The Virtual World is Flat: In 2010, Second Life User Activity is Flat to Negative (But for E-Commerce)

Linden Lab just published some key metrics of Second Life user activity and in-world economic performance in the final quarter of 2010, and the results are largely negative. In Q4 2010, monthly unique log-ins were floundering at 795K, somewhat up from the previous quarter, but below the peak of 806K in Q2 2010.

What's worse, total user hours in-world have dropped in 2010, which strongly suggests that even established Second Life users are spending somewhat less time in-world as well. (In late 2009, just 133K Second Life users were responsible for nearly 90% of SL's total user hours.) The other most meaningful user metrics were also flat or trending South: total land mass (which users contribute to when they buy private islands, or in this case, don't), and average monthly economic participants (485K in Q4 2010, down from a peak of 496K in Q1 2010.) Still worse, it's difficult to see these trends strongly reversing, barring a fairly radical change in how Second Life is run and deployed: a version for the iPad and Kinect would be a good start, a version of SL that runs on the cloud and on the web would be even better, as would deep integration with Facebook. The question is if Linden Lab's new CEO, Rod Humble, can introduce any or all of such changes before this decline becomes irreversible.

In all this, I should say, there is one hopeful sign:

Sales on Second Life's official e-commerce portal are growing fairly strongly, nearly doubling from Q4 2009 to Q4 2010. This is promising, because the activity is much more consistent (and comparable) with the buying and selling of virtual goods in social games and web games. If I were Linden Lab's CEO (and don't you wish I was? OK, no) I'd concentrate all my firepower on even more web-based deployment of Second Life content.

But how is that possible, when Second Life is a heavy 3D client? That's for another post.

Comments

[Luci Koenkamp]

Concentrate all firepower to even more web-based deployment? What a strange way of thinking! That step will make the situation even worse than it is, there´s hardly any inworld sales left. I´m already thinking about leaving my land and selling all my stuff through the marketplace ... I don´t need an accountant degree to see that it would bring me a lot more profit. The only reason that I´m keeping the land is a sentimental one.
What would happen to LL if everyone, who has a shop in SL, would do the same?

Luci

[Ananda]

While I concur that further web-ifying is a way to go, Luci is right, it'll further damage land ownership in SL, since as it stands most activities can't really support themselves without having some kind of commercial sales going on.

I still think LL is going to have to realize their land is priced higher than can be supported, especially now that there's OpenSim competition everywhere. If they don't find a way to support more artistic endeavors, RP communities, and general social spaces, it'll leave SL without much to go on.

Lowering prices, finding some way to load balance so the vast number of empty sims aren't consuming bandwidth while idle, something's gotta give.

[CronoCloud Creeggan]

Umm, Hamlet, I wouldn't exactly be painting doom and gloom with those numbers... 795K is only 11K lower than 806I and only a bit over 1% less. And 485K economic participants is still 97% of that peak number of 496. If we were seeing 20% drops, then I'd be worried, but we aren't. In other words, it's much closer to "flat" than the "sky is falling" verbiage you're using.

"a version for the iPad and Kinect would be a good start, a version of SL that runs on the cloud and on the web would be even better, as would deep integration with Facebook."

You're still a sucker for the marketroids, Hamlet.

SL doesn't need the cloud like Blue Mars did, since SL will run on anything. The 1.23 client will still run on Intel 8** and 9** chipsets. Facebook is a privacy landmine, and kinect is essentially an Eyetoy knock off that in some ways isn't even as good as the original Eyetoy, let alone the PS3's Eye.

Now a client that you can run directly in the web browser..that's not a bad idea for some...though those Unity folks are simply going to have to go cross platform, but downloading and installing the full SL client isn't as much as a barrier as you think it is. Blue Mars, is heavy, even Free realms is heavy compared to SL. The Windows SL client is only 24MB! I just downloaded it in 12 seconds. My SL "chat.txt" log is bigger than that.

Besides, the web browser is not the be all and end all of applications, EVERYTHING doesn't need to run inside it. For example, Gmail is better read in a REAL e-mail client using IMAP as the gods intended.

[Ezra]

Options, options, options.

If Second Life ran on the iPad, good for people that want to run it on iPad. If Second Life ran in the browser, good for people that want to run it in the browser. If people can increasingly do more outside of the viewer via webpages, good for that as well. If Microsoft releases a PC version of Kinect in coming years and a viewer supports it, excellent for people that want to make use of that.

The reality is, Second Life really isn't growing anymore, and the way people experience things on the web is changing. There's still room for Second Life to grow as a desktop application when it comes to user adoption, but there's a lot of other areas it can grow as well.

It's still all-important not to harm the integrity of what makes Second Life what it is, but not every new avenue should be considered a wrong turn if its only just another route that leads to the one thing thats important: increased in-world participation in anything and everything.

[Loki]

" a version for the iPad and Kinect would be a good start, a version of SL that runs on the cloud and on the web would be even better, as would deep integration with Facebook. "

STOP THAT!, rebuilding viewer2 would be a GOOD start, LL cant get the whole thing to work on desktop computers, you really want them to start messing about with cloud based handheld devices? An ipad version would be limited to just consuming SL which i do not think would fix the boredom of SL.

Anyway focusing on new ways for residents to LOGIN is not going to fix the issues of abandoned land, and disinterest with being in SL. I strongly disagree with this belief that flooding the grid with users is going to improve the metrics.

By the time LL build an iPad cloud based SL, new residents will log into a world where people buy and sell content without the need for expensive land.

I fully accept that Marketplace is an awesome resource for the selling of products in SL but i do believe that its effect on inworld shopping and private land ownership is not being acknowledged.

So instead of your next post being about fanciful dreams of cloud based ipad apps, perhaps you could investigate whats really effecting the metrics in SL.

[Masami Kuramoto]

Rod Humble will turn things around by introducing/extending themed mainland. LL's current business model depends too much on private regions while failing to create incentives for the average user to go premium. Mainland just isn't attractive because there's no way to predict what your neighbors will build. It's a mess, and only themed continents can fix it.

I'm not talking prefab content but basic building rules. You want to build sci-fi content on your land? Move to the sci-fi continent! Same thing for all the other themes like urban, rural, seaside, fantasy, Victorian etc. Of course there should still be an area where anything goes, but it would probably be much smaller than it is now because many people do prefer consistency. All the successful MMOs offer consistently themed worlds, and so should SL if it wants to be successful.

[Loki]

@Masami

"You want to build sci-fi content on your land? Move to the sci-fi continent! Same thing for all the other themes like urban, rural, seaside, fantasy, Victorian etc."

What you are describing IS private region communities. Instead of LL trying to provide everything they should be making it affordable for private SIM communities to provide stuff.

Designating a theme to a place will not make a difference. Community is based on common interests, thats why you see places like the Steampunk Sims, Gorean Sims and Sci-Fi Sims flourishing, because they all want to be part of the same thing. LindenLab cant recreate that on mainland, nor should they.

[Rin Tae]

The numbers does not look that impressive and indeed there is a lot behind them LL has obviously chosen to hide. Now this is of course nothing new as they have behaved like this before and it seem to be their way of understanding good business practise.

I guess the new CEO is already continuing the way those before have taken and once again we will have a year of wondering if LL is trying to deliberatly destroy their own product.

On the other hand there are many things in store they are working on and the chance is there that they can turn this all around once more (browser viewer, hand held device capable SL, mesh, etc.). Of course I don't have much faith in them (or rather I continue to not have faith in them) and this does not help in convincing me of spending money in SL. And this hurts creators since they don't get the profit needed to maintain the land what in turn leads to less land being rented and less money to LL. Unless the Marketplace is generating more profit then the land, but I highly doubt this.

Now of course I love inworld shopping since even with the lag it is what a 3D world is about. I have web marketplaces everywhere but in SL I can actually walk into the store. And this is a great benefit in my opinion. And with the sharp increase in marketplace sales it would be not a good move for merchants (especially small ones with low profit margins) to keep a inworld store. This would be a bit loss for SL and a even bigger loss for LL since all the land wont be rened anymore and more land will be freed and this means, that land prices will sink even further.

I am not sure this all is going into the right direction and when it comes to Facebook and such things, then no thank you .. not for me .. some might like it but I like to keep away from it.

