New World Notes

The Mystery of Second Life's 40,000 People Plateau, Continued -- How Many New "Users" Ever Actually Go In-World?

Here's another clue in the 40,000 people plateau mystery of Second Life, offered by reader lkosov: 

I sat there with the world map open and watched the green dots on Learning Island 1 for an hour yesterday, from 1235-1335 SL time. From what I can tell the player dots update once a minute, so it's an imperfect way of monitoring things, but was easier than creating a new account and camping on the island. Anyway, best as I can tell, twelve accounts joined in that one hour. Saturday afternoon in the Americas, Saturday evening in Europe. If that's normal (and that's a big assumption to make from one observation of one hour's possibly flawed data) that's something like 9,000 new users in a month. Even if I'm somehow an order of magnitude off, that's still a *far* cry from "300,000+ [per month]".

I just checked Learning Island on the map myself (screen capture above), and only counted up to 6 new users (i.e. the green dots on the dynamic map); no surprise, since it's in the middle of a weekday. But I also double-checked the most recent new registration figures I've reported from Tyche Shepherd of Grid Survey, from last October -- through 2020, between 6,000-18,000 Second Life accounts were created every day.

So what explains this discrepancy?

The Real Problem With Virtual Economies is the Virtual Currency (Comment of the Week)

Really great comment from reader "Kyz", a 3D content creator who made an excellent living from the Second Life economy. Commenting on my take on Matthew Ball's analysis of payment options for Metaverse platforms (he basically lands on suggesting that blockchain-based payments may be the best or least worst alternative), Kyz says this:

I don't think the problem is traditional currency and payment systems, rather it's that all these companies develop models where virtual product is worth such small amounts that devaluation of labor is the actual problem. Magnified by some companies that are also using currency itself as product.

For instance, I did pretty well in SL riding on the coattails of the breedables craze. Enough for a couple of full time incomes. The pain point of making money was SL. Between limits, virtual currency converted to real money and the extra steps required.

I did the same at various points for selling content for game engines, just being able to find the trends and fill niches. These markets were much less painful because there was no virtual currency to deal with.

As an example of what Kyz's talking about, take a look at the Unity Asset Store, where creators sell virtual assets to developers across all budget ranges... for real cash.

The problem becomes even more clear, Kyz goes on, when one compares it to selling actual products:

Second Life Gachas Are Gone But Gacha's Legacy Goes On -- Resales Still a Top SL Marketplace Category With Nearly 900K Items

As of today, gachas are officially banned in Second Life (with some gacha fans going over to gacha-like games), but don't expect the legacy of gachas to disappear anytime soon. Checking the Second Life Marketplace now, nearly 900,000 items are still listed under the Gachas category (resales of various gacha items and collections, etc.) 

That's huge:

SL Gacha Creators Scramble to Create Gacha-Like Systems Without a Gambling Mechanic Before Linden Lab's September 1 Deadline

Image/system by dazai voom

With Linden Lab banning Gachas in Second Life at the end of this month, " irihapeti" and others have noted the rise of Gacha-ish systems like the one above:

Many professional gacha machine makers have developed conveyor machines ready for the 1 September rollout date.

Those that haven't will have to close down their gacha operations.

The basic conveyor machine will display an item from the set. When the customer purchases the displayed item, the machine will 'randomly choose' the next item to be displayed. Customers can buy it or not as they please.

The items in the conveyor machine can be NoCopy Transfer.

So basically systems like this are Gacha-like, except without a completely randomized reward aspect that made Gachas so popular, and also a form of gambling. (And also, for many, so fun.) It also looks like a direct response to a question fielded by Linden Lab in its original announcement banning gachas:

As Fifty Linden Fridays Launches Its 12th Anniversary Party, Its Founder Tells Me How an Internet Meme Led to One of Second Life’s Largest Groups

Barb photo by Catalina Staheli, edited by Kreao Kujisawa

Click here to join the 12th year anniversary of Fifty Linden Fridays, one of Second Life’s largest in-world groups. Expect a massive crowd, however, because with 52,530 active members, roughly 1 in 10 of SL’s entire user base is a member of FLF. 

Founded and still managed by an SLer named OMGWTF Barbecue -- or just “Barb” to those who know her -- this celebration is quite a culmination for a young woman who, back in 2006, joined Second Life simply to have some rude fun. 

Hence her notably wacky avatar name:

SL Survey: Over a Third Expect the End of Second Life Gachas Will Hurt the Virtual World Economy

Here's the results of New World Notes' survey on how the coming end of gachas in Second Life will impact the larger virtual economy. A strong majority of the 89 respondents (65%) predicted that the loss of gachas and related events will cause no significant loss in virtual land (i.e. sims) or user activity of people logging into SL for gachas (i.e. concurrency rates).

Then again, that also means over a third of respondents predicted that the going of gachas will substantially hurt the SL economy, with most of them choosing the worst possible impact: Both a significant loss of sims and a drop in user concurrency.

