1 million. A drop of $1.3 million a month."

Do the math, annualize that out, look at it from the perspective of a long-term investor, and tell me it's a good thing private sims are going away (without another revenue stream to replace them).

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Adeon Writer

"without another revenue stream to replace it."

I wonder, how much do they make off the Lindex?

Shockwave Yareach

If they FIXED some of the critical ownership issues...

If they LOWERED the tier 20% across the board...

If they implemented a WELCOME BACK program where people who lost a sim can have it back just for picking up the new tier (No fee)...

If they limited the great no-land-required Suckage that is Marketplace in a reasonable way...

then they would have so many people return to SL that they'd be making more money than they are today.

Look at it this way -- who makes more money, Ford or Ferrari? Last year Ferrari made 128M$ in profit selling 3660 cars. Ford made 5.66BILLION$ in PROFIT selling much cheaper vehicles and employing many more people at the same time.

It's called volume. The money people in charge should look up the term if they want to get more for their investments.

CronoCloud Creeggan

@Shockwave

We've discussed Marketplace before, what you want is simply Not Going to Happen. Give it up already.

They also aren't going to lower tier. Let me explain...suppose they did cut tier in half... people would have to DOUBLE their region holdings for LL to keep LL's income level at where it was before the drop...otherwise their income would actually DROP AND they'd have increased support costs for the new regions. So they'd be worse off.

And not only that, but people like you complain about how much they pay now, they're not going to just increase their region holdings so they can pay the same amount. What they want is to have their cake and eat it too...pay less and get more. Which doesn't help LL's bottom line at all. Really, many landowners aren't that different from the freebie-hunters in SL, it's just not as obvious.

DBDigital Epsilon

While I agree that there are many things they *could* do. It is obvious they don't *want* to. My guess is they don't want to expand and slowly let SL fade away while getting what they can from it now.

If you remember SL is technically flawed (buggy) in many aspects. Scaling is one of those. If they were to go back to their peak days, I very much doubt the change since then (mesh, physics changes, stacking 4 sims on to the same server etc) would hold up. The grid would be far more unstable than it is now. Group chat is still buggy after all the development time that went into fixing it and there are less people on SL, it would only get worse with more active users. Just imagine every bug magnified by a factor of 10 or 100.

In short they don't want to expand or improve, only do what is necessary to keep the system going while they (slowly) move on to other projects. That is the sad truth. I would love to be proven wrong, but I highly doubt that is possible at this point in time.

Metacam Oh

DBDDigital is right, they have stopped expanding, stopped adding new things, what they have now hardly works, when they do add shit it takes 2 years, who wants to pay for that? 295 a month for what is equivalent to 1/8th of a server? Until Second Life is as life like as the real Universe they should never stop improving, but Second Life has stopped, and you can't expect peoples interest to stick when the company that owns the place can't even keep interested. Second Life is a pyramid scheme and the Lab is just milking the dying carcass. Its over folks, Im sorry to say that unless the company sells SL, its going no where.

Ciaran Laval

@CronoCloud Look at what happened when Openspaces had their prim counts doubled, there was a massive land boom, in Q2 2008 the land mass grew by 44%. Doubling the prim count on these regions was effectively a halving of tier.

There are many ways to skin a cat, but a straight out halving of tier right now would lead to major lost revenue for LL, I agree.

@Hamlet Ener's estimates on the full sim/homestead ratio are probably incorrect.

Tyche Shepherd estimates the top ten land owners have a 33.9% full sim 66.1% Homestead ratio and Tyche estimates current tier is US$4,170,000.

2013

Lower Tier? not going to happen, if you can't afford a sim, don't buy one.

Welcome Back plan? hell no, they should've had a better business model. If they couldn't afford it back then, they probably couldn't afford it now, even at lower tier.

Marketplace? You'll never see a creator/designer say the MP is a bad thing, so get over the thought that the MP is killing landsales.

I am all for Marketplace revisions:
1. Anything on MP pre 2008..LL deletes (some scripts if they still are worth a shit in 2013)
2. If account hasn't logged into the MP, updated, or added anything new to MP within a year...LL deletes

I have a bunch more, but it wouldn't matter

Tracy Redangel

I don't think high tier or the amount of prims is the issue. If people really want to be in SL, they will. If you can't afford a whole SIM, it's pretty easy (once you've found a good Estate owner) to rent the size you can afford. I've got a 1/4 sim, and that's plenty of prims for me to put a rather sizeable mesh house (from Maven homes) and quite a lot of mesh furniture and keep everything under 600 prims. There's plenty of prims left over for my husband's ugly 30-prim lazy boy recliner O.o that he refuses to let go of O.o.
I think for SL to attract new users and retain exisitng ones they need to focus on making Second Life BETTER. We're running on a really old platform with an out-dated default avatar. Of course a lot of people want mesh hands, feet, boobs, and heads because the default hands and feet in particular are terrible. (Although not as ugly as Cloud Party's...seriously ugly default avatars there).
It would also help if SL would run a little better on lower spec machines. No, it doesn't mean they should cater to those who are using a computer that is 10-15 years old. But there are a lot of users out there with 2-3 yr old machines with a dual-core processor and 4 gigs of RAM who can run other games just fine, but have a lot of difficulty running SL even set on low graphics.

Nitz Lane

The coordintion between the left hand and the right hand is lacking, in other words there is a need for a holistic view on the ecosystem of a vitual world.

Marketplace was good up until no land required at all to sell merchendise.

Marketplace allows you to sell unlimited amounts of items for 0L$ or 1L$ as freebies and dollarbies, and LL makes no L$ in transaction fee. These dollarbies and freebies means lost sales for vendors who sell normal priced equal items, and that means lost L$ to pay for tiers.

Advertise, I've not yet seen a advert for SL outside of SL context but wheverver I go I seeee IMVU adverts, I doubt thats only me?

In a RL when people are using tablets, smart phones and browser to a greater extent to play games and entertain themselves SL must follow, why not "fork" this into a webbbased application such as Cloud Party, and for us who prefer the "full experience" to continue with our viewers on our laptops and desktops.

Lastly beacause I realise I'm ranting a bit here. LISTEN to the community, beacuse the community like us do not always agree on things but the views are generally well thought through and insightful. Right now we have no idea what the people at LL are doing, and they probably have no idea about what problems we are facing, so why not let's talk to each other? What is LL and the shareholders view on the land/revenue decrease lately? we have no idea?

Rin Tae

Of course everyone I talk to about this tekks me, that they would get a sim if it would not cost as much as it does. Or got more land when they are already renting some. There is lots of demand from all what I can see and assume, but nothing is being done to satisfy it.

Of course I might be wrong since only LL knows any numbers and I assume (or maybe rather hope) that they do some market research about their customers.

As far as the revenue goes I would say that LL did jsut that in pushing the marketplace in the way they did and profiting form the sales being done through it instead of in inworld stores. Given the possible volume of those micro-transactions they might not only be able to repalce the loss of land revenue but get even more out of it. Of course this would mean that the previously privilieged position of land barons is being (rightfully so) erroded away by this and so also is LLs dependency on this rather small group of people. I call this to be very beneficial to SL as a whole (... provided they really can shift the revenue stream away from land)

But this again is an very wild guess since without data and numbers nothing can be said that could be taken as some sort of truth. It is all speculation and not much batter then looking into a crystal ball hoping for answers.

But if it is right then it is the consumers now who need to rent more land instead of the producers who needed it for their stores before. And those consumers and producers (often both since the line in SL is very blurry) I talk to usually say that the only reason that keeps them away from getting a sim is the cost of it.

Ciaran Laval

@Rin Tae Marketplace commission is not direct income for Linden Lab, they can't bank Linden Dollars. There is a purpose to it and one of those purposes is to generate income for Linden Lab elsewhere, but it is an indirect revenue stream, rather than a direct one.

Tier is direct income for Linden Lab, they can bank US Dollars.

Linden Lab will be making money from premium memberships, tier, land auctions, Linden Dollar sales, Sim rentals and commission on sales on the Lindex.

elizabeth (16)

on the GDF forum. ziicutie made a suggestion that linden could bump the sim prim allowance to 16384 for full sim. wouldn't impact the sim all that much

for starter 512m then get 128 prims. is 11 more than now. which quite significant

altogether would be 7.5% prim increase for whole sim

+

I think is good idea. like if cant lower price then give something else as equally valuable

new LI can help reduce prims if be careful and know how to do. a straight small increase is way easier tho for people to immediate appreciate

Arabella Jones

I am not sure that the big shiny implemented while I have been in SL has ever worked as intended.