Maybe it would help if LL would be a little bit more open about their plans. Otherwise the about the 'sky is falling' wont ever stop and they will continue to recieve the (in far too many cases well deserved) bashing.

[Seabreeze]

Perhaps I shall come across as seeming too Pollyanna for this crowd alas,
I do not see these reports as bad or negatives
Second life is a game it is delightful that people can come on and create and make Money
But Like real life, one has to have their "game on" so to speak
In other words it can only be what one makes it .. and takes and makes the time to Put into it ..
To be blunt "There is No Place to Hide" Sure open a new shop plop your goods there ..
But in the long unless you are continuing to build , adapt and adjust ones sails ..
Don't expect to be a fortune 500 company on the grid .
This goes for land owners as well !!
One can't just have land and offer nothing to their renters ..
It is all relative , I think more people are doing main land and their thing
rather then renting from niche markets and others !
However this is a trend , thing change , Ride the waves ..
'It is a game" remember ??
To be honest I am seeing more older members returning ..
Everyone takes breaks , it is healthy and Positive !
There is a real life serious recession going on world wide .
I think with the major adjustments to their staff and structure
Linden Labs Scored very well in 2010 !
If this positive outlook makes me delusional to some . I am sorry !
Reality Check people ::::
I have seen many real life corporations and pops and moms operations call in quits from 2008 to 2010 !
Kudos to The labs for sticking it out !!
lets try to see the positives instead of always harping on the negatives of this Game, so many of we still seem to enjoy it challenges and all !!
On an up Note thank YOU for all you do here with information and interest posts !!
all the best !!
Seabreeze

[Ignatius Onomatopoeia]

I rather enjoy shopping in world. LL gets their commission for the Web marketplace and it lets non SLers see what's on offer (not always a great marketing tool, considering some of the content).

It's sad to see the in-world merchants close. I bought my first skin at Lila's: gone. My favorite furniture maker, Morris Mertel, now is on Marketplace only. His in-world shop was wonderful.

I'd much rather shop at a RL bookseller than at Amazon, too. But I'm a curmudgeon. I just have the feeling that LL put their efforts into the Marketplace and a few will-o-wisp projects instead of improving other core technologies that would have made shopping better (fixing search, reducing lag).

Those changes would have made other aspects of the virtual world better, too. And LL would get tier instead of commission. Instead:

-40.9% of Mainland owned directly by Linden Accounts (Mainland is 6401 regions)*

-6.8% to 7.7% of Mainland by area is abandoned parcels (details - 2nd Jan 2011)*

Well, empty land does not add to lag, I reckon.

*Hat tip to Tyche Shepherd's SL Grid Survey at
http://www.gridsurvey.com/

[Claude Dawes]

I don't think the key is web-based deployment, but web and social web integration.

What if you could enter in second life and communicate with facebook friends or twitter and receive inworld, email or facebook chat?

[Jovin]

Instead of web users entering Second Life what if their SL avatars entered the web? Apple seem to think this is a possible future for web retailing according to patents that just surfaced today (altho' they're not the first Apple have filed in this area). More here: http://www.patentlyapple.com/patently-apple/2011/01/apple-introduces-us-to-the-personalized-shopping-avatar.html

[Addison]

I would have to agree with CronoCloud, Hamlet. Your analysis at least to me reads as if you are using numbers to justify preconceived notions, without actually analyzing context, variables, validity. It would help to take a more journalistic approach.

[Loki]

@Seabreeze

"'It is a game" remember ?? "

Its just a game that costs $295 a month remember???, and thats AFTER an upfront payment of $1000 am i bonkers for wanting at least some feasible way to make that investment back? or should i just cast it all to the wind and enjoy the buggy laggy 3D chatroom.

I do not make money in SL to get a profit, i make money to off set the the High monthly Tier Prices. Sim owners rent out shop space to payback the high Tier prices. If i DID want to make a profit from SL, i would not own land, i'd just sell on Marketplace, but then where would me and my friends play?

How do residents of SL contribute to the places they visit?

[Arcadia Codesmith]

Virtual rent is so 00.

Most virtual spaces I go to, I get an apartment free -- at a minimum. Sometimes I get a farm, a city or a planet.

The only price point that beats free is when developers pay me to come build in their world.

LL needs a new revenue model, stat.

