Comment of the Week: Don't Be Optimistic Just Because the Loss of Private Sims in Second Life Has Slowed

Last week when I pointed out that the constant loss of private sim estates in Second Life (Linden Lab's main revenue source) has been slowing, reader "Granger" wasn't having any of that:

Optimism is useful when warranted... misleading when it's not based on reality. It is difficult to look at the trendline of that graph and find anything of positive validity. SL dropping "only" 2% as compared with a prior 4+% is putting icing on a mud cake. The reality is it is still dropping.

When we drop the optimism, a more productive and realistic route is to try to figure out WHY it is still dropping. That trendline is still significantly downward and all the optimism in the world isn't going to change that. So we do well to address the issues rather than say, "Well, it's not as bad as it could be..."

The key reasons for the continued loss of private sims, as Granger sees it:

* People are realizing it's some kind of idiotic to pay such excessive fees for virtual ground. Are they excessive? Yes... absurdly so. Linden Lab net profits measure in the $ millions per month.

* The system has an extremely high learning curve on viewers that are poorly designed, difficult to use and regularly malfunction.

* Despite a decade and a half of operation the reality still exists that even simple things still malfunction: simple text-based group chat still doesn't work properly, group notices don't get to everyone, 2D textures still don't load correctly, mesh malfunctions regularly, etc etc.

* SL still has arbitrary limitations on prim count, link limits and region backup that does not exist on other grids. They still have not enabled regions larger than 256m. The lag of region crossing is still unbelievable. People still crash regularly.

This is the extremely short list of extremely major issues with SL. Maybe the reason private regions have dropped below 16,000 is the simple fact that SL users are getting smarter-- and realizing that a piece of pixelized ground isn't worth the price of leasing a new car. Maybe they're getting tired of Linden Lab putting a new coat of paint on a rustbucket that misses on half its cylinders.

The above is by no means pessimistic or negative. It is a realistic statement of grid affairs. After all this time it would seem the only thing Linden Lab has learned from its many experiences... is how to deposit money in the bank. As long as they continue to do so these problems will still exist... and we can expect region counts to keep dropping. Not that it matters to the company; how long can they exist on a 2% drop and still be happily profitable? At $300 a sim... I'm guessing quite a while. As far as LL is concerned, they're making ungodly amounts of money. 40 regions is a drop in the bucket. Why be concerned about user experience? "So long as the dummies keep paying us, we'll keep taking their money."

The reason for the declining trendline seem pretty obvious.

To the question, "[H]ow long can they exist on a[n annual] 2% drop and still be happily profitable?" I'd very roughly estimate Second Life could remain profitable for roughly three-five more years at that loss rate -- after which, the profits wouldn't look so happy, and staff cutbacks, already happening now, would happen more drastically.

As for optimism, I've been pointing out Second Life's revenue model was broken for at least 7 years. And while that analysis remains true, the userbase remains relatively stable -- at least stable enough to support most of the remaining private sims, which everyone knows are way over-priced. So I'm optimistic that the existing community will keep the world afloat for at the least next few years; by which time, Linden Lab's plan to move Second Life to the cloud and introduce new pricing options should have gone into effect. Nowadays, even a decent chance at mere survival is enough to make me optimistic.

Comments

[Chic Aeon]

Just wanted to note that your comment: " and staff cutbacks, already happening now, would happen more drastically." is over three months old and The Lab announced publicly that they were hiring more developers for Second Life -- this in the last month. Also at one of the last third party developer's meetings there was lots of joking (likely fairly serious underneath) about stealing some of Firestorm's developers as well as an announcement there that they were hiring.

So I can't see that particular comment holds much weight.

Also, if you have a fairly good computer, all those issues mentioned in the article happen rarely -- at least very rarely to me -- on a two year old desktop with a fairly spiffy graphics card when purchased -- so very much NOT state of the art by today's standards.

2 percent added to 2 percent for three years would certainly not be a positive step but if as Granger says the lab is making millions of profit each month on land alone, then less than six percent drop is not going to close the doors. Cutback? Maybe, and maybe not. We will have to see how all the shifts they are planning turn out.

[Pulsar]

A good computer helps indeed and in general it works, but sometimes the issues are server-side. You see it more often if you travel a lot by plane, boat or car. There are sims that are a pain even if you cross without a vehicle, with just your avatar. And even if your computer is great, when you fly an airliner and you passengers fall down on sim crossing, that makes it less enjoyable, until some people give up entirely.
Not to mention the infamous BUG-6925 that detaches your attachments, a problem that arose when LL introduced the AIS3 and SSA update in 2014. In fact, for a while you could still use AIS2 as a workaround and Firestorm had instructions for who wished to do so. But while marked as "Severe", and some work to mitigate it, LL never fixed that, nor they went back to the drawing board and kept AIS2 meanwhile, nope. Instead... they eventually enforced AIS3. Yeah. They kept going on with AIS3 stubborning, they didn't fix it and they even prevented their users to use that workaround.