Despite the continuing stream of new sign-ups, how many of those people are sticking with SL? How many of them are bothering to spend real money?

A lot of people don't need to pay tier to get what they want out of SL. It's nothing to do with the Marketplace.

Linden Labs depend on tier. Is that market saturated, and maybe diminished by the recession?

Ever since my first experience of a griefer attack it's been clear to me that, in this virtual world, I'm on my own. The Lindens will do nothing to protect me from abusive behaviour. What would I get from virtual land?

Second Life is, in the end, a virtual version of the Standard Libertarian Paradise: no laws and you can do whatever you want. And, despite all the decent, friendly, people I meet, I'm plagued by the rest. There are the griefers. There are the drama-queen merchants who scream about copybots, and who bought into the Redzone scam. There are club owners who run music streams that they continually interrupt with banal and ridiculous sound gestures. Second Life is often ruined by unconstrained power exercised by the self-important.

And all paying tier does is give me a little patch of rights to abuse others.

I can avoid the worst. I can TP direct to the places I like. I'm not sure that Second Life is working as virtual world, any more.

And have you seen how old some of the un-fixed movement bugs are?

Emperor Norton

The real irony in all this is LL clearly considers its customers a bunch of perverts they rather not have as customers, but thanks to LL inability to get tiers down the only viable sims are sex sims.

ZZ Bottom

Just thinking in the big numbers we forgot that what matters is costxrentability!
Big not always mean better!

Arcadia Codesmith

You've got a product at price point X. Sales are slipping. You can:

* lower the price
* make the product better
* do a marketing blitz
* all of the above (the best option)

or you can:

* listen to the fanbois who think your offering is perfect as is (because it's lining their pockets and/or they wet their onesies at the thought of change) and sit around with your thumb up your assets until you go bankrupt.

Your choice.

Archangel Mortenwold

Bill Clinton won the 1992 election in part by hammering home this simple slogan:

"It's the economy, stupid!"

Linden Lab refuses to understand the realities of today's economy. Millions of people are out of work with no hope of ever being hired again at any job. Millions more are working longer hours for less pay, which has reduced their surplus disposable income. People can no longer afford to plop down one thousand dollars with an additional two hundred ninety-five a month for server maintenance. Even the land barons are feeling the pinch and are getting out while they still can.

It's the basic law of supply and demand. Keep prices high in a depressed economy and revenue will continue to drop as fewer and fewer customers can afford to buy what Linden Lab is selling. Given this fact, it's sheer madness to keep prices so high. To bring people back and attract new customers, prices MUST come back down to what they were before the 2008 price hike. Otherwise the slow bleed is going to continue, and then where will Linden Lab be? It'll be in bankruptcy, having failed to diversify its product line sufficiently and in enough time to salvage the company.

Wallace Wirefly

Interesting reads. I think the one thing that LL can do to stimulate in-world : remove the requirement to own Full sim in order to purchase Homestead. I realize this would cause some to give up renting and hurt the market of large land holders at first but over time this adjustment would make a difference in those "owning" would now have a stake in what goes on in SL and also would allow the little guy a chance to learn and maybe do more. I know this. Something needs to be done soon or SL will fade slowly off into the sunset.

jen

people can pay using prepaid credits cards even with a verify paypal account, and will lose more users when some accounts will they memership will expire.
a lot of users are from europe and use to pay with prepaid cards, now they cant pay anymore, so yes they end up lossing money.
in this economy and you are getting more stric yes a sure way of lost a lot of money, did you notice how cell phones companies are wining well they incoporated more options without long contracts, and is better having someone pay you than less people with good credits and on cotracs, also some companies are growing bcuz they offer more options.
they will continue losing more and more money also the people on second life will lost money. If they dont change the company will go down, just bcuz of their stupid company decisions.
they dont have any excuse after all they can think is a alternative life of whatever, but is a game by 90 percent of the users, so of course is not that big deal, after all cellphones games are as addictive as second life.
if they dont change their perspective of their company their company will fall, that why i think imvu are getting more users even with a crappy game.

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