[Hamlet Au]

"Its just a game that costs $295 a month remember???, and thats AFTER an upfront payment of $1000 am i bonkers for wanting at least some feasible way to make that investment back?"... "LL needs a new revenue model, stat."

Loki, Aracdia, I think that's the most concerning thing about these numbers. With user growth flat and user hours and spending down, there's very little incentive for large landholders (Linden's key revenue source) to keep spending so much money.

"SL doesn't need the cloud like Blue Mars did, since SL will run on anything."

CCC, yes, SL can run on most consumer level machines on the market -- however, it can't run *well* an hardly any of them. It doesn't even run well on my Alienware laptop. It runs pretty well on a desktop PC with a high end 3D card and a dedicated broadband line... but that's an increasingly shrinking market. That's why I think a new deployment strategy is needed: The market is simply moving away (rapidly!) from the hardware and broadband assumptions that SL was originally architected for.

[Ignatius Onomatopoeia]

@Jovin, who wrote:

"Apple seem to think this is a possible future for web retailing according to patents that just surfaced today"

Fascinating. It may be good that Steve Jobs has stepped down as CEO, then, if Apple takes this technology any further. Otherwise:

Black turtleneck: check
Blue jeans: check
Frameless glasses: check
Megalomania: check

[Wizard Gynoid]

@Seabreeze it's not a given that "SL is just a game." that topic has been debated a lot before. a few of us contend that it's not a game. although, i suppose, if RL is a game, then perhaps i could grant that SL is a game in that sense. Commenting on blog posts sometimes seems like a game. :-)

[Deanya Lattimore]

This is what happens when a business looks at its customers and says, "we don't really give a special damn about any of you."

LL SHOULD have tried to increase the support for special interest groups instead of zapping it. There were LOTs of ways to make it better.

[rar]

why would anyone really believe LL's statistics anyway? Even an optimist would have to guess that the real numbers are worse.

[Lili]

Aaaaand facebook again. If you want to run what's left of the hardcore base out of Second Life, force more of real life into Second Life.

For the people who thronged here and built the wild and amazing things here, Second Life is or was an escape from real life. The more they are forced to deal with people, the more they leave.

* Unlimited anonymous accounts - Some people get fed up and stop coming.
* Voice - A lot of people stopped coming. Ok, so they were mostly guys playing girls, but they were here and very devoted to Second Life. It was their escape.
* Viewer 2 and forced, no opt-out web profiles - A few more people decide New World Grid is more their speed, byebye Second Life.
* Facebook Integration - Ok, now Second Life is Farmville. I think some people will love that, with all the retarded resource hogging fake animals we have now. Oh, you just rezzed a prim! Press OK to share this with all your friends. Oh, you just rezzed a prim! Press OK to share this with all your friends. Oh, you just rezzed a prim! Press OK to share this with all your friends. Oh, you just rezzed a prim! Press OK to share this with all your friends.

The point is, Second Life was what people came for. This thing some people are wanting to make it become is why we keep leaving. -- I bought a car because I wanted and needed one. If that car someday turns into a a pair of sneakers with hi-fi speakers and direct brain implant tracking and advertising, they're going straight into the trash and I'll go buy another car.

[Hamlet Au]

Lili, what's your evidence that most existing hardcore users don't want Facebook integration?

[Emperor Norton]

What an excellent move, lets take a 3d VR game, something inherently graphics intense and dumb it down in the hopes of chasing the latest marketing buzz word. Talk about not getting it. That's almost up there with "SL is the business ap of the future".

SL is down because it is freaking expensive to own land and there is a recession on. LL wants to get back up, drop the tiers, there will be more sims and more things to do.

[Alberik Rotaru]

I killed my Facebook account. Privacy was a secondary concern. My main concern was that it was clunky, slow and an enormous time sink. If I want to contact someone I send them an email. I don't need Facebook and a bazillion messages from people I don't know trying to send me Farmville critters I don't want. There are faster and better alternatives for each of the Facebook functions.

I doubt deep Facebook integration would have anything but a negative effect. The Facebook users I met were not technically sophisticated. You could not be and think messaging people through a slow-loading webpage is a good idea. I submit they are the exact opposite of Second Life users in their level of technical sophistication.