Which side is right? Fortunately we can objectively determine that question later in the year via Grid Survey, by checking sim loss and concurrency trends. At the moment, I tend to think the pessimistic side is right, and that we'll see a greater than average drop-off of both -- for a very simple reason:

Could Linden Lab Allow Gachas on Private Islands in Second Life Accessible Only to People from Countries Where They're Legal?

Above: Message that a SL user who logged in from a US state that bans skill games received when they tried to teleport to a sim with skill games

Last chance to take New World Notes' survey on how the end of gachas in Second Life will impact the economy of Second Life (if at all). Meantime, reader Frankie Antonioni had this interesting proposal on how SL gachas might continue:

Here is a solution to the new gacha rule. Allow gacha machines on some islands. If gachas are legal in your country, then you can go to gacha islands. The islands would be set at mature, and you will have to have payment info on file. On these islands, you can have gacha malls. People can rent places at these malls. Creators that are from countries, that don't allow gacha machines, can sell them to people that can go to these islands. It could be a 50/50 type deal. The money made would be split by the creator, and by the person that owns the machines. And the people that play the machines, can resell what they win.

Now granted, if you are from a country that doesn't allow gachas, then you can't visit the gacha islands, and you can't play the machines. But they can go to gacha yard sells, and buy gacha items. They just can't play the machines.

I can't speak to the regulatory issues, but Linden Lab already blocks people who haven't verified that they're adults from entering Adult sims, and even (reportedly, see above) blocks people from US states that ban skill games from entering SL sims tagged as having skill games. So Antonioni's proposal at least seems technically possible?

Survey: Will Ending Second Life Gachas Hugely Impact SL's Economy?

Now that we know that come month's end, gachas gotta get gone, please take this survey asking how their removal will impact the Second Life economy. While Linden Lab releases few economic/user stats to the public, we can track sim ownership and concurrency rates via third party data sites like Grid Survey. 

Hence the survey questions above.  Since SL gachas are extremely popular and lucrative, we may see the pang of their loss in a decrease of sims and concurrency.

... and then again, we may not. For instance, when Second Life casinos and other forms of explicit gambling were banned in 2007, many predicted it spelled the end of Second Life. But, as Grid Survey's Tyche Shepherd points out, that was not the case: 

Second Life Gachas' Huge Resale Market Makes Them Much More Likely to Be Regulated as Gambling, Says Legal Expert

Pictured: Gacha resale items listed on the official SL Marketplace at prices between USD $1037.50 and $5165 worth of Linden Dollars.

Reader "Gloom" makes an important point, commenting on last week's post about Second Life gachas being a type of gambling. Typically, it only costs the Linden Dollar equivalent of pocket change to play them -- but that's only part of the story:

Sure you can argue it's just pennies... but people easily drop hundreds of real life money into trying to get gacha sets. Then they turn around and take something that was a L$25 pull - to mark it up 100x the original cost on the Marketplace (I have seen multiple "rare" items going at L$2000 easily from a L$25 gacha). Then it becomes a cut-throat market. 

In fact, the SL Marketplace carries gacha resale items priced as high as thousands of US dollars. (See screencap in this post.)

Vaki, the longtime Second Life user and real life attorney that I cited in last week's post on gachas, tells me that this huge resale market for Gacha items will very much play into any legal determination of whether SL Gachas are defined as gambling by the many jurisdictions which outlaw or regulate the practice:

Expect a Real Life Crackdown on Second Life Gachas, Says Expert Lawyer

Update, August 2: As Vaki predicted, Linden Lab announced the end of gachas in Second Life:

Due to a changing regulatory climate, we’ve had to make the difficult decision to sunset a very popular sales mechanism for content in Second Life.  It’s widely known as "gacha", and is defined by a chance-based outcome as a result of a payment. We know that creators plan their content releases far in advance and will need to re-tool their products, so to mitigate the impact to those affected, we are giving a 30-day grace period, until midnight SLT on August 31.  After that time, selling content via gacha machines will no longer be permitted in Second Life.

Read her analysis here. Original post from June below.

Loot boxes in videogames are considered gambling and therefore illegal in some countries, and regulated in many other jurisdictions. But does that have anything to do with user-created gachas in Second Life? Extremely popular within the SL community, they are a vending machine game of chance to win valuable virtual goods. Should we expect a crackdown on them at some point?

In a word, yes.

"Gacha games/loot boxes/etc. are gambling" says Vaki, a longtime Second Life user who is also a real life attorney specializing in privacy and internet issues; she's even represented SL users in this field. "And they're starting to slowly be regulated as such. Best way to see this is in Chinese games like Genshin Impact, where gacha functionalities are regulated and providers are required to display the actual percentage of likelihood to receive each reward."

While it remains an open question whether SL-based gachas in particular are considered gambling, Second Life creators of gachas, along with Linden Lab itself, should prepare for regulations around them: