Second Life's Private Sim Revenue in 2013 Forecast at $48M, Down From $61M in 2010

Crunching the numbers from Tyche Shepherd's Grid Survey data, Ener Hax has a new forecast for revenue Linden Lab is earning from private sims: $47,700,000 in 2013, which is down from $60,624,000 in 2010. Back in 2011, Linden Lab's spokesman told me just under 80% of the company’s revenue is from land fees, so this could be a fairly sharp drop in overall revenue for the company. At the same time, Linden Lab seems to be getting pretty good revenue with Blocksworld, its new iOS app, while it's also boosted promotion for its monthly Premium subscriptions for Second Life, so it's possible some or even much of this private sim shortfall has been made up for by other revenue streams.

And yet again, as I've saying for several years, this also means Second Life needs new users to survive. Oculus Rift integration could bring many in, as could a robust mobile version. And yet again, no, as I keep repeating about as much, lowering private sim fees will not stop the loss of private sim revenue, only make it worse. Here's why:

As I noted last year, 76% of Second Life private sims are owned by 500 land barons. Most of them are breaking even or even making a profit on these sims, through rentals, which is why they're (relatively) secure for now. (But probably not in the medium term.) So while cutting monthly sim fees might keep the 24% minority of smaller sim owners from giving up their land, it would also mean a drastic, drastic drop in total revenue for Linden Lab. So no, the future for Second Life isn't private land -- it's new users, and new platforms, and radical experiments in how Second Life is used and designed. For instance, some Lindens have been trying to add game mechanics to Second Life for several years, but have been stymied by bureaucracy and fear of protests by a minority of hardcore "Second Life is not a game!" users. But as we keep seeing, something dramatic has to change, or the hemorrhaging will continue, until it no longer can.

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[Archangel Mortenwold]

Second Life won't see any significant net increase in new users until or unless land tier comes down to affordable levels. People log on for the first time on a poorly designed viewer they can't figure out, to a laggy grid the programmers can't seem to be bothered to fix without generating new technical problems, and then get a look at the ridiculously high price of land tier, which pretty much kills any remaining notions of sticking around.

Meanwhile, competing grids like InWorldz and Avination are staying afloat by offering more to users (up to 45,000 prims per region) for a fraction of the cost Linden Lab has its users paying.

There are a lot of things Linden Lab can do to retain existing users and grow a large new user base. These will have to include a sharp reduction in region tier prices to pre-2008 levels across the board, land-buying incentives for marketplace sellers so they can maintain an in-world presence, and ramping up customer service to meet the needs of users. Finally, the default viewer's user interface needs to be restored to its Viewer 1 layout and functionality, while retaining all the features of V3. If the Singularity developers could do it, so can Linden Lab. Like it or not, the V1 interface was very easy to use and learn, and for a long time more users were on Phoenix, Singularity, Cool VL, and other V1-style viewers than were ever on the default viewer. That really should be a wake up call to Linden Lab.

The bottom line is, without a significant price drop, improved viewer interface, and increased customer support, don't count on Second Life to make a comeback.

[Archangel Mortenwold]

As an add-on, you're assuming a drop in land tier wouldn't result in increased "purchase" or private regions as more people are able to afford them. To assume this wouldn't happen makes no sense.

[Hamlet Au]

Archangel Mortenwold: Do you have evidence of a substantial market for private sims, even if they were discounted to, say, $100 a month? By "substantial", I mean enough to stabilize or even exceed current revenue? Show numbers and cites, please.

[desmondshang]

All of the land pricing issues are moot due to the land glut, they decided to flood the market and destroy any and all land equity. And then let it fester and get even worse.

* * * * *

Rather than that being an esoteric argument, it's actually quite plain to understand the effect from a consumer point of view.

Say you are a longtime resident and you are most active from, say, November to February. Say you pay 50 dollars a month for land then... 200 dollars total. If there's always a huge glut of desirable land, then why bother keep it year round when you aren't using it, for an extra 400 dollars? True, some do, but anyone who feels that a few hundred dollars is significant won't bother. There's very little incentive to stick around all year, these days.

Point being, there is *no* solution to land pricing until there is some kind of land scarcity again. Totally irrespective of what land barons might do. We face the same land glut problem, and won't pay for dead time either. No matter what tier is, getting say 4 or 6 months of tier left in our laps won't fly.

Status quo isn't any good either; the revenue drop they have been realising over the past few years is not any kind of solution, and I'd bet that nine out of ten following commenters could tell you exactly how next year is going to go *right now*. This is why management makes the big dollars: so things don't continue like this.

It's econ 101; the solutions are *obvious*. I'd say more, but not really keen on giving any kind of advisement these days. They are big boys, and get paid lots to figure it out on their own.

And it's not like they don't have the audacity to try radical reform, certainly they used that audacity (and more!) with the content rights grab in August. It has puzzled me, though, why they haven't bothered to save their own bacon regarding land revenue yet.

[Pussycat Catnap]

So why do I keep my land year round?

Because frankly - I don't want to have to move somewhere else. If I dump my land... my odds of getting it back are poor. I did rebuy my original land again last year - but that was after a 3 year wait for it to be available again.

As for the decline... of a 10 year old MMO. Should anyone be surprised?

More surprising is that a 10 year old MMO is still sticky with as many people as it has.

Older MMOs abound - but by this stage they've usually shrunken to skeleton crew of devs supporting a tiny hardcore fanbase.

[Pussycat Catnap]

I will however agree with desmond on land glut.

I understand that linden homes got a LOT of people to go premium... but it did so in a very bad way - by creating 3 or 4 new continents (look on the map at how big the 3, maybe 4 linden home sim clusters are)...

A lot of people thought adding Zindra made a land glut. But since Linden Homes began, they've essentially added 3 more Zindras. Maybe 4 - been a while since I went counting them, they're a little hidden so you have to scroll all over the map to find them...

But if you just flipped the switch on them and deleted all that land - the vast majority of those linden home people are unlikely to go hunting for a new spot on mainland.

Many are the foolish ones who don't even realize they have 512m of tier... and many more are the ones who fear mainland and the land search process... Some might go to estate rentals - but doubtful enough would to boost private estates back up to an amount to cover the loss.

BUT... as long as those sims exist, there will be too much land in SL for the demand. Though LLs may make its money either way - from Linden Home owners or estate owners.

Certainly it would be better for them if they could make most of their money from Linden Home owners and became less reliant on the 500 'mega customers' (and thereby more able to act without fear of angering non-replaceable customers).

[Metacam Oh]

Greed has done in Second Life, only a change in Board of Directors or Ownership could save this dying cow.

[Informer]

Still very profitable for such a stagnant, lazy product that is blatantly ripping off its customers. It will continue to go down, but if it's a $14m drop every few years, it has plenty of life left surely?

[Oink]

Competition is long here... integrated gamification + metaverse all-in-one... for one-time 20 euros

Garry's Mod 13
http://en.wikipedia.org/wiki/Garry%27s_Mod

The killer sentence: "Although Garry's Mod is usually considered to be a full game, it has no game objective and players can use the game's set of tools for any purpose whatsoever. Garry's Mod allows players to manipulate items, furniture and "props" – various objects that players can place in-game. Props can be selected from any installed Source engine game or from a community created collection."

[Ezra]

The idea of "land glut" doesn't make sense to me. It makes as much sense as saying on YouTube there's "video glut", on Netflix there's "movie glut", on Rdio there's "music glut", on Flickr there's "photography glut", on Kindle there's "book glut", on DeviantArt there's "art glut", on Etsy there's "handcrafts glut". etc.

Understand that first and foremost "land" is the one and only medium we have to create and share. At least that's the way it should be. I understand due to the price of land, and institution of land barons, "land" in actuality first and foremost an artificially scarce overpriced commodity, that Second Life's economy depends on the suspended belief that land is in fact land and not an abstraction of CPU time, disk space, RAM and bandwidth; all of which has gotten exponentially cheaper in Second Life's ten years of life.

Personally, I wish Linden Lab had more faith in its users and creators like the companies that're going to be around in 10 years do. And I believe that lack of faith is the only reason tier costs haven't dropped.

In the beginning of 2007, YouTube still had 10-minute video length limits and hadn't rolled out its partnership program yet. Seven years later we're able to upload video as long as 12 hours, 20 gigabytes in size, at zero costs and even earn money while doing it.

A service like YouTube gambles that the more creative it allows its users to be, the more revenue and profits the company reaps, and it's held true.

Linden Lab on the other hand won't make those kind of gambles. In the same 7 years that YouTube and a bunch of other successful creative outlets on the internet have prospered, Linden Lab hasn't budged on pricing even though companies like Amazon Web Services have made things cheaper for them.

I believe during M's days the reasons they didn't budge on pricing is because they still believed they could be an enterprise company selling to the likes of IBM and universities. In Rod's era, there's been a return on focus on individual users, at least in marketing, the business side hasn't caught up and there doesn't seem to be any intentions to solve it.

There's no further explanation of why tier prices haven't dropped other than Rod lies to us when he says he believes in the power of Second Life as a creative platform. Linden Lab doesn't trust that we'd make Second Life a much greater, attractive place if they did everything in their power to lift limitations on us, as a company like YouTube has for its creators.

Hamlet, you say Second Life needs more users to survive while simultaneously stating dropping tier won't do anything. You understand we the creators put 99.9% of pixels on screen and sounds through speakers, right? We're absolutely the only ones that can make Second Life a place worth visiting. We absolutely need land in order to accomplish that. A mobile port or Oculus Rift integration means absolutely nothing if no one bothers to, or can't due to costs, create experiences for any new users.

If Linden Lab won't reverse course and make the same gambles on creators that other creative outlets like YouTube have, expect the same results as we've had the past six or seven years; dwindling region counts, stagnant user concurrency.

Meanwhile, unless something changes, the rest of the creative web will grow, and Second Life will become irrelevant as quickly as its creators realize their talents are amazing and that they can be much more creative and profitable elsewhere, with far less the headaches and costs.

[Iggy]

"Older MMOs abound - but by this stage they've usually shrunken to skeleton crew of devs supporting a tiny hardcore fanbase."

Pussycat makes an excellent point. Perhaps we should not worry so much about "the death of SL" as its diminished future. Then what is it that keeps the hard-core base there in SL?

New UGC. Best hope the creators don't leave or no new blingy-bling-bling for our fashionistas or Swords of a Thousand Truths for the RPers.

[CronoCloud Creeggan]

@Des, The Great and Glorious Leader Shang.

Yep, land glut...which is why I'm not too worried if a few "oldbie regions" that no one visits and who have content dating from 2005 go away. As we've seen with the popular sim lists... there's a stable core userbase...they're just not the ones commenting on NWN so no one knows what they think.

@Iggy who wrote: Perhaps we should not worry so much about "the death of SL" as its diminished future. Then what is it that keeps the hard-core base there in SL?

Shoes! (I'm joking on that, but let me explain further)

Now people will say, you need land to show off the shoes.... perhaps. But look at the most stable and popular regions in SL...it's not the social places where fashionistas hang out that are going away...it's the space museums and picturesque regions that one visits once and then never returns to.

It's community that keeps people in SL. Caledon may be smaller than it was, but it's got a solid core of residents. The Fashionistas shop like madwomen and keep the economy going, most of them own a bit of land too. The Furries may be less visible, but they're still there as are the Goreans. They're going nowhere.

Community...if you're good at organizing communities...you're a valued person in SL....and we need more of them.

[Robert Graf]

LL/SL will continue to exist as long as someone pays to keep the servers on. The real test of success is a growing user base, a growing economy(that benefits the largest number of people possible instead of the current model which benefits just the land barons and a few select builders). Active Worlds is still around after what? 15 years+. Builds done in 1997 still exist there but no one uses it. No one goes there. So, the folks pushing no change in tier, no change in the way business is done in SL, just keep doing what has been done in the past. Remember that when they start mouthing the same old same old... They don't have the interests of the 99% of SL residents that are still active. They are essentially corrupticans... They wanted a tilted playing field with all the advantage in their favor and they got it... Congratulations, you won but at the same time you lost. No noobs left to exploit... Most residents are hip to the games being played by LL. The height of insanity is doing the same thing over and over and having the same result... The future of Virtual Worlds isn't LL/SL. It's going the way of Active Worlds. still around but just a handful of people still there. ;)_~~~

[Adeon Writer]

Now that you can sell items on the marketplace, there is little need to own land in order to make good money in SL.

[Informer]

Yes Adeon, I agree. And it's for that reason that LL should start imposing fees or restrictions on Marketplace to try and stimulate the land market. I know, and I don't exaggerate, EIGHT people who have closed their in-world store in the past year (that's eight land rentals gone too) to go Marketplace only. And subsequently long time sim owners struggle to make tier.

[pussycat catnap]

@Ezra: "The idea of "land glut" doesn't make sense to me. It makes as much sense as saying [stuff]"

I at least mean a glut of unsold, vacant, or otherwise inactive land.

There is more land than customers to buy it. Because of the 3 extra mainland continents - linden homes, much of the rest of mainland is now excess. It remains vacant. That makes SL feel emptier than it is, and makes regions feel too disconnected.

SL might even benefit by raising tier costs in estate land, and lowering it on mainland - to force push people together more. Make it so only the mega-estate holders, who would keep their discounts, can afford it, and everyone else shunts to mainland.
- Then you would have land scarcity, and land would be seen as valuable more, while keeping it maintained would become more desired.

[pussycat catnap]

@Chronocloud: "which is why I'm not too worried . . .and who have content dating from 2005 go away. As we've seen with the popular sim lists..."

On the other hand visit some of those top sims - they're using content from 2005. And I'm not talking about a mesh vs. pre-mesh issue here. I'm talking about furniture with visible poseballs as the more advanced stuff on the sim, pre-sculpty trees, cars, and furniture... shops that still sell bling-wear in the malls... pre-flexi hair... and so on.

And when they do use newer things, sculpty, mesh, etc... they tend to go in for the most garish choices, misaligned (walls and floors that don't meet up, or textures that have improper repeats so either a tiny texture is single repeat stretched across a 64m megaprim, or a giant texture is set to 1000 repeats on a 2m prim... and an overuse of colors like Magenta, purple, cyan, black... and all set to fullbright and glow... prim beaches on prim water, with a wall 20m into the water from the coast that has animated gif XXX advertisements on it... I've even seen people rez prim water and a prim beach on top of SL ground and an SL water coastline...

I don't know what it is... but the most popular places in SL tend to have 'bad design and no artistic talent' as a unifying theme... O.o

[Robert Graf]

Land is meaningless... Prim counts are meaningless... Open Spaces vs. Regular Regions vs. Mainland vs. Protected Waterfront vs. etc. etc. etc.. It's all meaningless now. Want more prims... Up the region prim count... Need more land... Start up another region... And no one telling you that you can't do that... That is the future of Virtual Worlds... And I thank LL for releasing their server code to the opensim guys way back in the day. That is one thing I will give them congratulations on. Releasing that code... It made opensim possible... Alternatives to SL possible... Regions... Mini-Grids... full Grids... Their all like web servers now. Anyone can have one now. It has been made accessable to the masses. We all have the power now... I have 7 regions with homesteaders on them - 4096 sq meters/1500 prims. No Tier so no charge for the homesteads. I'm all out of them with every one of them occupied by current and ex-SL residents... And 90%+ say the reason they are looking at opensim is tier cost. ;)_~~~

[pussycat catnap]

@Adeon: On Marketplace not needing land...

- This is why I now say that SL is no longer the product.

Marketplace is.

SL only continues to exist as a motivator to drive sales on Marketplace. They're slowly phasing out the 'world' of SL, and eventually we'll be left with something like IMVU - just a barbie showroom to take pics of whatever it was we bought on Marketplace.

If that is not the case, then they need to make land needed again. Otherwise... even if not by intent, my assumption is more or less correct: Marketplace is LLs product, SL is just added weight.

[pussycat catnap]

@Robert Graf: regarding Open Sim stuff...

But where is your community?

Until you show me an Open Sim with at least 10,000 concurrency on average - its not a community. At the slowest times of a slow day, SL won't dip below 30,000. Its usually double that.

Sure some Iconoclasts and 'live in a bubble' types want a sim to themselves on some isolated server... but why when there is no one else around?

Most people want community.

[Robert Graf]

It's there, pussy... And growing every day. You should visit and see for yourself. You are very welcome to come by and see. ;) Competition is good, pussy. Don't fight it. Embrace it... The more choices consumers of Virtual Worlds have the better. I don't have any hatred for SL or those who choose to use it. It's all good in the Virtual Worlds neighborhood! ;) I was just pointing out the obvious long term trends going forward within the SL/Opensim community. Cna't we all just get along.... lol!! ;)_~~~

[zzpearlbottom]

All i know is that Mainland and its history is what makes SL unique from other virtual worlds!
More and more are finding that, as more private regions also start to figure that with the progress on crossing sims, more and more want to travel around, without having to tlp, and more are connecting their regions to mainland!
And for sure nobody can deny that LL is slowly trying to improve Sl experience, right now we can travel and cross sims on groups of more then 20 without crashing, we can go to watch live shows, where more then 70 users are there, and dont take 1 hour to see all around!
We can wander around, just being amazed by the changes on a region due to using a day cycle and shadows on!
V1 interface is dead, is useless and clumsy compared to V3 and i did used it for Years before i realize that!
So those who still think Sl is all about tlp from a sim to another, move out, Kitely is much better, or Open sims, for that!

[zzpearlbottom]

And LL still have plenty of room to act, from creating more mainland regions like Bay city (double prims per m2), allowing more m2 per tier level as premium members, make marketplace sellers need to have at least one shop in world (My soul mate has 3 shops in world and only 1 pct of her profits are from those, still never she will not let any to be able to see her products before buying them, so LL should make clear that:
Marketplace sellers need to have the items as well in world to be seen and bought!
A easy solution that would not ned to make tiers go down!

[2103]

haha, Kitely, IWz, open sims.. Lots of room, land is cheap, but no, people. People make the community, not the cheap land.

When I checked IWz last night to see how many where online... 183. Whoopdedo.

[JJ]

"It's there, pussy... And growing every day."

Funniest thing I've read all week.

[Metacam Oh]

Wow 2103 you interact with more than 183 people at a time? Impressive.

[Ciaran Laval]

@CronoCloud "Yep, land glut...which is why I'm not too worried if a few "oldbie regions" that no one visits and who have content dating from 2005 go away. As we've seen with the popular sim lists... there's a stable core userbase...they're just not the ones commenting on NWN so no one knows what they think."

However it's not a few old sims, last year it was around 11.5% net loss in private sims, this year isn't so bad, at around 7.5% net loss but as Hamlet's post explains with the comparison in drop of income via tier, it is something to be concerned about.

@Hamlet "For instance, some Lindens have been trying to add game mechanics to Second Life for several years, but have been stymied by bureaucracy and fear of protests by a minority of hardcore "Second Life is not a game!" users. "

The tier is too damn high for this. People can't afford to create experiences, tier stifles development in that direction. There are a very limited number of people who could pull it off.

Linden Lab's reliance on tier income stifles other avenues that could bring in more users.

However long term, Linden Lab absolutely need to find more ways to generate income. Tier should not be such a major part of their income stream and they've had plenty of time to get their heads around this.

[Dartagan Shepherd]

What you're leaving out in the "LL can't lower tier prices" is that there is a flexible profit margin in which they can indeed lower tier and still maintain profit.