In any case, we have already been offered deep Facebook integration. The usage statistics on Facebook and non-Facebook viewers tends to suggest that there is no demand among existing users for even shallow Facebook integration.

The real weakness in SL is the very high price of land and the company's exclusive reliance on land owners as a revenue source. Shortsighted decisions to max revenue by killing the educational discount may have given a brief uptick to the revenue figures, but took no account of the hit to the quality of the SL experience as the non-profit sector was forced out.

Barren plains do not draw many residents or visitors. The richer SL can make the SL experience the better, a fact they seem to have forgotten in the last few years.

[Lili]

Hamlet, I have no more empirical evidence than someone who wants to say everyone in Second Life loves facebook. I've been in Second Life for five years and have known a lot of residents -- most of whom have left now.

I am a profile snooper from way back. And if there are links to facebook, flickr or blogs in a profile I'm probably going to check it out. I've noticed more than anything else, that the majority of these pages are based on the Second Life avatar and have no real world connection. Many of the ones that do give glimpses of a real life are obviously fake also. That or Second Life has the highest congregation of twenty year old millionaires with perfect lives, on the planet. I know there are still some who do heavily promote their real life in Second Life, but I encounter few of them.

Now considering that facebook does not technically allow non-human accounts, where does that leave people who do not want to share their real lives? And if this disassociation with a "second life" is so important to so many people, why do they come to Second Life? Is it expected that people will visit Second Life on their iPad just to look around and buy things, so they will have something to post on facebook?

My problem, and most of my friends problem with this, is that this is not what we spent these years in Second Life for. Second Life was and is a simulator. A place where you can build, experiment, dream and run away from the world for awhile. Relationships, friends and even money came as an afterthought. I enjoy all aspects of Second Life, but when it ceases being a "3-D simulator" and becomes a "social website", I'll be gone too.

All these ideas to make Second Life simpler, run on a cell phone, or connect your real world with a virtual one for some as yet unexplained purpose, detract from the whole. If the time and money that was wasted on viewer 2 and social pipe-dreams in the last two years had been spent on improving the world, the virtual world would be a lot better and a lot of our friends who have left would still be here.

For everyone who loves facebook, farmville, twitter or getting drunk at the local bar every night, you already have that. Why try to make Second Life into something you already have. And when Second Life is facebookified, what's next on the list? Is World of Warcraft going to be converted into an online tax service? Maybe the sims online could be a good recipe site.

[Lili]

@ Emperor Norton
You have the right idea! If Linden Lab dropped tier prices by half, people would start buying all this cheap land. Maybe there wouldn't be much cheap land if they stop taxing us to death.

[Hamlet Au]

Lili, the very largest Second Life-related group online by far is on Facebook. Also, I'm afraid you're addressing a straw man version of how Facebook integration actually works. Facebook integration does not necessarily mean connecting an FB profile with an avatar. (Though I do think that should be an OPTION.) I consult for a MMO company that uses Facebook Connect as a streamlined account creation method. However, this process does NOT reveal a player's Facebook identity to other players. And there are lots of ways Facebook makes sharing media, content, and information easier and to far more people online, while not exposing SL identities.

If that was the extent of how Facebook integrated with SL, would you still have objections? If so, what?

[Stone Semyorka]

About running SL on an iPad... I have been in-world every day since Nov. 19, 2006. I have a Mac Pro, MacBook Pro, MacBook Air and a 3G iPad. There are times and places when and where I would like to use my iPad to log into SL. This is not the same as wanting to use Firefox, Facebook or my iPhone as my interface into the virtual world. Those are different topics for discussion. I simply want to enjoy SL anytime anyplace via the 3G iPad when my MacBooks and Mac Pro are out of reach.

[Masami Kuramoto]

@ Loki

"Community is based on common interests, thats why you see places like the Steampunk Sims, Gorean Sims and Sci-Fi Sims flourishing, because they all want to be part of the same thing."

Exactly my point. This is why we need themed mainland.

The problem with private regions is that when their owners run out of money or time, their sims disappear, and so do their communities. Which is why both land mass _and_ concurrency are in decline.