Sometimes, when I see how passionate the aviation and sailing communities are (and what the group Drivers of SL is doing now), and how they still try to enjoy their hobby, despite struggling with all these and other technical issues... perhaps Second Live would be more popular now if people could enjoy their vehicles better.

[Hamlet Au]

"The Lab announced publicly that they were hiring more developers for Second Life -- this in the last month."

At the moment, they only have one listed job position that's SL-related, for a Back End Web Engineer:

https://www.lindenlab.com/careers

The layoffs I reported last Feb. impacted 12 people:

http://nwn.blogs.com/nwn/2018/02/linden-lab-layoffs-second-life-sansar.html

There's been some other SL-related openings since then (some of which I've blogged), but overall it's still probably a net reduction of staff related to Second Life.

[Pulsar]

About the loss of private sims in Second Life, reasons to stop are many. Some non-US citizens stopped when the US dollar gained too much ground against their national currencies, making their sims even more expensive for them. Meanwhile the user concurrency in SL kept dropping as well, during these years (maybe somewhat less now). When you are paying for a sim that is receiving less and less visits, eventually you could start to wonder if it still worth doing so. If it's a social sim, it could become discouraging; but if you have a shop, you are also getting less costumers and so less income to pay your sim. Also some sim never became really popular and eventually close (but even iconic regions disappear, that was the fate of the SS Galaxy, the huge multi-region long cruise ship, if eventually she wasn't saved).

Besides this and the pricing, someone is discouraged by the excessive griefing.

Then sim owners have their own personal reasons too: aging, health, job lost, and other real life personal issues. Moreover, some regions are managed and rented by 2 people (or more). When one of them can't continue to contribute (or it's a couple and there is drama), the other person, alone, won't be able to keep running the sim or loses motivation and gives up anyway.
And those people and region leaving aren't compensated by the new arrivals.

This is from just my personal experience, among the sim owners that I know and a couple of sims that I managed myself, so I guess there are more reasons.

But recently I wasn't struck by the closure of a sim, but by a little place. Indeed there are sub-region areas and parcels that host something nice too, and sometimes they close as well.

[Chic Aeon]

@ Hamlet

Just reporting what was officially posted and said by LL.

I guess my real point is that IF you are going to highlight a layoff that happened three months ago without doing the research about the NEW hires since that time (some wouldn't necessarily have been on the website listing; we know how that works) -- then you likely shouldn't be pointing to those 12 jobs lost last quarter at all as part of your argument :D.

Just my opinion.

[irihapeti]

most of the sim/parcel ownership downturn I think is that historically a significant number of people obtained land and built on it a space for others. When the others didnt/dont come then the land is abandoned.

building spaces for others often comes with an owner hope/expectation (stated or unstated) that the others will contribute to the tiers in some way. Item purchases, parcel rentals, donations, tips, group fees, tier contributions, etc. When the hope/expectation is not met then abandon.

LL has never released any data on the status of the others but I am pretty sure that land occupants today are more proportionately residentials/hobbyists now than in any previous year. Residential and hobbyist occupants who have no expectation that others will contribute to the occupants' tiers/costs.

i think that analysis would show the total number of residentials/hobbyists has been more stable over the last few years than it has been for those who build spaces for others

i think also there is some reason to be a little bit more optimistic about the slowing in the abandon rate. The regularly-attending tier-paying inworld population is now getting down to predominantly residentials/hobbyists occupants, with a comparatively-historical smaller proportion of those who build spaces for others. Residentials/hobbyists on a known and affordable to them budget, are I think more resilient to unmet hope/expectation than those who build spaces for others.

[Dartagan Shepherd]

Price is a factor, as is the mentality of users that increasingly lean toward more light weight and less time consuming ventures for online entertainment.

But as I said before and I'll say again:

I can buy as much undeveloped land in RL as the cost to set up a private region.

I can pay less tax in RL on that land than the monthly cost of a private region.

I can grow and sell Christmas trees on that undeveloped RL land for more profit than I can make in SL from a private region.

RL wins financially especially when time is factored in with the money. This is why I haven't logged into SL in a few years and why I won't log in again unless something drastically changes with with costs on land.

And all that depends on whether or not LL focuses on SL as a primary product rather than a cash cow to develop other products that don't last, except to suck more money from players.

Example: Sansar will close, some people will be disappointed, but LL will have made their money on what's basically an alpha product that never saw a finished state. I'm just not that kind of sucker.