Since they don't publish their company financials exactly what that is, is unknown.

Indicators like investments in other products, their costs and level of employees and the money to acquire other companies also suggest the same.

In the last few years, LL has also cut its operating costs by closing a data center and continuing the process of moving more regions onto less hardware as well as improving rendering and load, more savings to resources by increasing land impact over prim count, adding quite a few more "sinks" to the economy, etc.

And yet none of this profit margin or operational savings have filtered down to the user as lowered tier costs.

Yes, it may mean less profit for LL, that isn't to say that it can't be done to some extent and have LL still remain in profit.

However, they'd rather gamble on new products and new users for those than the users who pay for all it, in the meantime looking at ways that they can monetize content even further without any savings to us judging by the ToS changes.

The bottom line is that we'll never know how many new users would bite at lower tier because this company is about nothing but maximizing their profit on others "creations" and their money turned play money.

Make no mistake though, there's room to lower tier to some extent, instead it's used on other things that most of us who pay for this companies existence don't use or want.

It's not that they can't and still be around. It's that they won't.

[Robert Graf]

I must have touched a raw nerve.... lmao!! So, let's say you actuall showed up at an event in OSGrid, Inworldz, germangrid, francogrid, etc etc. and you did nothing but compain the whole time... why arent; there ever any people... This place is too laggy.... I hate opensim!!!!.... I want to force everyone to use SL!!!! I want my mommy!!! I wouldn't want you to attend my community event either.... lmao!! It's not that there arent any events... Or that there isnt any community there... Its that you aren't being invited to the party.... lol!!! ;)_~~~

[Pussycat Catnap]

@zz: "All i know is that Mainland and its history is what makes SL unique from other virtual worlds!"

That is probably one of the few times we've ever agreed on anything.

@2013 & Metacam: re 183 concurrency in inWorldz.

Its not that one interracts with 183 people at once... but if concurrency is that low - you all kind of have to be near clones of each other to ever have reason to interract at all.

Think about the people who regularly comment on Hamlet's blog here. We have this interest that brings us together. But only here.
- How many of us know each other anywhere else? Likely few.

If SL were just us... it'd be dead in days.

Small concurrency makes community very hard. The smaller it is, the more the people in it need to be similar in interests, or the more, as with this blog; the platform needs to narrow its scope.

You can handle a blog on a specific set of topics just fine with a very small set of 'concurrent users' (which I translate in a blog as active posters). But you can't handle a wider open ended world.

If inWorldz has 183 concurrency - a few people not wanting to do the same things as the others can make a night there dead...

Granted this is a catch-22... you need community to... grow community...

Yeah I'd love to move to inWorldz... assuming I could get my hands on an African dark skinned Neko and bengal or Abyssinian Cat Furry avatar with nice AO and mesh wardrobe of several hundred outfits again... but I'm not the sort who is good at bringing my 50,000 friends with me... :)

(I'm not the sort who even has 50,000 friends.)

@JJ and Robert:
Always fun to see how people choose to abbreviate my name. :) When I chose it I was running through a long list of 'catty' names and crossing off ones that where already taken or didn't sound right. The one I landed on seemed a good way to reflect my sense that I was a neko on the inside - and reflected a different expected path in SL than the one I ended up taking. How people abbreviate it lets me see a little into their comfort zones.

[Robert Graf]

It's funny when folks who have no respect for others and their opinions choose to pass judgement on said others... I repeat... I do not hate LL/SL or the residents that choose to use SL. but it's not the same with you, pussycat.... You show hatred for anything that is not LL/SL and the folks that choose to use other non-SL grids.... I don't... Thats the difference between you and me. I have love for all Virtual Worlds and their residents... And you don't... ;)_~~~

[Ezra]

@Pussycat

"SL might even benefit by raising tier costs in estate land, and lowering it on mainland - to force push people together more. Make it so only the mega-estate holders, who would keep their discounts, can afford it, and everyone else shunts to mainland.
- Then you would have land scarcity, and land would be seen as valuable more, while keeping it maintained would become more desired."

Yeeeah, and here's where the "land" illusion gets really dangerous and concepts like "land glut" leads to persecution of some creators to please others. In your case, Pussycat, you pit mainland frequenters vs. private estate frequenters. In Crono's case, "oldbie" regions vs....newbie regions I guess?

You're suggesting a level of behavioral control and price gauging that exceeds even what Linden Lab has done to date. Second Life will continue to bleed regions until Linden Lab creates what they market; a shared creativity platform.

Creators like to please themselves first and foremost. It shouldn't be a requirement to have hundreds of dollars of disposable income to create with just about the most dated 3D creation tools one can find.

Unity is $75 dollars a month, and there is no in-fighting between "oldbies" and whatever is opposite of that, or people buying into abstractions so much they think up analogous faux arguments like "you know what, its the 3D people that are the problem, make 3D more expensive and 2D less expensive and then everything will be great."

Similarly in every other avenue of shared creativity I know that prices correctly and treats customers correctly, this Lord of the Flies situation doesn't happen.

Anyway, the greater truth has been put much simpler by people like Metacam; only major leadership change can heal the bleed of region loss and other ailments Second Life has. Until then its just Rod milking a dying cow to experiment on other products.

In the meantime lets keep blaming one another. Let's make 2014's "oldbie" and "Oculus Rift" 2011's "resistant to change" and "Facebook". Surely this time we have the right amount of divisiveness and attachment to momentary hype to fix Second Life.

[Ezra]

@Hamlet 'For instance, some Lindens have been trying to add game mechanics to Second Life for several years, but have been stymied by bureaucracy and fear of protests by a minority of hardcore "Second Life is not a game!" users.'

If you're interested in Second Life being more of a game platform, investigate what $75 a month gets a Unity user and what $75 a month gets a Second Life user likely renting 1/4th of a region at that price point.

Also, most game-related features Linden Lab has released in recent years have severe caveats. We have Mesh and Pathfinding but no way to animate NPCs other than laggy, cumbersome sculpty swapping via LSL. We have Materials but no assurance anyohe can actually see them. We got a bit of the Experience Tools used to build Linden Realms but are still waiting for the rest of them.

Also, individuals typically can't afford the tens of regions Linden Lab uses to make their games.

[Pussycat Catnap]

@Robert: "It's funny when folks who have no respect for others and their opinions choose to pass judgement on said others..."

Pot meet Kettle.

I have no "hatred" of other worlds. I'm simply saying... what's the point of me going to a place that is too small for a community.

You need to recognize the difference between an ad hominen attack and an argument on the merrits of something. Because I'm pointing out a lack of 'value' in something, not passing a value-judgement on its users.

And I'll repeat my stance: if your concurrency is below 10,000; can you reasonably say you have a community to offer me?

But also, why do people keep bringing them up? Is there somebody on your virtual world's blogs constantly posting about SL or something?

This article is not about Open Sim - so why even mention it? Hamlet does write about Open Sims from time to time - but not this time.

[Pussycat Catnap]

@Ezra: nearly half of mainland goes empty and unused.

If that is not best described as a land-glut, what would describe it?

Do you see it as a non-issue having no impact on the perception of SL, or on the community of SL?

Or do you have some better way to refer to it other than a land-glut?

You argue tier on the high end. Do you also find the $9.95/month to get a 512m tier (OR linden home) to be price gouging?
- In other words, do you think so much mainland is vacant because it is too pricey, or because there is too much of it?

The land-glut argument is the idea that so much mainland is empty because there is too much of it.

Do you find this argument wrong?

If the $9.95/mo price of mainland is too high, how low would be low enough to fill mainland back up to 'reasonable occupancy' without getting rid of a single sim? (which also ask you: how much of mainland needs to be full to be seen as reasonably occupied?)

[Ezra]

@Pussycat "The land-glut argument is the idea that so much mainland is empty because there is too much of it.

Do you find this argument wrong?"

You're the only one I know that limits it to mainland, some believe private estates are glut too.

I find the proposed solutions to any "land glut" problem wrong; extort private estate holders in your case, a scarlet letter "O" for oldbies as others have suggested.

If mainland goes unsold there's one or two problems that has nothing to do with whether or not a separate segment of the greater SL population needs persecuting or not: either the land is overvalued or has no value.

A sensible company would reduce prices when they can, or improve the offering, but -not- improve the offering by reducing the value of something else they offer like private estates.

You can't make people want mainland. Some people don't have any interest in a contiguous continent where we're compacted as much as possible. A large part of the Second Life population is interested in nothing but distancing themselves hundreds of meters apart in the sky even when they're on the same sim. The vast majority of Second Life might want more privacy, more space to build, and more selective sharing. That should be fine.

[Robert Graf]

Pussycat wants to limit debate to only her ideas and topics... And woe be to anyone who disagrees with her... Telling... ;)

[Robert Graf]

The reason for my comments are that there are alternatives and that if anyone is dissatisfied with LL/SL and their policies that they might want to vote with their feet and wallets. And opensim is just one alternative choice that they now have. It's not an LL/SL only solution anymore. Why would you fear anyone who lets SL users know about alternatives? It says alot about you that you attack anyone who doesn't stick to the LL/SL party line... Lighten up, pussycat.... Before you give yourself a stroke! lol!! ;)

[2103]

I guess the people have spoken since active users on peewee league SL wannabe platforms are non-existent.

[Robert Graf]

@2103... oooooo what a burnnnnnn..... lmao!!! ;)_~~~

[2103]

thank you, thank you very much, I'll be in your grade school debate class all day.

[Robert Graf]

@2103... Such hatred.... and at this time of year.... lmao!! I want you and pussycat to have a very Merry Christmas and hopefully a very Happy New Year... Obviously, anger and blood pressure rises are occuring and that is not good. Take a deep breath and exhale.... Think about meadows with furry bunnies and sunshine.... Light breezes brushing across your face as you gather a large handfun of flowers and move them towards your nose... Breathing deeply the smell of lilacs and roses wafts thru your olfactory passages... Ahhhhhhhh... You burrow into the grasses of the meadow... looking up at the sky you think could this day be any better than this.... Paradise.... Hopefully, that helps you and pussycat to relax a little and to let go of all your hatred.... ;)_~~~

[Pussycat Catnap]

@Robert: what?

No... but well... we might as well talk about the Roman invasion of Gaul here. Its makes as much sense as the constant bringing Open Sim stuff into SL specific topics.

The topic Hamlet started was SL tier...

So... because rebels seized the capital of the Central African Republic, the UN has authorized sending troops there. And as a result, LLs sucks monkey cheese.

relevancy...

its useful in a conversation...

But personally, I'm hoping the new doctor is as good as Matt Smith.

[Pussycat Catnap]

@Robert: also, do you have any points left to make, or is it all just personal attacks at your presumptions about my character now?

[Pussycat Catnap]

@Ezra: You can't make people want mainland.

That's a good point. But I think people DO want it. The linden home sims are largely full - and they are often more interconnected than so-called "regular mainland".

Maybe my estate solution isn't the right one.

Here's the problem I'm trying to find a solution to:

Since the linden homes started up, land has been getting vacated everywhere else.

On the one hand fine: give people what they want, and what they want appears to be a linden home.

But then on the other hand the side effects I see are two:

*****
First mainland, I know it better. Its become scattered spots of occupation, with about 50% of the space between vacant. Of the occupied land, a large amount of it is absentee owners - the people who are still paying tier on a 2007 lot, who have not logged into SL for almost as long (I profile perv a lot, and you can see when someone last logged in by looking at their name in any group they're in).

- before the linden homes, mainland wasn't full either, but it had a lot less vacancy. The land crash happened twice. Once when hype died, and again when linden homes began. In the first cycle, it was just a price drop. 4L/m average went to 1.5L/m average. In the second, it went to abandoned.

The LL solution of setting all of that abandoned land for sale then backfired - because it only set newly abandoned land for sale, people saw visibly just how fast land was getting abandoned, and buyers also realized "why buy land when if I wait a week, they will abandon it and I can get it cheaper..."

This is a problem because it changes perceptions of SL - makes it look like it is dying, when the most visible land is poofing away. The strict covenant on Linden Homes means people don't see that they are full - you only go there as a resident, and people don't tend to hang out in their SL homes in crowds. Its where folks spend their downtime - so often when you go there you're one of 1 to 3 people on sim, if that. Even though the place is full of active residents, it actually looks even emptier than the actually empty mainland...

Perception gets toxic.

***
Second problem is estate, and here my facts come second hand from my read of comments from estate holders. I gather that they too have seen a rapid loss of tenants since linden homes began.

So smaller estates start bleeding out to below profit margins... and then close... and then Hamlets gets statistics like the one for this blog...
And the people who get evicted when the smaller estate closed think SL is dying, and maybe quit or protest... or complain about unfair land barons...

Again ruining perceptions...

***

Linden Homes are bleeding the rest of SL...
"give them what they want" is not good if you don't think through the consequences. Unfettered market action and all...

My solution wasn't meant to punish estate owners... but stabilize them. If you raised tier on them, but kept the discount intact for being a larger land baron... only the businesses with good business models would remain... the situation for them would stabilize.

The remainder who are too small to be in that market... would fill in the remaining choice for land: either rent from the larger barons, or move to mainland.

While I would love to wipe out linden homes - its too late, and frankly they do have a valid purpose. A LOT of people who would never have gone premium did so because of them. The problem is they didn't control the supply of them enough, and didn't think through ways to control the bleed out from other forms of land into them.

Right now... if we lowered tier on mainland to nothing... it might still not fill up.

This MMO is 10 years old. Its not going to grow.

Lowering the costs won't add people. There aren't new people to add in significant numbers. Most new signups now are just SEO spam bots signing up to spam the forums.

Lowering costs is only effective in terms of what it can do to keep people from quitting. On that regard... I agree that costs need to go down.

[Tor1976]

Excellent update. Thx for the post. Just revisited SL again after an absence of a year. Still can't believe the brightest idea for revenue the Lindens could come up with is virtual "land," which is nothing but a server running the sims... which in turns translates to cost. It's like they built a gigantic sporting venue with an array of a million halogen lights that are always on, but then structured the rules so that the only games the stadium could hold were hop-scotch and rope skipping. SMFH.

My biggest gripe with SL has always been that the Lindens have refused to invoke it with "purpose," or for that matter allow anyone else to give it a serious shot. Let's think about this... the best MMORPG to survive in SL is Bloodlines... I mean... WTF. Bloodlines? Amway with avatars.

It's just tragic. That's basically how I spend my time in SL. Skipping through the gigantic void of empty sims shaking my head... imagining the vast infrastructure of servers and vast cable network and the amount of energy required to run the place... for little or no purpose....

And a year later I realize that key technical issues have still not been addressed while the "innovations" that are introduced leave me utterly indifferent.

I've said this many times, and my opinion remains unchanged. VR is an evolutionary inevitability... but the abandoned strip malls of SL's vast deserted wastelands, badboy excon avatars and stumpie-armed tramps in the latest trollop wear is NOT it.

[Archangel Mortenwold]

Hamlet, you assume that a significant drop in region tier across the board won't result in increased sales of private regions. You've asked me to cite numbers, but could you please cite some yourself credibly demonstrating how a price drop wouldn't increase sales, or prevent more region losses?

[Hamlet Au]

I can't prove a negative, dude; if you want Linden Lab to take you seriously, you need to prove why they should take such a dangerous risk. However, LL did restore its non-profit discount, and that hasn't appreciably slowed sim loss.

[Archangel Mortenwold]

It's the four basic principles of supply and demand, Hamlet, which are:

1.) If demand increases and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price.
2.) If demand decreases and supply remains unchanged, a surplus occurs, leading to a lower equilibrium price.
3.) If demand remains unchanged and supply increases, a surplus occurs, leading to a lower equilibrium price.
4.) If demand remains unchanged and supply decreases, a shortage occurs, leading to a higher equilibrium price.

Laws two and three appear to be applying here, but Linden Lab refuses to acknowledge them. Demand is low and supply is high relative to demand, therefore it is necessary to lower prices to attract new buyers and retain existing ones. No company that wants to survive the long term ignores these basic laws of supply and demand.

The reason lowering tier price for nonprofits hasn't abated the region loss is that it isn't enough at this point to draw in new buyers, or keep existing ones. Having been burned before by Linden Lab, many nonprofits are understandably wary of spending diminishing funds on a virtual world that is unstable and prone to hastily made, poor business decisions. If the Lab wants to see any stabilization with regards to region retention, it has to lower tier across the board. To do otherwise is to invite further decline in region ownership.

[Archangel Mortenwold]

Additionally, Linden Lab can increase demand for virtual land by creating incentives for Marketplace sellers to purchase land. Right now, with direct upload having eliminated the need for maintaining expensive land, there really is no legitimate business incentive to maintain a costly in-world store. Discounts for Marketplace sellers on virtual land, with the discount increasing to a fixed yet equitable maximum as the seller acquires more land, may help attract more land buyers.

Just food for thought. Just understand one thing: the current pricing model is in the long term unsustainable.

[phantom republic]

I disagree with the premise that lower-priced tiers would kill SL. Certainly, it couldn't be done that easily, but LL certainly has enough statistics about land sales that they could test market how quickly land would sell at 100USD/sim/month. Repeat with five sims if the stats were good, ten ... If the model improved sales, retention, and hours in-world for involved sim-owners, it could opened up grid wide.

Obviously, it could only work if it had a massive positive impact. Even though the model discussed in this article might reduce current-model revenues by 50 - 67%, if it created the affect of quadrupling land use and concurrency and linden transactions ... what's the loss?

The automotive industry once believed the nonsense that not everyone could afford a car - Henry Ford believed the opposite, and car sales (particular Fords) exploded with every price drop he instigated.

I don't believe for a second that LL spends $300 USD for every sim they use. They might need that for their remaining employees - but what if the grid doubled, tripled, quadrupled? Why not work toward that end now with reduced land tier (testing first)?

This isn't "build it first and they will come," it's "build it cheaper so they will stay."

[Land Baron]

I'm not sure if anyone is aware but me and my land baron friends have been scoping up mainland like no tomorrow. 2012-2013 actually was extremely profitable for some of us. We also put some of competitors out of business permenantely opening up more profit. Yes the envionment is changing however we are changing with it. Consumer demand for our land keeps us very busy and people want new things. You can't just sell "land". Second life has just about every function you could need. Also you can expand your functionality by using PHP and MySQL ( HTTP Requests ). Possibilities are truly endless and the foundation is without a doubt there. Also if you want a prediction from someone who is easily earning more then 10 000 USD monthly. 2015 will be a turning stone for SL, mostly due to Moores Law. I know of several viewers in development specifically for tablets and other hardware that will change the way we think and interact within Second Life.

[molokai sharkfin]

Pulls out her credentials, years as a business consultant, waves them around impressively and then tucks them away. My question meanders over a few points. If Linden labs is losing that amount of sims over the years, what replaces that loss.

I look at the Linden Homes as harming a lot of rental businesses who might have rented out small parcels. I look at the clubs which have closed down after 6 years and returned their sims. They depended upon rentals and stores to pay for the sims that supported the clubs. So what replaces that income. Is the LL percentage taken through the market place enough to offset the loss of in world stores rentals and their sims? Or was that unforeseen.

The other matter which comes to mind is how profitable are the creator up loading fees. With everyone rushing to Mesh, does it make up the sim losses. Or does the entire creator upload of textures, sculpts and assorted other uploads make a difference when added together.

And then there is the Linden Exchange fee, what is the pulse on that? So I guess what is not clear is what is the overall impact on the long term survival of Second life.