The burden of land ownership and the future of entire communities must not rest on a few private region owners. LL must find ways to make those communities flourish on the mainland, where they can grow much larger during boom periods and shrink more gracefully during recessions.

[Lili]

Maybe my problem is that the only Second Life group I am involved in, is Second Life itself.
I have a number of accounts on websites such as flickr, but they have nothing to do with Second Life for me.

My problem with facebook is that I despise the pushiness of it. You can't go to a website now without facebook intruding. Every place you go it's, connect with facebook, share on facebook. Facebook is the current fad, much like myspace was and with about the same level of class. The difference being, more people are actually online now and it gets more attention. So, people that want your money all flock to facebook. The more entertainers and corporation that have a page there, the more sheep think it's cool there.

Now when Linden Lab thinks they can make money with advertising and cloud based crapula, they begin to lose interest in ever developing the engine of Second Life. When there is no need to support land owners and everyone is buying content on a website instead of inworld, advertising and facebook-type social interaction is what they will be selling. Like many other companies on the web, Linden Lab is easily distracted. The new shiny steals attention from what they should be concentrating on, finishing what they started. We're beginning to see where this is going. The "build your world" is becoming the "let us sell you stuff and maybe sell your info like our heroes at facebook".

Maybe facebook will start a VW so people can go there and be tracked, targeted, advertised to and buy their toys.

Anyone remember Spymac.com? I won't tell the whole story because I believe I've told it here before. Suffice it to say, it was an incredible community of PAYING members, that ended up destroying itself by listening to everyone except the members.

Everything changes and nothing lasts forever, but it's a shame to watch something die before it even matured. Well, I'll say no more about it. I'm really glad I've got openspace on my computer, maybe I'll start my own server farm, haha. Thanks for letting me rant, Hamlet. I don't do it to you very often.

[Hamlet Au]

Lili, I'm still not sure I understand your objection to Facebook integration, besides the fact that you personally don't like Facebook. Which is fine, but as I said, it's entirely possible for you to enjoy Second Life without Facebook, while others enjoy Second Life with it. There's over 100K people doing that already.

Also, I just don't see any evidence that Facebook is a waning fad like MySpace. It has over 6x the users that MySpace had at its peak, and just got half a *billion* dollars in funding. At current growth rates, it'll have a billion *users* in a year or two. It's simply not going away any time soon. For that matter, even MySpace is still quite large, with about 43 million monthly uniques in the US alone.

[Maxx]

I actually have a (RL) facebook account and i am a member of the SecondLife group.

However... i don't want to link my Avi to my rl identity. So no facebook integration in SL please.

So the number of Second Life group members in Facebook is not an indication for the adoption of Facebook in SL...

[Ananda]

just a factcheck note to Hamlet: "Largest SL group by far" is maybe overstating your case. There are groups within SL itself that have nearly 80K members. So the fact that there's a 100K group on Facebook doesn't really support any position other than "yup, Facebook is really big."

[shockwave yareach]

Since land ownership is falling because you don't need land to sell on the website, the solution is simple. Just have a 12 item limit on the number of things you can have in the webstore. And if you own land, the number of prims you can have is divided by 6 and that's how many more items you can sell in the webstore - you own 1024m, you can have 12 + 39 items on the web. Own half a sim? Your webstore can have 12 + 1250 different items for sale.

The webstore and the inworld stores should grow hand in hand. For simple browsing, there's no substitute for an inworld store. For lightning fast searches and purchases, the marketplace can't be beat. But today it's not worthwhile to have land when you can have a webstore for almost nothing. Simply restore the balance by limiting how much stuff you can have on your webstore in relation to how much stuff you can have on your land, and the problem is solved.

[Renee Marie Jones]

All the suggestions are to dumb it down, make it more trivial, and cater to the lowest common denominator. Maybe remove the 3d and just make it sliding flat puppets? It would run better on the web, huh?

If you like Facebook, then go use Facebook. If you succeed in making everything on the web run from Facebook then you simply destroy everything good that is not-Facebook. Why do you want to force everyone to use only the tools that you personally like?

Companies always destroy anything worthwhile. I'll stay in Second Life until they destroy it, then shed a tear and move on.

[Jordan France]

i went to the same school as patrick. i remeber those girls from my school who wrote in. they were white trash...i always felt so bad for them.